Legislation from Rep. Janet Trujillo, R-Idaho Falls, cleared the House Revenue & Taxation Committee on a party-line vote this morning to cut the budgeting capacity of local taxing districts – including cities, counties, and school districts – in which previously private property is purchased by the state and taken off the tax rolls. It came amid talk that the state of Idaho is going to purchase property on the Hewlett-Packard campus in Boise for the state Tax Commission, which is losing its current office space; the bill includes an emergency clause making it effective retroactively back to Jan. 1 of this year.
The bill was opposed by both the Association of Idaho Cities and the Idaho Association of Counties, who raised questions about the impacts it could have both in Boise and in other parts of the state, when the state endowment purchases large tracts of timber land.
Seth Grigg of the cities association said, “This is new to us – we weren’t consulted on this particular issue. And we are very concerned about the potential impact this would have on the taxing districts here. There is potential this could have impacts elsewhere.”
Teresa Baker, of the counties association, told the committee, “Even when property comes off the tax rolls, there still is a need to provide services to that property.”
In addition, Baker said removing the value of state-purchased land from a county’s budgeting capacity could impact federal PILT, or Payment In Lieu of Taxes, payments to the county, which are calculated based on the county’s budgeting capacity. “That will reduce the PILT that we would get from the federal government for the other federal lands that are there in those areas,” she said.
Trujillo said the Idaho Constitution requires publicly owned buildings to be exempted from taxation, but because we’ve always removed them only from tax revenue – not also from budgeting capacity – they’ve not been fully exempted, as the responsibility for those exempted taxes then shifts to other property taxpayers in the district.
“We are purchasing the Hewlett-Packard buildings – hopefully I’m not letting the cat out of the bag on this,” Trujillo told the committee. “We need to be able to remove that completely from the tax structure.” She said that would avoid a tax shift to the citizens of Ada County.
Rep. John Gannon, D-Boise, who along with Rep. Mat Erpelding, D-Boise, voted against the bill, said, “Just because a property goes off the rolls doesn’t mean that the services don’t have to be provided,” from police and fire to roads and snow removal. “It still has to be provided.”