Batt’s Tax Cap Called Centerpiece Of Bill
All the attention has been on how much - or how little - people will get when Gov. Phil Batt’s property tax cut bill becomes law.
But some lawmakers say the most important part of the legislation could be the less-publicized section limiting to 3 percent a year budget increases funded by property taxes.
“I think that’s the best budget limit on property taxes that I’ve seen since I’ve been here,” said Rep. David Bivens, R-Meridian, whose first term in the Legislature was in 1967.
Noted Sen. Jim Risch, R-Boise, whose legislative service dates to the 1970s, “The cap will go a long way toward curing the problem” of escalating property taxes.
At Batt’s request, the property tax cut bill was revised to put a limit of 3 percent in the budgets of taxing districts, other than schools, funded through property tax.
At a leadership meeting well before the tax-cut express got rolling, Batt told top officials he felt the spending limit was more important than the actual property tax reduction.
Rep. Jim Kempton of Albion and other lawmakers argue that’s the only practical way to curb soaring property taxes, other than to order an artificial limit on increases in property assessments. And pending legislation to do that has constitutional problems.
But in its 16-year history of trying property tax caps, Idaho has had little success.
It started in 1978, when Idaho voters copied California and approved an initiative limiting property taxes to 1 percent of market value. With about 1,000 often overlapping taxing districts in Idaho, the Legislature couldn’t figure out how to make it work.
Lawmakers settled for a 5 percent limit on budget increases. But House Speaker Mike Simpson contended that simply forced taxing districts to increase spending 5 percent a year whether they needed it or not, making the cap a floor.
He personally pushed “Truth in Taxation,” which eliminated the 5 percent cap and required taxing agencies increasing budgets by 5 percent or more to take out a newspaper ad explaining the hike and then hold a hearing on it.
After just a few years, lawmakers say they don’t know whether that had any effect. But “Truth in Taxation” was scrapped by the new Batt plan.
Now there will be no more budget increases over 3 percent except for special circumstances.
Sponsors think the special circumstances will make the 3 percent cap work better than past limits.
Cities, counties and other districts can still reap the additional revenue from new construction, although critics argue that’s going to put a tremendous burden on county assessors. Sponsors contend fast-growing areas are where spending increases are needed most.
And local officials can ask voters to remove the 3 percent cap by majority vote. That would lift the cap for two years. But legislators behind the Batt bill feel that will be rare.
Local governments can also bank any unused portion of the annual 3 percent increase for use in future years. If a city increased its budget just 1 percent for two years in a row, in the third year, the increase could be as much as 7 percent because it would have saved two percentage points from each of the two previous years that could be added to the standard 3 percent hike.
The $40 million property tax cut is getting all the headlines, but in the long run, the 3 percent budget limit could prove more significant.
House Democrat Leader Jim Stoicheff has a new nickname this session. State Affairs Chairman Ron Crane of Nampa calls him the “Northern Idaho Guerilla Fighter.”
For years, the Sandpoint Democrat held his House colleagues together to do what they could to support the programs of Democratic Gov. Cecil Andrus, even though sometimes Stoicheff didn’t personally agree.
Now, a Republican is governor, and Stoicheff has no such restraints. He’s always urging a Legislature dominated by farmers and ranchers to remember the “lunch-bucket crowd,” working folks who punch a time clock.
And if Batt calls himself a “tightwad,” he’s nothing compared with Stoicheff, who’s a legend for being tight with a dollar - and thinks government should be the same way.