Flanked by Republican legislative leaders who made it their top priority, Gov. Phil Batt signed a bill into law Thursday that will reduce property taxes by $40 million.
“This bill grants Idaho taxpayers the largest property tax relief in Idaho history,” Batt said during a signing ceremony in his office. “It fulfills my campaign promise to grant this relief within the first 90 days of my administration.”
Idaho’s first Republican governor in 24 years hailed lawmakers for enacting the plan that he contends in the long term will generate far more property tax relief by limiting local governments’ ability to expand.
Besides the permanent reduction gained from cutting the basic school district operating levy 25 percent, the $40 million plan imposes a 3-percent cap on annual budget increases for property tax-financed governments - primarily cities and counties.
Opponents fear Batt’s plan will provide only marginal relief for most taxpayers while hamstringing local governments in their efforts to cope with growth, resulting in deteriorating services that might actually hurt economic expansion.
Even its most ardent supporters in the Legislature did not dispute that just 30 percent of the reduction goes to resident homeowners while the rest - including an estimated $4 million to out-of-staters owning vacation homes or property in Idaho resort areas - goes mainly to business and farmers.
“The critics of this tax relief say the average homeowner won’t see a huge decrease in his or her property tax bill,” Batt said during a signing ceremony in his office. “But what has been overlooked and underreported is that, for the first time in years, current Idaho property taxpayers will pay less taxes instead of significantly more.”
He said property tax increases were the most consistent complaint he heard while campaigning for governor. Besides the legislation signed Thursday, Batt last week approved state payment of $12 million in catastrophic health care bills for the poor - bills that county property taxpayers otherwise would have to cover.
In addition to paying those bills dating back to late 1993, Batt plans to have the state pay future catastrophic health care bills at a cost of about $7.5 million a year.
But the governor rejected criticism that his property tax reduction measures would leave the state without enough revenue to pay for programs even he supports, including creation of a new Department of Juvenile Corrections. And he said opponents of his thrifty budget guidelines are out of line.
“It’s interesting that they talk about the cuts under my administration. We have cut only two budgets. We cut the governor’s budget and we cut one other one that was so minor I can’t even remember what it was. The rest of the budgets all have substantial increases in them,” he said. “While they aren’t lavish budgets, they certainly are not reduced to the extent that we won’t be able to carry on the necessary functions of state government.”
Batt’s spending plan actually eliminates two agencies - the Council for the Deaf and Hard of Hearing and the Commission on Drug and Alcohol Abuse.
House Speaker Michael Simpson, R-Blackfoot, also dismissed the idea that the state would not be able to meet its financial obligations. However, enactment of the state-financed property tax cut leaves legislative budget writers little room to stray from Batt’s tight-fisted spending blueprint.
“We can fund the state budget with the money that’s available, and it will be a substantial budget,” Simpson said. “Talk about leaving us short of money and we won’t be able to fund state government is out of place.”
Batt left his options open for pursuing even more property tax reductions.
“We’ll have to see how the economy goes and what kind of funds we have available,” he said. “In no way do we want to injure the duties of the state, particularly the educational efforts of the state, and we will not injure those.”