Audit: State Housing Costly Taxpayers Subsidizing Rent On 117 Homes For State Workers

Taxpayers are subsidizing rent on 117 state-owned houses for state workers who earn up to $50,000 a year.

The practice bleeds hundreds of thousands of dollars from state coffers in rent, taxes and maintenance costs.

In many cases, the arrangements violate state and federal income tax laws.

The findings are outlined in a new report by the state’s Office of Performance Evaluation. The audit was requested by a legislative committee reviewing efficiency in state government.

“I was surprised,” said committee member and state Sen. Grant Ipsen, R-Idaho. “I don’t think it’s a practice we should continue.”

The report outlines a pattern of cheap rent for certain employees at 15 state agencies - from the Department of Corrections to the Department of Fish and Game to the Department of Lands. The subsidies also extend to workers living at 55 mobile home sites and trailers.

Thirty of the state-owned houses and trailer sites are in North Idaho.

Workers living in all of the dwellings pay far less than fair-market rent, as determined by the federal Department of Housing and Urban Development.

Nearly 85 percent of the state-owned houses rent for less than $100 a month. A quarter are rent-free.

The cheapest two-bedroom homes and apartments on Idaho’s open market rent for $394 a month, according to HUD.

Most agency directors could not explain how rents were set. Half the agency directors couldn’t recall the last time rents were reviewed. In some cases records were missing or never existed.

The rents rarely cover building upkeep. The Department of Corrections alone has spent $107,739 since 1992 on housing improvements that could have come from rents.

In addition, the IRS and state tax commission considers the difference between what employees pay in rent and what a house would fetch on the open market as taxable income - unless the employee is required to reside there.

Yet while 49 percent of employees live in the houses by choice, no state agency ever has reported the income to the state or the IRS.

“Essentially we concluded the state is not meeting its tax obligations,” said Nancy Van Maren, director of the Office of Performance Evaluation.

The report recommends one state agency develop mandatory guidelines governing rental, tax status and record-keeping of all state houses. Ipsen said he expects the subsidies to come up during 1997’s legislative session.

“We’d be remiss if it didn’t,” he said.

Many of the rent discrepancies date back dozens of years to when the state needed financial incentives to get employees.

One agency set rental rates based on employee salaries in 1979. It capped one worker’s rent at $260 a month. The same employee still lives there today and pays the same rent - despite a 235 percent salary increase.

Some state workers argue low rent is a part of their salary package.

“At first glance it looks like a pretty cushy deal,” said Brian Rowder, manager of Farragut State Park. But “you have to cope with being at your job 24 hours a day. It can be real stressful.”

Rowder raised two daughters in 21 years of living in one of five state-owned houses at the park. He and other rangers pay $47 to $90 a month, but he is the only one required to live at the park.

Rowder said he’s grown used to knocks on the door in the middle of the night.

“The scariest one was when a park visitor came by at 1 a.m. and said he was leaving because of a disturbance,” Rowder said. “A man in a nearby tent was threatening to kill his entire family.”

Daniel Beers works at a fish hatchery in Clark Fork. He pays $40 a month for a state-owned house. The report concluded the house would get $463 a month on the open market.

“I couldn’t afford that,” he said. “I’d have to move.”

Beers said he maintains the property, works long hours and his presence deters crime. He makes $29,120 a year.

If the state raised his rent, “come 5 o’clock each day, I’d leave, and if somebody wanted to come in and steal the place, more power to him,” he said.

Other employees have lived in cheap housing long enough to buy property on the side, for investment.

Ray Green, supervisor for the Department of Lands in Coolin - 27 miles north of Priest River - pays less than $120 a month to live in a three-bedroom, 960-square-foot cabin. When he took the job in the 1970s, he was required to live on site, but couldn’t afford a home.

Now he makes $50,000 a year, owns several building lots and plans to retire next year to a house in Post Falls.

, DataTimes ILLUSTRATION: Graphic: Average rent at state-owned houses