A group of Democratic legislative candidates on Tuesday unveiled what they called the “50 percent solution” to property tax problems: expanding the homeowner’s exemption.
Rep. Ken Robison, D-Boise, said the plan would give homeowners property tax relief, without creating the “carnage” in Idaho’s tax system threatened by the One Percent Initiative.
That initiative, which would limit property taxes to 1 percent of assessed value after exemptions, also requires the state to pick up millions of dollars in school funding now covered by property taxes. That likely would mean increases in other taxes.
Republicans decried the Democrats’ proposal and Gov. Phil Batt said he may propose his own alternatives to the One Percent Initiative.
Initiative author Ron Rankin defended his measure Tuesday, saying opponents are spreading false information about it. Rankin maintains his initiative will provide property tax relief and growth in state revenues will make up the difference.
Andrew Arulanandam, executive director of the Idaho Republican Party, said most Republican state legislators oppose the One Percent Initiative, but they don’t like Robison’s proposal either.
“It negatively affects a vast majority of Idahoans,” Arulanandam said, referring to owners of business property.
Businesses, including landlords, pay 70 percent of Idaho’s property taxes. Homeowners pay 30 percent.
That’s partly because of Idaho’s so-called 50-50 homeowner’s exemption, which exempts from the tax 50 percent of the value of an owner-occupied home, up to $50,000.
Robison wants to add the value of the lot, and lift the $50,000 cap.
“If you had a full 50 percent exemption, most homeowners would be at or below 1 percent,” Robison said.
Robison led the effort that got the homeowner’s exemption passed as an initiative in 1982.
“In the ‘90s, the market value went up so much it just outgrew our exemption,” Robison said Tuesday.
Robison said homeowners are the ones hit hardest by fast-rising property values that have bumped up their taxes.
He and other Democratic lawmakers have proposed expanding the homeowner’s exemption for the past few years, but have been blocked by Republicans in the House Revenue and Taxation Committee.
Robison said the One Percent Initiative would shift taxes from businesses to renters and homeowners, because they’re the ones who will have to pay increased sales taxes while businesses get most of the property tax relief.
Batt feels proposals like Robison’s would shift taxes from homeowners to businesses, said his spokeswoman, Amy Kleiner.
Instead, the governor favors expanding his 3 percent cap on growth in local property tax budgets to include school districts, and passing a constitutional amendment to limit skyrocketing property tax assessments by setting a maximum percentage increase in value per year.
Batt has directed his staff to look into both possibilities. If they’re feasible, he may propose them to the Legislature. A constitutional amendment requires two-thirds passage in the Legislature plus a vote of the people.
Batt also believes his 1995 property tax cut and 3 percent cap on budget hikes “will work if they’re given time to,” Kleiner said. “Last year property taxes only went up 1.9 percent.”
But, she said, “The big problem is still the increasing valuations.”
, DataTimes MEMO: This sidebar appeared with the story: A taxing debate Ron Rankin maintains growth in state revenues will offset tax cuts from his One Percent Initiative. Rep. Ken Robison, D-Boise, says his “50 percent solution” will aid homeowners, who are hit hardest by fast-rising property values that have bumped up taxes. Gov. Phil Batt thinks proposals like Robison’s would shift taxes from homeowners to businesses. He favors expanding his 3 percent cap on growth in local property tax budgets to include school districts, and limiting property tax increases.