BOISE – The debate over property tax relief in Idaho shifts into overdrive this week as the Senate debates a constitutional amendment and the House ponders major legislation to increase the homeowner’s exemption.
“It’s an interesting drama that will play out in the next few days,” said Senate Tax Chairman Hal Bunderson, R-Meridian.
Rep. Dennis Lake, R-Blackfoot, predicted “a watershed day for property tax,” saying, “We’ll see what the Senate does and we’ll react to that.”
Earlier, the House passed eight property-tax reform bills, and Bunderson’s committee sent six to the full Senate for amending. There, all six bills survived with few or no changes, though even small amendments could prove controversial in the House. Two then were pulled back to Bunderson’s committee. Those bills, HB 678 and HB 679, would shift half of school operations funding off the property tax and raise the sales tax half a cent to partially make up the difference.
Meanwhile, a constitutional amendment asking voters if they want to shift school funding from property tax to sales tax was introduced in the Senate and will soon come up for a vote.
Four reform bills passed the Senate – and two are now on the governor’s desk. The first, HB 680, sets up a state-funded deferral program to allow some low-income seniors and disabled people to defer their property taxes until they die or sell their homes.
The second, HB 676, eliminates the “developer’s discount” tax break for some rural land speculators and developers. Despite rumors that some House members were unhappy with a minor Senate amendment, the House voted unanimously on Monday to approve the amended bill and sent it to Gov. Dirk Kempthorne.
Mike Journee, Kempthorne’s press secretary, said Monday the governor likely will sign the bill. Kempthorne owns land in Valley County that benefits from the tax loophole, cutting his taxes to less than $10 a year; he’s said he’d like to see the loophole eliminated.
Rep. Ken Roberts, R-Donnelly, told the House, “This is the bill that’s been floating around and we’ve been trying to close this loophole for four years. I’d appreciate your green light.”
The vote was 63-0.
Two more amended bills await concurrence from the House in the Senate amendments.
One, HB 421, increases the homeowner’s exemption from its current maximum of $50,000 to $75,000, indexes the top amount to inflation in the future, and counts the value of land instead of just improvements. That measure would provide an average $300 tax break to homeowners throughout the state, and more in the future.
Sen. Shawn Keough, R-Sandpoint, said, “It’s not been adjusted since the voters put it in in the ‘80s, and now it’ll float with the values. It’s a fairly significant policy change.”
The other bill, HB 422, increases the “circuit breaker” tax break for low-income seniors and the disabled. The Senate made several amendments to the bill, but Lake said the House likely will endorse them.
On HB 421, the Senate amended the bill to use the Idaho Housing Index, rather than the Consumer Price Index, to gauge inflation in the homeowner’s exemption. The housing index has gone up much faster than the CPI in recent years, but it also would go down if housing prices in Idaho drop.
Lake said widespread rumors Monday that the House will hold the homeowner’s exemption bill until the end of the session were false. “That’s not going to happen,” he said. “I’ve got the concurrence language on my desk now.” He said it’ll be considered “when the speaker recognizes me.”
But Lake said there’s also still some question as to whether House members want to concur with the change to the housing index, or bring the bill to a conference committee with the Senate. “This is something we will work on,” he said.
Keough said she and other supporters of increasing the homeowner’s exemption were scrambling Monday to shore up support in the House. “I spent some time today calling in favors,” she said.
Other property tax relief ideas still are circulating, including freezing taxes for a year if lawmakers can’t reach agreement on whether to shift school operations funding onto the sales tax or not.
Keough said if all of the school operations property tax were eliminated, the sales tax would have to rise to 6.25 percent. “There’s simply not any money in the budget to cover that without raising the sales tax,” she said.