Tue., Jan. 17, 2006
First property tax discussion is a wild one
People spilled out into the hallway and packed into the doorway as the House Revenue & Taxation Committee held its first discussion of the session on property taxes this morning. The interim committee that held a dozen hearings around the state and heard from 1,500 Idahoans on the issue over the summer wasn’t invited. Instead, Rev & Tax Chair Dolores Crow, R-Nampa, set up her own list of speakers that she chose to educate the committee.
First came Russ Hendricks of the Idaho Farm Bureau Federation. Hendricks said his group opposes “shifting property tax to agricultural real estate.” Though residential property now pays more than 63 percent of Idaho’s property taxes and all other categories have been declining for the past decade and a half, Hendricks said farmers are cultivating less ground – in part because so many homes are being built. “The 36 percent agriculture, timber and mining used to contribute is much smaller than the 10 percent of the overall pie that we contribute today,” he told the committee. “It really doesn’t make a lot of sense to expect a shrinking land classification to pay more.”
Then came Steve Ahrens, head of the Idaho Association of Commerce and Industry, the powerful business lobby. Ahrens laid out various options on property tax relief – not the same options the interim legislative committee endorsed – and said IACI will decide later which to endorse. At the top of his list: An $80 million-a-year property tax break for businesses, by repealing the personal property tax on business equipment, machinery and furnishings.
Rep. Dennis Lake, R-Blackfoot, asked Crow whether the interim legislative committee – which he co-chaired – would also be making a presentation. She said no.
“I would hope that those who should’ve, did hear your presentation as part of the presentations given last week,” she said. Those presentations were to a leadership panel – not to Rev & Tax. “We’re not going to have a presentation as such,” Crow told Lake, “but when your bills come before us, you can expand as much as you want.”
Lake is Crow’s vice-chairman on Rev & Tax.
Lake responded by asking some questions of Ahrens – starting with why Ahrens had completely different numbers on the impact of increasing the homeowner’s exemption than the interim committee got from its expert staff.
Rep. George Sayler, D-Coeur d’Alene, who served on the interim committee and is a member of Rev & Tax, asked Ahrens what could be done about a constituent of his in Coeur d’Alene who has lived in the same home since 1942, is retired, lives on Social Security, doesn’t qualify for public assistance and whose home is a “scraper” – something a wealthy investor would just tear down to get the valuable land underneath. But skyrocketing values have pushed his property taxes up so high he can’t afford to stay in his home. “What would you say to this man?” Sayler asked Ahrens. “How can this be a fair and balanced system?”
Ahrens responded, “I don’t know what I’d say to that guy. … You have to make laws that deal with the majority.”
The final speaker for the day was Phil Homer, lobbyist for the Idaho Association of School Administrators. He stressed the importance of property tax as a stable funding source for schools, and urged against replacing half that property tax with state funds – a move recommended by the interim committee.
Crow said she has some other speakers lined up for tomorrow – from the Association of Idaho Cities, the Realtors, the Idaho Association of Counties, Associated Taxpayers of Idaho and the Idaho Tax Commission. “The interim committee’s already made their presentation,” she said. “It was a matter of time, I guess. I picked what I thought were the players from every area I could think of. These are the head honchos in each of the different categories.”
Crow also told her committee: “I’ve been saying this forever: The property tax issue is in the wrong venue. It should not be here. It should be in your cities and counties. … They collect it, they spend it, and we really have nothing to do with it except set the broad outlines.”
The interim committee made seven recommendations, including increasing the homeowner’s exemption, counting land in it and indexing it for inflation; shifting half of school funding from property tax to state funds; expanding impact fees and allowing schools to charge them; expanding property tax aid to low-income seniors and setting up a deferral program; and repealing a tax loophole for developers. All would require the Legislature to change state laws. Gov. Dirk Kempthorne, in his State of the State message, recommended only the aid for low-income seniors and the deferral program.
Crow said she plans to hold a big hearing on Jan. 30 on all property tax bills that come before her committee. Then, the panel will wait and mull them over before taking a final vote. “We’ll hear every bill,” she said, and take testimony from everyone interested. “We’ll take as long as necessary to get through them.”