Property Tax Cut May Bring Little Relief Questions Persist About Voter Reaction To Immediate Impact Of Reduction

In the 45 days of his administration, Republican Gov. Phil Batt did what he said Idaho voters told him to do - cut property taxes and check government spending.

But the question remains whether what voters get is what they expected, and if it isn’t, just how will they vent their disappointment.

There is no doubt that Batt’s state-financed $40 million property tax reduction package will hold down the budget.

Taking a chunk of cash that big out of the hands of budget writers has left them little choice but to adopt the kind of bare-bones budget the new governor says will make state government a servant rather than a master.

There will be some tinkering to be sure, but the final product will be one of the tightest spending plans the state has adopted in a period of economic prosperity - a period when some believe growth demands a greater state investment in services.

The tax bill does permanently eliminate 25 percent of the basic school operating property tax levy, which accounts for a fourth to a fifth of the average overall property tax levy.

And it slaps a 3-percent cap on the annual growth of property tax-financed local government budgets - the provision Batt and his legislative allies believe will be the real brake on property taxes.

Escalating tax bills, fueled by the dramatic growth most state officials have hailed, were behind Batt’s commitment to provide property tax relief during last year’s campaign. Officials repeatedly warned that failure to cut property taxes, especially for the low- and fixed-income homeowners hardest hit by recent increases, would prompt a citizen revolt.

For the past two weeks, Batt has been grousing about the criticism that his proposal fails to address that problem, that the people who really need relief would see their tax bills drop only about $50 - about $4.20 a month for homeowners whose taxes are part of their monthly mortgage payment.

Against a tax bill of $800 or $1,000 on an $80,000 home, all too many lawmakers fear that’s not the kind of cut voters are expecting. In fact, 70 percent of the reduction goes to the people who pay the most taxes - businessmen, farmers and those able to afford vacation homes.

The governor tried to reverse that spin a few days ago by saying his plan coupled with state assumption of $12 million in unpaid indigent medical bills from the past two years and $7.5 million annually in future years for indigent health care costs translates into a $60-savings for every man, woman and child in the state.

That has some people - especially those with large families - thinking about a tax break totaling hundreds of dollars when many will be lucky if their 1995 tax bill isn’t higher than last year’s.

Chances are it will be, based on the way the reduction will be implemented.

Because of the experience with a cap following the 1978 voter tax revolt, the plan gives local governments the chance to use the highest amount of annual property tax collections since the 1993 budget year. To head into the cap in the best position possible, every taxing district will take advantage of that option.

For a number that have tried to respond to property tax discontent by holding down levies this year, maybe in hopes of cajoling voters in approving bonds, that means the base on which the cap is applied will be higher, erasing at least part, if not all, of the reduction.

And if it is a homeowner’s year to be reassessed, and the value increases by a greater percentage than the countywide values rise, that also could wipe out the tax break.

Batt predicts that the cap will slash the increases in annual property tax collections statewide from 10 percent to 2 percent. But it will take some time for that to happen - more time than is left to the 1996 election.

And if experience is any teacher, by the time the cap does have an impact, demands on communities caused by declining federal and state support will have risen to the point that lawmakers begin to exempt various activities from the cap. That is exactly what they did in the 1980s with the cap from the 1978 One Percent Initiative.