Idaho Cities On Tax Diet Batt Tells Officials To Forget Waivers To Property Tax Caps

Republican Gov. Phil Batt told Idaho municipal officials on Thursday to forget attempts to win exemptions from the 3 percent limit on annual increases in local governments’ property tax-financed budgets.

But the governor did not slam the door on alternatives to property tax revenues as financiallystrapped local governments search for new sources of cash. He indicated he would consider proposals for local option taxes and state financial assistance for school building construction.

“I’m not prepared at this point to endorse them, but I will listen,” Batt told the annual convention of the Association of Idaho Cities.

Touting the property tax-relief plan that he pushed through the Legislature last winter, Batt acknowledged the concern of local officials over the provision that limits annual budget increases to 3 percent plus any additional cash generated by the property tax on new growth.

“I think that’s a wise concern,” the governor said.

But he said that voters will not put up with government continuing to take advantage of rising property values to generate more and more cash so their operations can expand. If that continued, he warned, voters could likely limit property tax collections to 1 percent of assessed value, which “would be extremely difficult to live with, hard to govern.”

County officials have expressed serious concern that they will not be able to finance their part of the new juvenile justice system without some relief from the 3 percent cap, which Batt has seen as the key to checking skyrocketing tax bills.

“I think that would be a very bad thing to do,” the governor said. “I would resist that.”

Batt said if the system requires more cash than currently allotted, it should be sought from the Legislature.

And if local government finds it necessary to spend more than allowed under last winter’s bill, they can always get the additional money if a majority of voters approve.

“I don’t think that’s a bad provision or restraint on local government,” Batt said. “The people should rule. … In the last election voters said, ‘We will no longer tolerate business as usual in our political institutions.”’

Still, anti-tax activist Ron Rankin has labeled Batt’s tax relief scheme as inadequate and has begun collecting signatures to put a 1 percent tax cap on the 1996 ballot.

Batt refused to embrace the cities’ longstanding campaign for local option taxing authority although he said of the alternatives the local option sales tax, which is widely used elsewhere, would probably be the best.

He conceded it would give local governments a greater ability to respond to local demands but said a relatively small number of people could enact the tax since turnout at local elections is usually low. He also was concerned about the economic dislocation local option taxes can cause - the kind of dislocation felt by western Idaho retailers, who charge 5 percent state sales tax when their Oregon competitors charge none.

But, Batt said, “I don’t have a closed mind on it.”

As for state assistance in erasing a backlog of public school building needs that is approaching $1 billion, Batt parted company with his predecessor, Democrat Cecil Andrus who adamantly opposed state involvement in that area.

“There’s that possibility, of course,” he said.

While recognizing the problems school districts have been having in winning voter approval of school construction bonds, Batt said that system does tend to work over time even though it involves higher property taxes.