Senate Oks Extending Tax Break
Idaho senators have approved a bill extending the state’s 50-50 property tax exemption to residential lots, though even the measure’s supporters know it is unlikely to be enacted.
The 20-15 vote on Friday pitted primarily rural against urban interests.
Supporters argued that Idaho’s average residential property values have doubled in recent years, driving taxes up even as rates in many cases have declined.
Opponents countered that commercial property owners who do not benefit from the 50-50 exemption already bear too much of a tax burden, and the proposed change would only make it worse.
Existing law allows residential property owners to exempt the first 50 percent or $50,000 of the value of their primary residence from property taxes, excluding the value of the land. The change sponsored by Sen. Evan Frasure, R-Pocatello, would allow property owners to include lots up to one acre in the exemption.
That would remove about $1.5 billion in property value from the residential tax base, Frasure said, without significantly changing the proportion of tax receipts between residential and commercial properties.
“If you leave the tax code as it is, unchanged, you will continue to see a tax shift to residential,” he said. “This would simply slow down that shift.”
Sen. Jerry Thorne, R-Nampa, argued that commercial and residential property that does not qualify for the 50-50 exemption - such as rental units - would be forced to carry more of the load of financing local governments.
But Sen. James Risch, R-Boise, summed up the frustration of supporters when he said he would cast a protest vote for the bill that is certain to be killed in the House.
“There is no chance this bill is going to become law,” Risch said. “It simply isn’t.”
Similar pieces of legislation already have been rejected by the House Revenue and Taxation Committee, where by tradition all the Legislature’s tax and revenue bills originate.Still, Risch said even people who voted against last year’s One Percent Initiative - which would have capped property tax at 1 percent of taxable value - believe the system needs fine-tuning.
He and others also said a change like Frasure proposed could help forestall future One Percent Initiative drives by reducing one source of property tax opposition.