Property tax shift to homes persists
BOISE – Owners of residential property are paying more and more of Idaho’s property taxes, according to new figures from the Idaho Tax Commission.
In 2005, the share of property tax paid by owners of residential property rose to a record 63.2 percent – up from 61.6 percent in 2004 and from 47.1 percent in 1990. Meanwhile, the share paid by other types of property has continued to fall.
State Sen. Shawn Keough, R-Sandpoint, chaired a joint legislative committee that held a dozen hearings around the state over the summer, then voted to recommend a large increase in the homeowner’s exemption, among other changes. The new numbers, Keough said, “support the committee’s work and the recommendation on the homeowner’s exemption.”
Idaho’s homeowner’s exemption was enacted by voters through an initiative in 1982. It exempts from property taxes 50 percent of the value of an owner-occupied home, not counting the land, up to a maximum of $50,000. But the amount hasn’t been changed since it was passed. Had the exemption been adjusted for inflation, it would have doubled by now.
Keough’s committee voted to increase the homeowner’s exemption to a maximum of $75,000, to include land value and to index the exemption to inflation in future years. The panel also backed an array of other changes, including shifting millions in school funding off the property tax and making it up from the state budget, which is funded mainly by sales and income taxes. The recommendations go to the full Legislature in January.
Many attempts have been made over the years to increase the homeowner’s exemption, but they’ve been staunchly opposed by key legislators and the state’s most powerful business lobby, the Idaho Association of Commerce and Industry. Association chief Steve Ahrens noted in the association’s legislative agenda for 2006 that the group long has opposed any increase, to avoid shifting the property tax burden onto businesses.
“There’s no question about the side effects of expanding the homeowner’s exemption,” Ahrens wrote in an article posted on the association’s Web site last month. “The cost of cutting property taxes for homeowners will be shifted to other property owners, such as business and commercial property.”
According to the Tax Commission’s annual report on Idaho property taxes, the share of property taxes paid by commercial property owners dropped to 27.9 percent in 2005, down from 28.7 percent in 2004. In 1990, it was 33.2 percent.
Backers of increasing the homeowner’s exemption argue that a shift already has occurred – onto residences. Increasing the homeowner’s exemption will restore some balance, they say.
“I think the homeowner’s exemption is a key toward trying to equalize those classifications out,” Keough said.
Other property types also have seen their share of taxes continue to fall. Agricultural land accounted for 4 percent of property taxes in 2005, down from 4.2 percent in 2004 and 10.1 percent in 1990, according to Tax Commission figures.
Timber property paid 0.7 percent of property taxes in 2005, down from 0.9 percent last year and 1 percent in 1990. Mining held steady at 0.3 percent in 2005, the same as in 2004 and down from 0.7 percent a decade and a half ago. Utility property now accounts for 3.9 percent of property taxes in the state, down from 4.4 percent last year and 7.9 percent in 1990.
Keough said residents who testified at the committee’s hearings are angry about rising residential taxes and likely will back an initiative to cut taxes if lawmakers don’t act.
“We as elected officials and organizations like IACI had better come to the table and find a solution,” she said. “Otherwise the voters will take care of it for us, and they’ll take care of it either by turning out the Legislature that IACI has enjoyed so much influence with, or through the initiative process.”