Bonner County tax deal crafted

BOISE – Taxable values for Bonner County homes will go up – but not as much as a disputed assessment would have pushed them, the state Tax Commission decided Wednesday.

Sitting as the Board of Equalization, the state commissioners crafted a compromise plan to come up with legally acceptable tax values for the North Idaho county. Until all the numbers are run and the calculations made, it won’t be clear just how much home values will increase, but it will be less than the average 62 percent jump the earlier assessment settled at.

County commissioners passed a resolution to roll back values to 2005 levels after being besieged with appeals of the initial 2006 assessment – most of which were successful and resulted in lowering values. But Tax Commission research showed the 2005 values for homes in the fast-growing county didn’t match current fair market value either – as the state constitution and state law require.

Tax Commissioner DuWayne Hammond crafted the compromise plan, which he said would set the values “at the low end of acceptable.”

“My recommendation is to put Bonner County in the middle of all the other counties – not at the front end,” he said.

Bonner County Commissioner Karl Dye welcomed the compromise, which the four tax commissioners approved unanimously. “I appreciate the board’s consideration,” he said. “I think this is a more just value that we can take back to our taxpayers and try to explain what’s going on, and go from there.”

The tax commissioners also called for a state-supervised reassessment of all Bonner County residential property by June 1, 2007. That doesn’t mean every property would be physically reappraised, but local factors such as whether a property is lakefront, secondary lakefront, view property or rural ground would be factored into assessments.

“We’d welcome the state’s cooperation and oversight,” Dye said. “I think that’s what needs to take place.”

Dye told the commissioners in a hearing on Monday that those and other factors were overlooked when broad trends were applied to home values in the county in the original 2006 assessment. The result was simply inaccurate, he said, and the county had to scrap it and start over with the 2005 numbers.

The Tax Commission’s compromise plan applies differing percentage increases to those 2005 numbers for various cities, neighborhoods and types of property in the county.

For the most part, it calls for increasing land values by close to 100 percent, but increasing values for improvements on the land – homes – by only about 30 percent to 50 percent. For most homeowners, a large majority of their total taxable value is due to the structure, rather than the land.

Those figures then vary by neighborhood, city, and other factors. For example, a house in Priest River would see a 30 percent increase in the value of the structure, and a 100 percent increase in land value. If that’s applied to a $120,000 home for which $20,000 of the value is from the lot, it’d mean a total increase of 42 percent to $170,000.

However, other things have changed since 2005. One is the homeowner’s exemption, which was increased from $50,000 to $75,000. That means this home’s taxable value in 2005 was $70,000, and its new value this year would be $95,000, a 36 percent increase.

Other areas would see differing increases. In Dover, land values would go up 320 percent, but home values wouldn’t rise at all, and instead would stay at the 2005 level. In some rural subdivisions, home values actually would drop while lot values would double, all in an effort to more accurately match market prices.

“It’ll be an increase,” Dye said. “I feel that it will be less of an increase and more fair.”

Hammond noted that there’s also a tax reform plan up for a vote in a special session of the Legislature next week that includes eliminating a major property tax levy for schools, and replacing it with a sales tax increase. If that plan passes, homeowners in Bonner County could end up with no property tax increase even if their homes go up in value by 65 percent, he said.

Dye said, “The special session of the Legislature will have a bigger impact on what people pay in tax than this action.”

Dye and the tax commissioners noted that many people wrongly assume that a higher taxable value will mean a higher tax bill, dollar for dollar. That’s not necessarily true. If one person’s home goes up in value more than everyone else’s, that person will pick up a larger share of the tax burden. But the total amount collected is determined by the local taxing district’s budgets – not by values. The budgets are divided by values to come up with rates, so when values go up across the board, rates typically drop.

The dispute in Bonner County was only over residential property values; commissioners there didn’t try to roll back values for other types of land.

Hammond’s compromise plan used a calculation to determine the percentage increases that set a goal of reaching 95 percent, rather than 100 percent, of current market value for each area. That resulted in numbers that still fell within legal requirements for matching market values.

Tax Commission Chairman Tom Katsilometes said, “We don’t have any heartburn with Bonner County or Bonner County commissioners. Frankly, I think this has been a good exercise, bringing this issue that’s facing Idaho to the forefront. It’s not going to go away.”