Bills seek to curb budgets in growing cities

BOISE – Fast-growing Idaho communities would have to cope with new residents and businesses without spending more money under a series of bills considered by a House committee Wednesday.

The measures, co-sponsored by three key members of the House Revenue and Taxation Committee, would prevent local government budgets from growing to accommodate new construction and other growth.

“When we talk about limiting property tax and not taking into account growth factors, we are pushing the cost of new growth onto the existing residents,” warned Caldwell Mayor Garrett Nancolas, who spoke for the Association of Idaho Cities. “The demand for new services does not go away.”

Nancolas gave an example: His city grew so much that fire and police response times grew to more than 10 minutes, so it had to add firefighters and police officers. Property taxes paid for the new positions.

“If we are to continue to provide the very basic services of fire and police protection, we ask you to oppose this bill,” Nancolas said.

But Rep. Dolores Crow, R-Nampa, the committee’s chairwoman, said local governments should rethink their role and provide fewer services.

“It all comes down to watching the budget,” Crow said. “You don’t have to buy a Rolls-Royce when a Ford will do. … There’s not an unending amount of money.”

Crow is co-sponsoring three bills that came up for hearings Wednesday with House Assistant Majority Leader Mike Moyle, R-Star, and Rep. Jim Clark, R-Hayden Lake, who is the only North Idaho Republican on the panel.

Two of the bills, HB 419 and HB 478, would remove consideration of community growth from existing budget caps on local government property tax budgets.

A third bill, HB 479, would cap school budgets to no more than 3 percent growth from year to year, while also directing state revenues over a certain growth factor to property tax relief.

HB 419 would allow local budgets to increase to reflect new construction for only one year, rather than permanently. After that year, the amount would be subtracted back out of the budget, Clark explained. He said that in fast-growing communities, there always would be more new construction, so there would be enough money.

Rep. George Sayler, D-Coeur d’Alene, disagreed. “The costs of new construction and growth are permanent. They’re not one-time,” he said.

Clark’s bill also would eliminate the so-called forgone balance, which allows local governments that don’t levy the maximum tax increase to raise taxes later by the amount they’ve forgone. “All this bill says is you either take it or you lose it,” Clark said.

That clause originally was written as an incentive to local governments to not take the full 3 percent each year. Clark noted that Coeur d’Alene and Kootenai County refrained from taxing the full amount, then took advantage of the “forgone amount” later to raise taxes beyond 3 percent in one year.

HB 478, which Moyle presented to the committee, ends exceptions for growth and annexation – and even for voter-approved levies – from the 3 percent cap on local government budget growth. Instead, it says, local government property tax budgets can’t grow by more than 3 percent a year, period.

The bill drew opposition from cities, counties, school districts, an economist and the AARP. AARP spokesman Joe Gallegos said his organization thought the measure would have a “devastating effect on local municipalities.”

Sayler, who served on an interim property tax committee that held a dozen hearings around the state, said, “One of the major themes I heard this year was to make growth pay for itself. I think this is stepping away from that and putting more cost on existing property owners.”

The committee wrapped up three days of hearings on an array of property tax reform bills Wednesday, but it still has dozens of bills it hasn’t gotten to. Crow said the committee will continue to hear the bills, one after the other, at its regular meetings at the Capitol, possibly through next week.

“Then we will start getting down to voting and seeing whatever this committee of 19 will come up with,” she said. “We will do the very best we can in deliberating on this issue.”