Property tax reform bills largely unchanged

BOISE – With tempers flaring, stomachs rumbling and rulebooks waving, Idaho senators spent four hours Friday amending House-passed property tax reform bills – and by the end, all the bills had survived with just minor changes.

Following the intricate rules of the Senate’s amending order, the senators narrowly rejected an attempt to double the property tax relief approved by the House by shifting all – rather than half – of school operations funding off the property tax.

“This is a profound change in public policy, and we should not do it lightly,” warned Senate tax chairman Hal Bunderson, R-Meridian. “The surveys I’ve seen show that people want property tax relief, but a higher percentage … say, ‘Don’t mess with our schools.’ “

All five of the Panhandle’s senators, from districts 1 through 5, favored the larger shift, but they were narrowly outvoted. Though votes aren’t recorded in the formal 14th Order, the Senate’s amending order, senators stand up to show which way they vote – and it appeared to be very near a tie.

“I’m disappointed on the school … piece, and I think we’ll continue to debate on that one,” said Sen. Shawn Keough, R-Sandpoint. But, she said, “Overall, I’m pleased that we’re moving forward.”

The bills that emerged from the hours-long amending process, which ran through the lunch hour and beyond, look much like those originally proposed by an interim legislative committee that Keough co-chaired.

“I’m pleased that the homeowner’s exemption came out the way that it did, relatively intact with what the summer committee recommended,” Keough said. “I’m pleased with the circuit breaker. I think those were appropriate changes.”

House Bill 422, expanding the “circuit breaker” tax break for the low-income elderly and disabled, had several minor adjustments made to lay out additional qualifications and tie eligibility in the future to a percentage of poverty levels.

Here are the other bills and how they fared:

“ HB 421, the bill to increase the homeowner’s exemption, survived four amendments attempting to scale it back. The only amendment that passed was one to tie future increases in the exemption to the Idaho Housing Index rather than the Consumer Price Index, to better reflect what’s happening in Idaho’s housing market. The bill retains its main provisions: It increases the exemption to $75,000 from the current $50,000 limit; includes land value; and ties future increases to inflation.

“ HB 676, to do away with the “developer’s discount” tax break for rural land speculators and developers, survived with just an amendment to remove a clause allowing the loophole to continue if land was sold to family members.

“ HB 680, to set up a state-funded tax deferral program to allow some low-income seniors and disabled people to defer their property taxes until after they die or sell their home, wasn’t amended.

“ HB 678, the bill to shift half of school operations funding off property taxes, wasn’t amended, despite four attempts. One of those amendments would have replaced the move with a one-year tax freeze, plus school impact fees and a renewed law requiring public notice of tax increases.

“ HB 679, to raise the sales tax by half a cent to partly make up the lost school funding from HB 678, also wasn’t amended. Unsuccessful amendments sought to raise the sales tax a full penny, or to broaden the sales tax to services.

Sen. Joe Stegner, R-Lewiston, said the state will have to look at that option eventually, as the economy now relies much more on services than goods, yet only goods are taxed. “We place, in my estimation, an unfair burden on a limited segment of our economy, and it’s only a matter of time before we have to address that in a matter of fairness to all of our citizens,” he said.

All the bills, whether amended or not, now will come up for regular consideration and votes in the full Senate. If bills that have been amended pass, they then go back to the House for concurrence in the amendments.

In addition, senators are working on new bills calling for a constitutional amendment or advisory vote to shift school operation funding from the property tax to the sales tax; those could be introduced next week.