Homeowner’s exemption passes

BOISE – The property tax change most requested by hundreds of Idahoans who testified at hearings around the state last summer won Senate support on a strong 28-7 vote Thursday, after earlier passing in the House.

House Bill 421a would increase the homeowner’s exemption from its current maximum of $50,000 to $75,000. The amount hasn’t been changed since Idaho voters first enacted the exemption by initiative in 1982.

The bill also includes land value in the amount, rather than just the value of improvements, and indexes the top amount to inflation in the future.

“Good senators, this is about protecting the American dream and the home,” Sen. Shawn Keough, R-Sandpoint, told the Senate. “There are many other things we can do that will still be debated here that will provide property tax relief across the board, but this piece today is about protecting the homeowner, and I would ask for your aye vote.”

Keough co-chaired an interim legislative committee that traveled the state over the summer and held a dozen well-attended public hearings, then recommended a slate of property tax relief legislation. HB 421a was a key part of that slate.

Sen. Joe Stegner, R-Lewiston, spoke against the bill. “We’re not reducing taxes – we’re not doing anything but shifting the burden of supporting local government and schools from one group of people to another group of people,” he told the Senate. “I find that very unfair.”

But Sen. John Andreason, R-Boise, told the Senate, “In my view the tax shift has already taken place. What this bill represents is a correction to that tax shift for equity for the residential homeowner.”

Residential property has been picking up a larger and larger share of Idaho’s property tax burden in recent years, and now accounts for more than 63 percent of Idaho property taxes – up from 47 percent in 1990. In that same time period, the share of taxes paid by owners of all other types of property dropped, including commercial, agricultural, timber, mining and utility property.

The bill was opposed by the Idaho Association of Commerce and Industry, a business lobby, which said it would shift taxes to businesses. But other groups, including the Boise Metro Chamber of Commerce, came out in favor of the bill, saying businesses have benefited from the large increases in residential values in recent years.

Because the bill was amended in the Senate – senators switched the inflation index in the bill from the Consumer Price Index to the Idaho Housing Index – it still needs to go back to the House for concurrence in the amendments.

The Senate also passed HB 422a, to increase the “circuit breaker” tax break for the low-income elderly and disabled, on a unanimous vote. That bill, too, now returns to the House for concurrence in the Senate amendments.

Two other major tax-reform bills, to shift half of school funding off the property tax and to increase the sales tax to partially make up for the lost school funding, were sent back to committee for more work.

“We didn’t bring them back to kill them – we brought them back to hold them until we see what’s occurring in the House,” said Senate Local Government and Taxation Committee Chairman Hal Bunderson, R-Meridian.

A new bill is scheduled to be introduced this morning to amend the state Constitution to fund schools from sales taxes rather than property taxes. To become law, that measure would need two-thirds approval from each house of the Legislature, plus majority approval from voters in November.

The amendment is a proposal from Sen. Brad Little, R-Emmett, and was prompted in part by a suggestion from Lt. Gov. Jim Risch.

Keough said, “There are still proposals that are floating around in the House to address the issue in yet another way.”

The school-funding and sales tax bills, HB 678 and HB 679, are raising concerns about whether they would adequately fund public schools next year under budgets already approved by lawmakers, Keough said. “There’s a strong desire to make sure the schools get the money that we said they’d get.”

The Senate also has unanimously passed a resolution calling for another interim committee next summer to study property tax issues. Bunderson said bills being passed this year will address some, but not all, of the problems related to rising property taxes in Idaho, and more study still will be needed.