Dueling measures seek property tax relief

BOISE – Dueling property tax bills in the House and Senate look to give the relief many lawmakers say the Legislature has yet to provide this session by shifting school operation funding from property taxes to an increased sales tax. But some say the proposals could end up doing much more harm than good.

Property tax reform has been the hot issue confronting the Legislature. More than 1,000 residents packed public hearings last summer to tell a legislative committee about the need for relief and reform. But 80 days into the session, the only relief given, many say, has been increasing the homeowner’s exemption from $50,000 to $75,000. Some complain that isn’t enough.

“If we don’t do something, we’re going to have problems,” said Assistant Majority Leader Mike Moyle, of Star, the House bill’s sponsor.

Taxpayers in Idaho will be saddled with nearly $100 million more in property taxes next year because of rising home values and other factors – unless the Legislature does something, said McCall Republican Rep. Ken Roberts, who presented the House bill on behalf of Moyle.

The House bill introduced to the House Revenue and Taxation Committee on Wednesday would eliminate property taxes for maintenance and operation but increase the sales tax from 5 cents per dollar to 6 cents and would eliminate the 3 percent tax rate for school operation tax levies. It would not amend the state constitution, meaning no vote from the public is required.

Eliminating the maintenance and operation property tax, coupled with increasing the homeowner’s exemption, would reduce property taxes for owner-occupied homes by about $89.4 million, Roberts said.

“That’s where your significant property tax relief is,” he said.

On the Senate side, SJR 108 proposes amending the constitution to shift funding for public school maintenance and operation off property taxes and onto the sales tax, which would be increased to cover the cost.

The Senate State Affairs Committee voted 6-3 Wednesday to send the amendment to the full Senate without the typical recommendation that it pass; the House tax committee voted 11-8 Wednesday to approve Moyle’s bill and send it directly to the full House for a vote rather than hold a hearing.

Some opposition to the House bill centered on the fact that the 1-cent increase in sales tax wouldn’t cover the cost of eliminating the school property taxes, leaving about $40 million to be covered by other appropriations. Others said the change was too drastic to do so soon and in only one bill.

“Let’s not do something stupid just because we’re trying to get out the door,” said Rep. Jim Clark, R-Hayden Lake. “We’re going to increase taxes to get tax relief – a rather interesting concept.”

Senate opposition to SJR 108 focused on the enormity of the change and what it might do to schools that like the stability of the maintenance and operation property tax.

Senate Minority Leader Clint Stennett, of Ketchum, and fellow Democrat Minority Caucus Chairman Edgar Malepeai, of Pocatello, were joined by Senate Assistant Majority Leader Joe Stegner, of Lewiston, in voting against the amendment.

“This isn’t a little nudge fixing something. This is taking a sledgehammer to the problem,” Stennett said.

Senate Majority Caucus Chairman Brad Little, of Emmett, said that’s what the people of Idaho asked for at the interim committee’s public hearings last summer.

“We are responding to the pleas of the taxpayers out there to offer them some relief from runaway property taxes in some of these high-growth areas,” Little said. “I see it as the best way to resolving probably the biggest bur in the saddle of property tax payers.”

Stennett said past problems with properly funding public schools make him reluctant to support the amendment.

“How can we assure the schools that the funding will be there when we’ve already proven that we can’t assure them?” Stennett said.

Stegner voted against the amendment because he felt the language, which says the Legislature shall use “sufficient” funds from sales and use taxes to make up for lost property tax revenue for school districts, would incite excessive litigation over its meaning.

Little said the amendment wasn’t perfect, but given the other failed options, it’s the best one available.