“It’s like Groundhog Day – déjà vu all over again,” said Kootenai County Assessor Mike McDowell. “If they fix it again at $100,000,” as a bill sponsored by Rep. Janet Trujillo, R-Idaho Falls, would do, “we’re putting ourselves back into the position we were in in 1982.”
McDowell, who’s been Kootenai County’s assessor since 2003 and has worked for the office since 1983, said, “It’s ridiculous.”
“It will ultimately be a tax shift to the homeowners, as the value erodes,” said Bob McQuade, Ada County assessor and president of the Idaho Association of Counties.
Idaho’s homeowner’s exemption shields a portion of an owner-occupied home’s value from property taxes. It was created in 1980 with a maximum value of $10,000, then moved up just two years later to half the value of the home or $50,000, whichever was less.
McDowell said that in 1982 the average home price in Kootenai County was $55,000, so most homeowners got a full 50 percent exemption. But by 2006, the average home price in Kootenai County was up to $220,000. That’s the year lawmakers raised the maximum exemption from $50,000 to $75,000 and indexed it, so it goes up and down with the Idaho housing market, as measured by the Idaho Housing Price Index.
This year, the maximum homeowner’s exemption is $94,745. It hit a high of $104,471 in 2009, gradually fell to a low of $81,000 in 2013, and then began climbing again as the housing market recovered.
Trujillo told the House Revenue and Taxation Committee, “When we talk about good tax policy, the thing that we need to remember is keeping it stable and predictable.” The indexed homeowner’s exemption, she said, “is the opposite. … It makes it difficult for taxpayers of all types to predict their future tax burden.”
John Eaton, lobbyist for the Idaho Association of Realtors, told the committee that as home prices fell during the recession, homeowners saw their exemption fall, too, increasing their taxes. “So it really exacerbated the financial crisis that we had for the homeowners in the state,” he said.
But housing prices are now going up again. McDowell said the current average in Kootenai County is $215,000.
From 1982 to 2006, he said, the tax burden gradually shifted from all other types of properties to homeowners, because their exemption was capped, regardless of rising values. The total amount of collections isn’t changed by the exemption; just who pays which share.
McDowell said he and other county officials had just stopped in at the tax committee to see what was up, since they were in town. After the meeting, he said, “We didn’t know this was even coming – we got blindsided.” If county officials had known, he said, “We’d have had somebody from the Idaho Association of Counties” at the meeting. “Unfortunately, what they’re doing is very shortsighted,” he said.
McQuade said the exemption is rising quickly now. “For 2017, I expect it to be back up where it was at the height in 2008.”
The House committee approved the bill and sent it to the full House, where it’s now awaiting a vote. Two committee members voted “no”: Reps. Ron Nate, R-Rexburg; and Dan Rudolph, D-Lewiston.
Legislation to cut Idaho’s top personal and corporate income tax rates and raise the grocery tax credit for low-income Idahoans has passed the House on a 53-16 vote; opposition came from 13 Democrats and three Republicans.
The bill, proposed by House Majority Leader Mike Moyle, R-Star, would trim Idaho’s corporate income tax rate from 7.4 percent to 7.3 percent, and its top two individual income tax rates from 7.4 to 7.3 percent and 7.1 to 7 percent. For taxpayers who fall into the state’s five lower-income tax brackets and wouldn’t get the break, the bill includes a $10 increase in the $100-per-person grocery tax credit.
“This is a fair bill; it tries to touch all the bases,” Moyle told the House. The tax cuts would cost the state budget $27.8 million next year, $22.6 million of that for the rate reductions.
Here’s how North Idaho representatives voted:
Voting in favor: Reps. Vito Barbieri, R-Dalton Gardens; Don Cheatham, R-Post Falls; Sage Dixon, R-Ponderay; Luke Malek, R-Coeur d’Alene; Shannon McMillan, R-Silverton; Ron Mendive, R-Coeur d’Alene; Eric Redman, R-Athol; Heather Scott, R-Blanchard; Caroline Nilsson Troy, R-Genesee; and Kathy Sims, R-Coeur d’Alene.
Voting against: Rep. Paulette Jordan, D-Plummer.
Idaho’s 7.1 percent bracket applies to a single taxpayer with a federal adjusted gross income of $17,560 or more, or $35,860 for a family of four, married and filing jointly. The 7.4 percent bracket starts at a federal adjusted gross income of $21,100 a year for a single filer, or $39,400 for a family of four.
Senate Tax Chairman Jeff Siddoway, R-Terreton, told the Lewiston Tribune his panel won’t consider the bill until March, when the state’s budget and revenue picture is clearer.