BOISE – Idaho Gov. Brad Little signed a property tax relief bill Wednesday that opponents describe as deeply flawed but supporters say is better than nothing.
The Republican governor expressed his own doubts in approving the legislation that was rushed through in the final days of the legislative session last week with little public participation. The law takes effect immediately, with significant portions retroactive to Jan. 1.
“I am signing House Bill 389 because it provides some relief to Idaho taxpayers,” Little wrote in a letter to lawmakers. “However, I fear the long-term consequences may outweigh this temporary reprieve.”
The measure raises the homeowner’s exemption from $100,000 to $125,000. It also raises a property tax reduction for qualifying low-income seniors from $1,320 to $1,500. Businesses get a boost in their property tax exemption from $100,000 to $250,000.
Opponents contend that the new law will cut into basic services provided by local governments by limiting tax revenue from new construction. It does that by limiting new construction taxes to 90%. Additionally, a local government’s total budget increase can’t exceed 8%.
Little sounded like many of the bill’s opponents.
“I have always subscribed to the adage that our taxes need to be fair, simple, competitive, and predictable,” he wrote. “When considered against these pillars of tax policy, House Bill 389 falls short. The bill is an aggregate of complex and nuanced changes to Idaho’s property tax code, and I am troubled that this was introduced in the waning days of the longest legislative session in Idaho history.”
Wednesday marked day 122 of the session. The Legislature is typically done in late March or early April, but lawmakers spent much of this session in a power struggle with Little concerning the executive branch’s authority during the coronavirus pandemic. They also targeted local governments that instituted pandemic restrictions, such as mask mandates.
Meanwhile, the rise in property taxes has been a major concern of many Idaho residents who have seen their home values soar.
“I am supportive of the increase in the homeowner’s exemption from $100,000 to $125,000, but the near-exponential increases in home valuations mean the exemption will only slow the property tax increases for many Idahoans and not provide long-term relief,” Little wrote.
Republican House Majority Leader Mike Moyle sponsored the legislation.
“There are only two ways to cut taxes, you either shift it to somebody else or you cut the budgets, and I think you’ve got to do a combination of both to get where we need to go,” Moyle said after a Legislative Council meeting Wednesday that approved an interim committee to study property taxes.
Moyle said new legislation could be brought next year to advance what the newly signed bill launched.
“It’s a start in the right direction, but we’ve got a long way to go,” he said.
No Democratic lawmakers voted for the measure, and enough Republicans opposed it in the Senate to prevent a veto override had Little chosen that path.
“(The new law) does jeopardize vital local services and does not provide meaningful property relief,” Democratic House Minority Leader Ilana Rubel said. “I think procedurally it was deeply disturbing how this bill unfolded where the public had no opportunity to evaluate or weigh in on this major piece of legislation.
“I think the procedural flaws resulted in substantive flaws where we ended up with something that is not going to serve the people well,” Rubel said.
In a related tax matter, Little signed legislation Monday that has $220 million in one-time income tax rebates and $163 million in ongoing income tax relief.
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