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AIC Legislative Update: House Committee Approves Property Tax Freeze Bill & Revenue Sharing Bill Up for Hearing

Posted By Justin Ruen, Thursday, February 13, 2020

AIC Legislative Update: House Committee Approves Property Tax Freeze Bill

This morning the House Revenue & Taxation Committee voted to send the property tax freeze bill (House Bill 409) to the House floor with a do pass recommendation.  House Bill 409 will be up for floor debate and vote in the House early next week.    

We ask city officials to contact their legislators and respectfully ask that they oppose House Bill 409.  You can find your legislators and their contact information by using this tool.

The bill would freeze city, county and other non-school taxing districts’ property tax budgets for the upcoming Fiscal Year at the dollar amount each entity received for the current Fiscal Year.  The lost revenue would not accrue to a taxing district’s forgone levying authority.

House Bill 409 is premised on the flawed assumption that freezing property taxes will help homeowners in areas with rapidly escalating values.  In testimony to the committee this morning, Ada County Clerk Phil McGrane said that if a one-year property tax freeze had been in place in 2019, 82% of residential properties in Ada County would still have seen a tax increase because taxes are shifting from commercial property onto homeowners.  Without the one-year freeze, 91% of residential properties would have seen an increase. 

The Legislature has tools at its disposal to fix rising residential home values in the form of increasing and/or indexing the Homeowner’s Exemption, which was capped by the Legislature at $100,000 a few years ago, and providing additional relief through the Circuit Breaker program that helps low-income homeowners who are elderly, widow(ers), disabled, blind, or disabled veterans or former prisoners of war.

Freezing property taxes will force cities to essentially bring development to a halt, if they are unable to pay for the services and infrastructure needed to serve Idaho’s growing population.  Property taxes pay for vital police and fire services that protect our communities and maintaining our streets and bridges.

Revenue Sharing Bill Up for Hearing Friday, Feb. 14 in House Rev & Tax Committee

On Friday, February 14 at 9 a.m. the House Revenue & Taxation Committee will have up for hearing Rep. Monks’ bill to change the revenue sharing formula.  AIC is officially neutral on House Bill 408, but cities should feel free to weigh in with committee members on the bill (link to list of House Revenue & Taxation Committee members—click the link for “MEMBERS” toward the top of the page).  AIC prepared a five year and cumulative analysis of the bill, that shows the effects if the bill had been in place over the last five years (see link at end of this blog post). 

House Bill 408 would revise the formula for sales tax revenue sharing for cities, merging the current State Distribution and County Distribution.  The bill would establish new quarterly base amounts for Fiscal Year 2020 for each city based on their quarterly revenue sharing distribution, as well as an annual per capita revenue sharing amount based on the previous Fiscal Year’s receipts.  If there is no change in the amount of revenue sharing from the same quarter of the previous Fiscal Year, then cities will receive the same distribution amount.  If the amount of revenue sharing dollars for the current quarter of the Fiscal Year is greater than the amount for the same quarter of the previous Fiscal Year, then cities would receive their quarterly base amount with an increase of up to 1%.  Any revenue over and above the 1% increase would be distributed to cities with a below average per capita distribution in proportion to the population of that city to the population of all cities with a below-average per capita distribution.  If revenue declines below the amount for the same quarter of the previous Fiscal Year, then each city would receive a proportional reduction down to the quarterly base amount, and if further reductions are needed, they would be based on the proportion that the city’s population bears to the population of all cities within the state.

 

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