Idaho lawmakers write 3 bills on property tax relief. We break them down for you

Idaho Republicans have promised homeowners a bill this year to cut property taxes — but they have competing ideas for how to do it.

GOP lawmakers on Thursday introduced three bills aimed at property tax relief. One would subsidize residential property taxes using sales tax revenue; another would index the homeowners exemption, which means the exemption would increase as the value of the market does.

The third bill, which is backed by House GOP leadership, would give money to school districts for facility construction. That’s meant to ease the necessity for districts to seek bonds, which affect property taxes. The bill would also raise the exemption slightly.

“I’m glad that all of us are finally coming to do something about property tax,” said Sen. C. Scott Grow, R-Eagle, who’s sponsoring the sales tax subsidy proposal. “Our constituents, yours and mine, are homeowners, and they want property tax relief.”

Property values have skyrocketed in recent years. Ada and Canyon County homeowners saw their property values increase by 30% to 42%, the Idaho Statesman previously reported. The increase in values doesn’t always mean an increase in property tax bills, but often indicate a rise in property taxes if cities’ budgets grow.

Rep. Jason Monks, R-Meridian, who is co-sponsoring the school facilities proposal with House Speaker Mike Moyle, R-Star, chairs the House Revenue and Taxation Committee and decided to hear all three bills at once.

“It’s important that these ideas get out there,” Monks told the Statesman. “That doesn’t mean that they’ll all get hearings moving forward, but we’re going to see what the committee wants to do.”

Subsidizing property tax bills

Grow’s bill would dedicate 4.5% of annual sales tax revenue to property tax relief.

About 25%, or $600, would come off an average property tax bill, Grow said. However, the subsidy would not impact the portion of property tax bills that cover voter-approved bonds and levies.

In total, the proposal would cost the state $150 million in its first year, according to the legislation’s fiscal note. The state’s existing tax structure is “too high,” Grow said, “as evidenced by the ongoing tax surpluses.”

Last year, the state collected $1.4 billion more than forecast, the second year in a row that tax revenue surpassed expectations by $900 million or more. Another $1.5 billion surplus is expected at the end of this fiscal year.

“Structurally, we’ve got money to handle this,” Grow said.

An accountant and the co-chairman of the Legislature’s budget-setting Joint Finance-Appropriations Committee, Grow said he sought input from a range of people, including the governor’s office, local government associations, and House and Senate Republican leaders.

“We went everywhere, from the left to the right and everywhere in between,” he said. “This is what we came up with.”

Indexing homeowners exemption

Canyon County representatives are bringing back a bill to increase the homeowners exemption, which they first proposed in 2021.

Anyone who owns and lives in their home is eligible for the homeowners exemption. Taxpayers are exempt from 50% of the value of their homes and up to 1 acre of land, but only up to $125,000 of their taxable value.

Sponsored by Rep. Bruce Skaug, R-Nampa, the bill would raise the exemption cap to $224,360, or 55% of a home’s value. The bill also reintroduces homeowners exemption indexing, which would allow the exemption to go up and down with fluctuating home values.

The Legislature repealed the indexing aspect of the exemption in 2016, and property tax obligations have been out of balance since, Skaug said. While property values are increasing, owners of commercial properties are paying less in taxes, while residential property owners continue to pay more.

“The removal of the index can cause dramatic shifts to homeowners that … will continue to grow,” Skaug said. “I’m asking, and many are asking, to bring back the index.”

Property tax relief is happening in Canyon County, said its controller, Zach Wagoner, in an interview with the Statesman. But it isn’t homeowners who are seeing this relief, he said — it’s commercial and agricultural businesses.

When the homeowners exemption is capped, the same amount of tax money is collected by local governments and taxing districts, but homeowners pay a larger share while other taxpayers, such as agriculture and commercial property owners, pay less.

Targeting school debt to relieve property taxes

The proposal from Monks and Moyle also uses 4.5% of sales tax revenue for property tax relief, and it increases the homeowners exemption cap. But it primarily targets school debt.

The bill would give $300 million to school districts to pay off bonds and levies, which are funded by property taxes.

“It provides the opportunity for our schools to function and get their building needs taken care of,” Monks said. “There’s issues that need fixed that the school districts don’t have the funds to take care of.”

The legislation would pull from various existing state funds to create a new school facilities fund, to be distributed to districts based on average daily attendance, instead of enrollment.

The bill would raise the homeowners exemption to $150,000 and eliminate two of the four election opportunities for school bonds — March and August. It also would expand eligibility for the circuit breaker, a property tax relief program targeting homeowners with fixed incomes.

Moyle on Thursday repeated his mantra that the state is not responsible for collecting or spending property taxes, and that property taxes are driven by local government budgets.

County officials pushed back on that claim Thursday. Wagoner said Canyon County last year reduced its property tax budget by $14 million, but tax bills still shot up because property values rose.