Property tax freeze sparks debate

BOISE — A proposed freeze on local property tax collections prompted some heated comments — both pro and con — during a nearly two-hour hearing Tuesday.

The legislation, sponsored by House Majority Leader Mike Moyle, R-Star, would freeze property tax collections at 2020 levels for one year. The restriction would apply to all non-school local taxing districts, including cities and counties.

Districts could exceed the cap with a two-thirds public vote. Absent that, they would be limited to collecting the same amount of property tax revenue as they receive this year. The non-property tax portion of their budgets, however, would not be affected.

When presenting the bill to the House Revenue and Taxation Committee, Moyle mentioned a “widow woman” he’s known since he was a boy who recently came to him in tears.

“The value on her home is skyrocketing because of new construction and growth, and her property taxes are through the roof,” he said. “She can’t afford it. She’s going to be put out of the home she’s lived in her whole life. It’s not fair. It’s not fair that we take people who have lived here their whole life and drive them out.”

A temporary freeze, he said, would give stakeholders an opportunity to sit down, discuss this issue and find a solution that works for local government around the state, and for the taxpayers who bear the burden.

More than a dozen people testified on the bill, including four private citizens who spoke in support and several local government officials who all spoke in opposition.

Washington County Commissioner Kirk Chandler, for example, noted that most of what counties do is mandated by state law, yet the state rarely compensates them fully for the service.

“We got $42,000 from the state (for public defense services), but our total cost is over $300,000,” he said. “So I would ask you (the Legislature) to reduce state mandates. We can’t cut our expenses without reducing what we’re required to do.”

Doug Racine, director of finance for the city of Nampa, said the issue of rising property taxes “is a highly complex issues, and this (tax freeze) is a brutally unsophisticated approach to solving it.”

Although Nampa charges impact fees, he said, they don’t cover the full cost of growth. Over the past five years, the city has grown by an annual average of 3.8 percent — something that’s expected to continue.

“So how do we pay for that growth?” Racine asked. “If we freeze property taxes, my costs are still going up. I have contractual obligations, and health care costs went up by $1 million last year.”

A one-year property tax freeze, he said, wouldn’t reduce the overall tax burden, but it would have a multi-year impact on the city’s ability to fund its infrastructure and public service needs.

Moyle was unsympathetic. He pointed out that the Legislature faced similar challenges during the last recession, yet managed to cut spending without decimating state services.

“You say, ‘How will I cut, how will I cut?’ I ask you, how will that elderly couple do it? What will they cut?” he said. “Their fixed income isn’t growing. So what do you want to tell me to tell them — that the cities can’t cut a dime out of their budgets without the world coming to an end, so they should sell what they have left?”

Fred Birnbaum with the Idaho Freedom Foundation spoke in favor of the tax freeze, saying statewide property tax collections have risen by an average of nearly 6 percent per year for the last 40 years.

“That’s not sustainable,” he said. “We need to hit the pause button.”

Some people have suggested raising the homeowners exemption will solve this issue, Birnbaum said, but the real problem is ever-increasing local government budgets. As long as they continue to rise, increasing the homeowner exemption simply shifts the burden to other property owners.

“The bottom line is, if you don’t restrict that (budget) number, you’ll never lower property taxes. You’ll only shift them,” Birnbaum said.

Nampa Mayor Debbie Kling said she and other local elected officials are on the front line of the budget wars, scrounging for dollars wherever they can find them.

“When you talk about the widow lady, my question is, what about our kids?” she said. “I’m not going to hand my children and grandchildren a mess because we dug ourselves a hole so deep we can’t get out.”

If the Legislature freezes tax collections, Kling said, “the very thing we’re trying to achieve — quality of life for our citizens — is going to diminish.”

She also took direct aim at Moyle.

“There have been a lot of accusations and, I have to say, total disrespect for local government spoken here by Rep. Moyle today,” Kling said. “I find that extremely unfortunate, and I’m offended by it.”

The committee will take additional testimony today. Depending on the time, it could also vote on whether to advance the bill to the House floor or hold it in committee.

William L. Spence may be contacted at bspence@lmtribune.com or (208) 791-9168.