Moscow Mayor Bill Lambert is one of many local government officials across the state who says essential city and county services will be restricted if legislation that would freeze Idaho property tax rates is adopted.
The House Revenue and Taxation Committee recommended last week approval of House Bill 409, which is sponsored by House Majority Leader Mike Moyle, R-Star.
The House will vote on the bill as early as Tuesday.
The legislation would freeze the property tax portion of a taxing district’s budget at 2020 levels for one year with the exception of school taxing districts. It would not freeze property tax bills for individual homeowners.
Almost all private residents who testified on the bill supported the freeze, according to the Lewiston Tribune.
Lambert said services, such as police and fire, are things communities need.
“The problem is when we make cuts you usually get rid of popular services or cut back on services in order for it to work,” Lambert said.
He said “shotgun approaches,” such as the proposed property tax freeze, “come back and bite us and haunt us.” Lambert said tax reform — not a tax cut or gain — is what is needed.
“His idea of getting cities and counties involved is just to tell them what they’re going to do,” Lambert said of Moyle. “He really doesn’t like anybody coming to the table with other ideas.”
Lambert wrote a letter to Rep. Caroline Troy, R-Genesee, and Rep. Bill Goesling, R-Moscow, earlier this month asking them to oppose House property tax bills 353 and 355, which were also introduced by the House Revenue and Taxation Committee.
House Bill 409 replaced 355, which proposed freezing property tax budgets for fiscal year 2021. The only difference is 355 included school taxing district freezes.
House Bill 353 is still in the Revenue and Taxation Committee.
“Both bills create bad law and seek to restrict the essential services provided by cities and counties to our citizens,” Lambert wrote.
House Bill 353 would cap property tax growth at 3 percent per year, which is the current law, but would prohibit local governments from taking revenue amounts for new construction and annexations.
“The practical effect of this flawed legislation places the increased costs of providing services to newly constructed homes and businesses and annexed properties on the existing tax base,” Lambert wrote. “It is a basic tenet that growth must pay for the additional services that the growth requires. It is unfair to expect that the current tax base should pay for those additional services.”
Moscow takes a much lower portion of property tax dollars than virtually all other Idaho cities of comparable size based on its low levy rate and the makeup of property ownership in the city, Lambert wrote.
The city’s levy rate in fiscal year 2018 was $4.92 compared to a state average of $7.35. The levy amount used to serve the entire city is paid by about 50 percent of property owners within the community because of the large number of tax-exempt properties, such as university and church properties.
Lambert also challenged the Legislature in his letter to allow local governments the authority to implement a voter-approved local option sales tax, which will help reduce dependence on property taxes. A local option sales tax is often used as a means of raising money for local projects.
Goesling said last week he opposes House Bills 353 and 355 but could not immediately be reached for comment regarding 409.
“It hits our community really hard,” he said of the two bills.
Goesling said he believes large Idaho cities are comfortable with the two bills. But towns like Moscow and Plummer need that extra revenue to operate each year.
“I think if we’re going to really resolve this whole real estate tax situation, it’s got to be a cooperative process between the state and the counties,” Goesling said. “And we’ve got to get this finger pointing at each other behind us.”
Goesling agreed with Lambert that a local option sales tax is appropriate. He said he is also interested in the benefits of an impact fee, which is a fee imposed by a local government on a new development project to pay for all or part of the costs of providing public services to the development.
Troy said two weeks ago she was leaning toward opposing 353 and 355, and she shared the same opinion Friday regarding 409.
However, she said, there is a great deal of concern about rising property taxes and the impact they are especially having on residents with fixed incomes.
Troy said officials need to continue to look for solutions that work best around the state, not just in areas that are growing the most, such as the Treasure Valley.
She said Lambert’s letter reinforces her beliefs.
She recently met with members of the Latah and Benewah counties highway districts, and they expressed concern about how they will continue to maintain roads. Genesee and Plummer mayors have also voiced the same worries as Lambert.
“This is more than just a Moscow problem,” said Troy, who along with Goesling, represents Latah and Benewah counties. “This is certainly something that mayors around the district have felt strong enough about and then the highway districts have felt strong enough about to reach out to us.”
Garrett Cabeza can be reached at (208) 883-4631, or by email to firstname.lastname@example.org.