House speaker presents property tax bill

BOISE — The third tax-cut bill of the session was introduced Tuesday, this time tackling property taxes.

House Speaker Mike Moyle presented the proposed bill, which would take $50 million from a fund that’s no longer in use and put it toward a small reduction in homeowner property taxes one time, and also would take another $50 million from online sales tax revenue and provide it on an ongoing basis toward school facility bonds and levies.

State government does not set or collect property tax revenue, Moyle said, but rising property values in the state have come with calls to help reduce the property tax burden. Local governments — such as cities, counties and school districts — largely rely on property tax revenue.

“There’s more to do on property tax relief, this is a start to get us there,” Moyle said. “One of the concerns I’ve had as we look at property taxes is, if I had my way, we would get rid of them all the way. I don’t know how to crack that nut.”

The bill builds on funds established in the 2023 session with HB 292, which created a tax relief fund that went to reduce homeowners’ property tax bills and a fund that went to school districts to go toward paying off their bonds and levies. The House Revenue and Taxation Committee voted unanimously to introduce the bill, which means it can come back for a full hearing.

It would take $50 million from the now defunct Bond Levy Equalization program — which was eliminated last year as part of a school facility funding bill, HB 521 — and put it in the fund that goes toward homeowner property tax relief. This would be a one-time transfer.

The Bond Levy Equalization fund, which used to go to school districts based on need to help pay off bonds and levies, had about $63 million left in it after it was no longer in use, Moyle said. The remaining $13 million in the fund after the $50 million transfer to the tax relief fund would go back into the state’s general fund.

The money going to reduce homeowner property tax bills only applies to a primary residence and not to voter-approved bonds and levies.

The bill would also add $50 million in additional funding from online sales tax revenue to school bonds and levies; per HB 292, each year 20% of a fund created with sales tax revenue from online purchases goes toward the school facilities fund, which can be used in order of priority to pay off bonds, then levies, then saved for future construction needs, and lastly for new bonds. This bill adds the $50 million on top of the 20% of online sales tax revenue.

Reducing school district reliance on bonds and levies for facility maintenance and construction needs is meant to reduce property taxes so residents in areas that approved those bonds and levies are not paying as much for them on their property tax bill.

The school facility funding is distributed to districts based on average daily student attendance. This distribution formula has drawn some scrutiny because smaller districts get smaller distributions but still face high costs to maintain and build facilities.

Rep. John Gannon, D-Boise, said he would vote to introduce the bill but expressed concerns of the combined impact of several proposals on the state budget.

“I do think we need to be careful,” Gannon said.

Other proposed tax cuts

On Monday, House Majority Leader Jason Monks, R-Meridian, proposed an increase to the grocery sales tax credit that would result in a $50 million reduction in the state’s revenue annually.

The proposal would increase the tax credit from $120 per person to $155 per person annually to account for the sales tax applied to grocery purchases.

Last week, Moyle proposed a reduction of the individual and corporate income tax rate and a tax exemption on some military pensions — which would reduce state income by about $253 million.

The bill would reduce the rate from 5.695% to 5.3%; it also eliminates the capital gains taxes on metal bullion from mining operations.

Moyle has said he hopes to reduce the revenue by around $400 million in tax cuts in total this session.

Guido covers Idaho politics for the Lewiston Tribune, Moscow-Pullman Daily News and Idaho Press of Nampa. She may be contacted at lguido@idahopress.com and can be found on Twitter @EyeOnBoiseGuido.