We’re almost to the end of another Idaho Legislature session, and our lawmakers are still considering several bills that could have major impacts on our industry. We’ll walk through the basics of those bills in just a moment, but before we do, I’d like to extend a friendly reminder.
Idaho lawmakers typically are in session only from January through March, which gives us a limited window to contact them — fortunately, as Treasure Valley residents, we have easy access to their offices. The bills before the Legislature now will have an outsize impact on our communities and your bottom line simply because we are the fastest-growing region in the state. If you see something here that concerns you, now is the time to exercise your right to contact lawmakers.
With that said, let’s take a look at the bills lawmakers will be tackling in the last few weeks of this year’s session.
House Bill 409 is one of the most controversial pieces of legislation before the House this year, and it addresses one of the most contentious topics in the state: property taxes. The bill’s sponsor, Rep. Mike Moyle (R-Star), is proposing a freeze on property tax budgets for fiscal year 2021 that would affect all taxing districts except schools. Many think this would directly hold your property taxes at their 2019 rate, but that may not be the case. Too many other factors affect how property taxes are calculated to know for sure.
Under current law, taxing districts can increase property taxes up to 3 percent per year. Additional increases are calculated by the rate of growth — for example, if construction in your city surges by 2-3 percent, your local taxing district could increase their budgets by 5-6 percent, which affects property taxes.
Opponents of HB 409, such as Nampa Mayor Debbie Kling, Boise Mayor Lauren McLean, and Meridian Mayor Robert Simison, say the bill would impair communities’ ability to pay for growth. Although cities could make up some of that income through impact fees, impact fees can’t be used to pay for personnel. So, for example, Nampa might be able to pay for new fire trucks to accommodate its 4 percent-per-year growth, but under HB 409 it would not necessarily have the cash to pay for firefighters to man those trucks.
The mayors who oppose HB 409 fear that they will still need to spend the same amount of money to keep up with growth but won’t have enough money coming in to pay for it. Nampa has hinted that if HB 409 goes through it will have to issue a moratorium on building permits, which will have a huge effect on our industry over the course of the year.
This is another bill sponsored by Rep. Moyle (co-sponsored by Rep. Jim Addis, R-Coeur d’Alene) that would affect the way property taxes are determined. Under current law, assessors can value business property using income or market approaches, as well as the cost approach. HB 590 will establish a ceiling on value when using the cost approach. Every city formulates their property taxes differently, so this will affect their distribution of taxes. In the Treasure Valley, HB 590 has the potential to impact Nampa the most.
House Bill 562 would remove the current deadline to file for a homestead exemption, which allows landowners to remove up to $100,000 of taxable value on their primary residences. You’re probably familiar with this exemption that must be filed by April 15 every year. The bill’s proponents claim that the April 15 deadline puts land buyers who purchase property after the deadline at a disadvantage and this bill would level the playing field. Opponents say the deadline is crucial for budget planning and removing it would lead to fluctuating income for counties throughout the year.
This bill would allow first-time homebuyers to set up a tax-advantaged savings account similar to those used for college savings plans. If passed, individuals will be able to set aside $15,000 per year and couples will be able to set aside $30,000 per year.
If you would like to make your voice heard about these bills — and I encourage you to do so — reach out to your local representative and the lobbyists that support our industry. There may be only a few weeks left in the legislative session, but those few weeks could have consequences for the year to come.
Phil Archer is vice president - Treasure Valley manager at Fidelity National Title.