Idaho’s Uni-Party of Legislators screws Idaho property owners again.
The headline reads: Property owners once again get screwed on their property taxes. Idaho’s legislature overrode Governor Littles’s veto on property taxes relief. “hip hip hooray”, don’t cheer until you realize that this 13% cut will be insignificant for the majority of Idaho’s property owners. The reason I say this is many homeowners have already been saddled with much higher property taxes because of the March 14th education bond elections. Many of these elections passed and will raise taxes for many homeowners, substantially higher than this 13% cut will decrease them.
The voting for these egregious bond issues for education that raise our taxes are held before the legislature even decides on how much money is in the budget that will be available for education. This year’s education budget is substantially higher so voting to pass these bond issues is like putting the cart before the horse. Essentially it winds up being a double dip where the taxing districts get not only the money from the new bond issues but also the additional monies voted on by the legislature’s higher budget allocation.
A Lesson in Inflation: Idaho’s state budget for education continues to expand exponentially every year and so will property taxes which will continue to choke the economic life out of homeowners and small businesses who are struggling with higher interest rates and soaring inflation. The inflation rate for 2022 was up nationally by 8.5% the highest it has been since 1982 and so far for the first 3 months of 2023, inflation is up over 6%. I ask you how much real economic relief are homeowners going to get from this minuscule 13% reduction in property taxes? The answer is very simple “NONE AT ALL”.
When the government figures the inflation rate, they don’t include Food or Energy into the equation. If you take into the rise in food and energy prices the rate of inflation far exceeds the government’s 8.5% figure. The real bad news is that from December 2021 to December 2022 Food prices increased 10.4 percent, reflecting an 11.8-percent increase in prices for food at home and an 8.3-percent increase in prices for food away from home. In the 2022 calendar year, the average price of gas increased to $4.192 per gallon from the 2021 average which was $3.133 per gallon, registering a 33.8% increase. What is more onerous is the price of natural gas the most common way people heat their homes is up over 100% from 2021. So what these figures mean is that the 13% decrease in you property tax is not going to do much of anything to help everyday people in their struggle to make ends meet.
The magic of Political Double Speak: Your legislators want you to think they did something to help you when in essence this effort to override the Governor’s veto was nothing more than a way for them to say at least they did something in this session to help their constituents. This tax cut was structured in a way that will do little or nothing to ease the property tax burden of Idahoans whose taxes have in many cases risen 25 to 50% in the last 3 years because of the rise in the valuation of their homes. Our legislators are not addressing the real problem of indexing the Homeowners’ Exemption to the yearly valuation of our homes using a real estate valuation index. This is the only fair way to solve the continuing rise in property taxes. You would think with a surplus of more than 1 billion sitting in Idaho’s treasury our legislators would have been able to do a lot better than a 13% cut in property taxes.
Residential vs Commercial/industrial property taxes: Why are residential property owners paying a larger share in taxes compared to commercial and industrial properties? We did a little research and found that a report in Aug of 2021 showed that the value of the residential properties across Ada County increased 26%, and their commercial counterparts gained 11.5% during the same time period. This means residential homeowners took on a higher burden of the local budgets with increased property taxes. We must ask the question why is there not a way to equalize the property taxes when a shift like this takes place? Let us not forget how the Little administration has given huge tax breaks to corporations such as the $50 million break for Facebook’s new server facility in Kuna. Yet when it comes to property tax relief our supposedly conservative Governor can only veto tax relief for homeowners
Equalizing the Property Tax Burden: Unfortunately, our legislature continues to ignore the fact that assessing a residential property at a value 25 to 50% higher than the previous year because of inflation is unfair. This valuation is done by an analysis based on the sales price of homes in that taxing area. The problem is created when the real estate boom ends. Sales tend to decrease substantially, and properties don’t get reevaluated and marked to the current market price which can be substantially lower. This places a greater financial burden on homeowners whose home prices have gone down from the previous assessed valuation. If the homeowner’s exemption was linked and indexed to the rise or fall in valuations using an index of real estate values calculated in real time sales, taxes would automatically be adjusted appropriately to reflect the current value of a property. Whereas we currently place the burden of proof on the homeowner to show that the valuations of their homes have declined from the previous assessed valuation. It would also reduce the necessity of tax assessors to reevaluate properties during times of volatility in the real estate market. The one good thing in this bill is it will increase eligibility for the circuit breaker, which gives a tax exemption for low-income homeowners.