Op-Ed: Legislators missing the property tax bus
| February 10, 2021 1:00 AM
The Idaho Legislature, including representatives from this area, claim they are working on bills to fix the issue of rapidly rising residential property taxes. Either they misunderstand the way property taxes actually function or they are seeking to limit the ability of local entities to make decisions and are using the very real issue of rising taxes as a strawman.
Currently, Sen. Souza and Rep. Addis are working on a bill which would cap cities’ ability to collect taxes related to new growth and annexation around 2-3%, depending on inflation. This retains only about one-third to one-half of the funds recently available from these activities.
These growth dollars have been the primary reason the city of Post Falls has not been taking property tax increases. These dollars assist with paying for the increased cost of services. Capping taxes may sound good on the surface but, as it often does, a deeper look reveals a different story.
The city of Post Falls has not taken a tax increase for more than 12 years except for transferring the streetlight fee to property tax six years ago. However, you may note, residential taxes have increased. How is that possible?
Currently, taxes to homeowners are rising as home values are increasing faster than commercial property values. Because each property pays a share based on its value, this means homeowners are now carrying part of the tax burden previously carried by commercial properties.
Collecting taxes related to new growth and annexation allows new members of the community to pay their fair share. Basically, those new members bring their checkbook with them. If this is restricted, cities will be forced to decide between decreasing services, like public safety, street repairs, and parks maintenance for all community members or denying annexations beyond a small number per year.
We’ve all heard about the current housing market, even with many approved annexations across the prairie. If we artificially limit the housing market due to a cap imposed by state legislators, our housing prices will likely increase even more dramatically. If there is no fix to prevent a further shift, those rising values will again mean higher taxes for homeowners.
As a city, it is our goal to lessen the real estate property tax burden on our citizens. There are ways to address the core driver of rising residential taxes, the imbalance in residential taxable values increasing at a faster pace than commercial taxable values.
These fixes include indexing the homeowner’s exemption, improving the circuit breaker program, and capping increases in assessed values to name a few, and these have been shared with legislators. Unfortunately, they seem to have already made up their minds.
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Ron Jacobson is mayor of Post Falls.