Mayors, legislators picking up pieces after tax relief divide

The impact Senate Bill 1108 would have had on Idaho taxpayers comes down, quite simply, to whomever you choose to ask.

“1108 was a good bill,” Sen. Mary Souza said Friday. “It did bring down the increase trajectory of taxation facing our citizens.”

The purpose behind SB 1108 was to change the formula for property tax budgets in an effort to provide tax relief for property owners. The bill died by one vote in the Senate, 18-17.

“The reason it didn’t succeed is because the cities were worried,” Souza said.

In that respect, she's absolutely correct.

“It was a poor bill that deserved to be defeated,” Coeur d’Alene Mayor Steve Widmyer told the Coeur d’Alene Press. “It didn’t provide the relief it promised.”

The bill originally asked to send 75 percent of new construction tax revenue to cities. The other 25 percent would have gone to property owners in the form of property tax relief. Mayors from around the state reached out to lawmakers, hoping to use whatever influence they could muster to persuade senators to vote against SB 1108.

“It was totally ineffective legislation,” Post Falls Mayor Ron Jacobson told The Press.

Jacobson’s argument, with which he lobbied hard against the legislation, stems from a reduction in city budgets that he said would end up costing taxpayers, essentially robbing Peter to pay Paul.

“We use tax revenue from growth to pay for the cost of growth,” he said. “As a result, we haven’t had to increase our levy rate in Post Falls. But (the Legislature was) going to limit that to 75 percent of the new growth.

"If we’re using 100 percent of that revenue, and you take away 25 percent of it, and you have the same budget and the same needs, who’s going to pay for that shortfall? The existing taxpayers.”

Jacobson said mayors have been banging their fists on their tables for months trying to make this point to state lawmakers, but their efforts “have fallen on deaf ears.”

Widmyer concurred.

“We’ve been having conversations with the Legislature since before the end of the last session,” he said. “We’ve said many, many times the problem is a flawed assessment model, and the state hasn’t properly dealt with that. But If people want new growth to pay for itself, you don’t limit how much revenue you can draw from that growth.”

Jacobson agrees with Widmyer’s assessment of the faulty model but added that county assessors shouldn't shoulder the blame for models out of their control.

“I think what we need to do is review evaluation methods being used,” he said. “That is not a criticism of the Assessor’s Office by any stretch of the imagination. But we need to review that. We need to look at the homeowner’s exemption; it has not been updated for several years. I think we need to look at the circuit breaker and what’s available to seniors.”

But if SB 1108 won’t be the solution to providing tax relief, what will?

“I wish I knew,” Jacobson said. “We have sent information to both the House and Senate, we sat down and visited with them in person, and yet it’s fallen on deaf ears. We are more than happy to provide information to them, but if they choose to ignore it, I really don’t know what the next step would be.”

Whatever comes next, Souza, Widmyer and Jacobson agreed more than one step will be necessary on the path toward tax relief.

“There will be a tax bill coming over in the House to provide some tax relief,” Souza predicted. “That could provide some income tax relief. We could see some sort of a direct credit sent to taxpayers. There isn’t one solution to this problem. There are a lot of moving parts to this...But SB 1110 would have done some good things. It was a start, a good first step.”