Will lawmakers seek Prop. 13-style tax cap?

Published by admin on Wed, 02/19/2020 - 10:14am
Property taxes are a bit of a hot-button issue at the Idaho Legislature
these days.
There are bills before lawmakers in the House and
Senate that seek to put the brakes on escalating property
taxes.
The most egregious situation is those homeowners
on fixed incomes who have lived in their homes for decades
and now are getting socked with big tax bills.
The assessed value of their homes is going up and up.
Sure, they are getting rich on paper with the appreciation
in value. The thing is, they don’t have any intent to sell. They want
to stay in the home they have owned for 40 years, but the tax bills get bigger.
If they did sell, they could no longer buy back into the neighborhood because
home prices have gone through the roof.
The classic example of this was found in California.
You had residents who bought their modest ranchstyle
homes in the 1950s or 1960s. Then real estate
prices began to skyrocket in southern California.
The home they bought for $35,000 all those years ago
was now assessed at a million dollars and they were
getting $20,000 property tax bills every year.
The answer to out-ofcontrol property taxes was Prop. 13,
a popular initiative that passed with a two-thirds vote in 1978.
It put a cap on property taxes. Some derided it
as draconian, but it was effective. It was
an anti-tax statement punctuated with an
exclamation point.
Under Prop. 13, the annual real estate tax on a parcel of property
is limited to 1 percent of its assessed value. The assessed
value can only increase by a maximum
of 2 percent per year.
The cap protects those who want to stay in their homes but face getting
forced out by increasing property taxes bills. If the property changes ownership,
the assessed value can change.
I could see Idaho lawmakers taking the same approach and swinging the
same sledgehammer.
There are a couple of bills in the Legislature that could help homeowners
who are getting hit with big property tax bills with a different approach.
One way, as some lawmakers have suggested, is to index the homeowner’s exemption.
As the assessed value of a home rises, so does the exemption.
The Legislature capped the exemption in 2016. That has led to higher property taxes for homeowners.
Ideally, the property taxes that pay for streets and libraries and fire protection and many more
services are spread out over many taxpayers, including the businesses.
In past years, the policy shift in Idaho has been to put more of the property tax bill on homeowners.
Commercial and ag property have lagged in assessed value, pushing the tax burden to residential.
A Prop. 13 approach to property tax reform will force taxing districts, cities, counties and
others to make difficult budget choices.
It’s sort of like, here are the property tax dollars you are going to get. Adjust your budget accordingly,
regardless of need. If it means cuts, too bad.
Steve Lyon is the editor of the Weiser Signal American.
Contact him at scoop@signalamerican.com.

 

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