By Robert McQuade,
Ada County Assessor
Last Friday I received a message left on the Boise Mayor’s hotline. The caller said, “The tax assessor must be smiling all the way to the bank thinking we were going to get any [property tax] relief.” If the caller only knew that my assessed property value increased 21% this year! As a result, my taxes will most likely go up by more than 15%. Bottom line: if I get a raise this year, more than half of it will be used to pay my tax bill.
While a 15% tax increase is hard to swallow, I at least have a clear understanding of Idaho’s tax laws and how the tax system is structured. For those of you who are as troubled as I am about skyrocketing assessments,
I’d like to arm you with the following facts so you can at least make an informed call for meaningful tax reform.
Ada County’s real estate market has experienced unprecedented growth. According to Intermountain Multiple Listing Service, the median price of all properties sold in the first quarter of 2005 was $173,300; by the 4th quarter of the same year, the median price soared by 22% to $211,575. Why is this important? Idaho’s Constitution and statutes passed by lawmakers require each county assessor to appraise property at current market value. If they don’t, the state tax commission may adjust property values to reflect the true market trend.
Land values have followed the same amazing upward trend. Many people speculate land values were only increased to offset lost revenue brought by the expanded homeowner’s exemption. This assumption is wrong for two reasons. First, any deficit created by the increased exemption could easily be made up by increasing the levy on the 49 other taxing districts. Secondly, and perhaps more to the point, continued demand for land in Ada County has caused bare land prices to explode – in some cases by more than 100% in less than a year’s time.
One other question I am always asked is, “Where’s all that extra money going?” The answer is simple; there is no extra money or “windfall,” to the county or any of the taxing districts. Other than schools, the current tax law caps local government budgets at 3%, with a growth component allowing counties to tax new construction, not yet on the tax rolls, with last year’s levy rate. Ultimately, increased property values decrease the levy rate. For example, the total tax levy for Boise residents went from a high 2.1% ($2.10 per $100, value) in 1994 to 1.76% ($1.76 per $100 value) in 1995. But as we all know, such decreases can’t offset double-digit increases in property values.
Lawmakers moved in the right direction by increasing the homeowner’s exemption to $75,000 and including land in the exemption. But as I told many lawmakers during the session, increasing the exemption by $25,000 would not lead to any real relief, since we were already seeing property values increase in excess of 20%. On a bright note, the legislature did tie the exemption to the Idaho Housing Price Index, which means it increases with market inflation instead of staying static at $50,000 as it has for the past 25 years.
Governor Risch sees the opportunity for property tax reform and seems willing to take bold steps to bring tax relief to Idahoans. Personally, I think the school maintenance and operation (M&O) budget should be covered by a sales tax increase and removed from property taxes altogether. I urge you to contact both your state representative and senator and ask them to support Governor Risch’s call for a special session to solve this property tax issue once and for all.
Robert McQuade has served as Ada County Assessor since he took office in 1995.
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