City Government

Property Tax Woes Explained

GUARDIAN reader Tom Lopez sent us a rather articulate letter he had sent to Guv Butch eloquently detailing what is quickly becoming a TAX CRISES here in Idaho.

Your comments are welcome. Since the letter is long, please click on the bottom CONTINUE button to see the entire version. Tom asks readers to write their representatives and the politcos listed at the end of his letter.
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Dear Governor Otter:

Explosive growth is causing many problems in Idaho. In my opinion, the most
serious problem is the rapid and uncontrolled increase in residential property taxes.

My retirement will start within the next five years and if the property tax crisis is not resolved, after nearly thirty years I may be forced to move from Boise or even the state because of the recent and uncontrolled growth in property taxes make it difficult to plan for a retirement on a fixed income.

My property taxes have increased from last year by $1,638.04 or roughly 33 percent. My house’s value (including the lot) was assessed at $324,100.00 last year and is assessed at $456,400.00 this year.

The homeowner’s exemption increase from last year makes no material difference in my tax exposure. My house was purchased in 1996 for $220,000.00. Consequently, in slightly over ten years, according to the assessor, the value has doubled. I imagine that the house could be sold for the amount of the tax value assessment and I am not attacking the assessment.


Nevertheless, my house was purchased, not as an investment, not as income property, but for a home in which I could spend my retirement years.

The increase in growth and land speculation which has infected the Treasure Valley has unquestionably driven up property values. Property is in short supply and there is no doubt that even with the current slow down in the real estate market that property values will continue to rise. The Legislature recognized this problem in 2006 but its fix did not work. Idaho needs a new fix and it needs it soon.

The property tax law as it is now formulated in the Idaho Code mixes democratic
principles and the arbitrariness of an unpredictable market. First, I am not
against paying property taxes. I recognize the need. I believe the current super
majority requirement for levying property taxes is fair because it recognizes that
although everyone can vote, only property tax owners pay property taxes. Tax
levies are basically a democratic process.

However, the tax code provisions are not democratic when it comes to the assessment process. The criteria for raising property valuations is arbitrary and tied, not to a vote, but to forces which no one can control. This problem is magnified when it comes to a person’s primary residence. This country has always placed a high value on home ownership, yet, the uncontrollable rise in property taxes on personal residences threatens this widely held value.

The tax code is also counter-intuitive and detrimentally affects homeowners and
especially young homeowners and those approaching retirement age, and even the
economy of this wonderful state that we live in.

If I live as long as my parents lived, I will have another 25 years to live. Even at a tax rate of $5,100.00 per year, that will cost me $127,500.00 to pay property taxes. That is a lot of money that will not be spent in the local economy. Of course, the property taxes will unquestionably increase and inflict an even heavier burden on what will soon be my retirement income.

As it currently stands, I must pay $425.00 property tax each month to stay in a house. While I continue to work, this a burden but it is a burden I can manage. However, how is one to plan for retirement when the burden of property taxes cannot be adequately mapped out? How will seniors pay to maintain their houses when property taxes are uncontrolled? How will young homeowners avoid financial problems when the monthly payments drastically increase due to uncontrollable growth?

It is unquestionable that under the current tax scenario at some point during my
retirement I will have to sell my house because I can no longer afford the property
tax burden. Idaho’s property tax law will drive retired people from the state.
Is this the type of state policy we want to promote? Retirees bring many benefits
to their communities. Among these benefits is the influx of Social Security and
Medicare payments which are utilized in the local economy. Perhaps one of your
staff could calculate the loss of money flowing into the state if half of the
retired homeowners sold their homes and moved to a state where property taxes
handled in a more equitable manner.

While the calculation may demonstrate that retirees are not an economic benefit to the state, I expect that the result will be otherwise. Furthermore, Idaho’s senior citizens bring social stability to our communities. They have years of experience which benefit the entire population. Senior citizens benefit the economy and our society.

I strongly urge you to start today to build a coalition to cap property tax
valuations on a person’s primary residence at the figure the person originally
bought their primary residence. In other words, my property valuation would be
capped at the $220,000.00. If someone were to buy my house now for $500,000,
that would become the new valuation.

This change will insure that Idaho will be a place where people, young and old, can live, raise families and prosper without the threat that (inevitable) growth will drive them from their communities by making the community so expensive that it is beyond their reach. It will also allow people to calculate their retirement expense with more certainty. It will also insure that market forces and not taxes shape the housing market in this state.

This is the only method which is both equitable and fair for homeowners. Property
tax levies can still occur and valuations can still increase over time through the
levies. This proposed change should be retroactive. My investment in my house can
be recovered if I sell the house and the property taxes can increase at that time.
For those of us who want to live in their house until they die, they will not
penalized because property values increase as a result of population growth.
Let’s avoid the most dire impact of uncontrollable growth and save people’s
houses.

Tom Lopez
thl@idahodefense.com

cc: Lt. Governor Jim Risch (w/ enclosure)
Senator Mike Burkett (w/ enclosure)
Representative Nicole LeFavour (w/ enclosure)
Representative Anne Pasley-Stuart (w/ enclosure)
Commissioner Paul R. Woods (w/ enclosure)
Commissioner Rick Yzaguirre (w/ enclosure)
Commissioner Fred Tilman (w/ enclosure)
Mayor David Bieter

Comments & Discussion

Comments are closed for this post.

  1. Ken Malgren
    Jun 23, 2007, 8:14 pm

    Wells stated. I hope that the appropriate people will not only listen, but act. Unfortunately, the current makeup of our politicos does not offer much hope.

  2. I would add that our elected officials have a fiduciary responsiblility to the folks tha eleceted them to manage growth and not just let it happen. Impact fees and exactements are allowed by the Land Use Planning Act why don’t these elected officials use these tools.

    Lastly, as homeowners we do not get to participate in any way when the value of our homes go up other than the right to pay more taxes on the appreciated value. I am sure that I am not alone but my current property tax burden is now more than my mortgage payment was when I retired my mortgage in 1994. There is something fundamentally wrong with this deal and the state legislature simply will not deal with this problem.

    Every time they float a bond issue they tell us the levy rate won’t go up. Joke is on all of us as the assessed values do go up and so do your taxes. With all the increased valuations why isn’t the levy rate going down? Simple, your elected officials are spending money like drunk sailors on payday.

    I am simply disgusted with the whole rotten deal.

  3. We need to completely separate the amount of property tax from the value of the property and levy it based only on the cost of delivering services to that property. All other funding for cities, counties, and schools should come from other sources.

  4. I am another one that will not be able to afford my property taxes when I retire. I bought this place 7 yrs ago and thought it would be my last house to buy and one that I would retire in.

    I didn’t buy it for profit, I bought it to live in and retire in. Now what does a person in my postion do? Where do I move to? Will there be no place for family’s like mine to retire and not be afraid the goverment will force me out of my home.

    I agree with Tom Lopez idea’s and protecting my property from goverment seizures. How do we get this greedy bunch running this State to understand the common family?

  5. I agree completely, however the blame for the property tax scam needs to be placed at the feet of those who keep perpetuating the system. That would be Idaho Republican politicians and your friends and mine, the rank and file Idaho Republican voters who keep electing these greedy legislators who only care about re-election.

    They are the ones who benefit from developer paid election fund handouts. This state is owned ,run and operated for and by Republicans. If you don’t like the system ask an Idaho Republican how it is working for them.

  6. Robert McCaw
    Jun 24, 2007, 5:32 pm

    California, a bad word for most Idahoans, passed Prop 13. It capped the homeowners assessment at the purchase price. It was also transportable within a few SoCal counties so seniors could move and provide space for growing families. The state did not go bankrupt as predicted. I firmly believe that a prop 13 is necessary in Idaho as my assessment increased about 57% and on a retirees fixed income it really hurts!

  7. No, Robert, the state of California did not go bankrupt from Proposition 13; the state does not receive money from property taxes, local governments and schools do. But some of the counties have gone nearly bankrupt while community services and schools have suffered.

    California, which pioneered driver’s training, dropped it entirely. Many schools have no music program. Libraries and other institutions have suffered. Senior citizen programs are a shell of what they were. In addition, some things receive more state funding than previously, allowing for more state control at the local level.

  8. PROP 13 NOW
    Jun 25, 2007, 4:24 am

    We need a Prop 13 NOW that would cap our value at what we paid for the house when we bought it.

    The government will not go under and it is the only way we can disconnect this out of control money grab.

    When values go down you will NEVER see your taxes go down. PROP 13 NOW!

  9. I spent 35 years working nights and weekends rebuilding older houses that I could use as rentals with the plan they would supply me with retirement income. Now because I have to subsidize out of state developers so they can make big money in Idaho I can’t afford to keep some of my property, simply because I can’t continue to raise the rents to cover the taxes.
    I am also very angry that our beloved officials managed to schedule the vote for the new state college just 2 or 3 weeks before these latest assessment notices came out. How about letting us vote on that one again!!!!
    And you can’t blame it on one party, they are all a bunch of power hungry greedy people. All our politions see anymore is POWER and MONEY!!!

  10. First of all, California schools are NOT in financial trouble because of Prop 13. The money rolling in to local govts is still huge. There are other problems facing the schools–starting with their administrations.

    You list the types of courses NOT being taught. You should also list the ridiculous courses that are. Pointing a finger at Prop 13 as hurting schools is a completely bogus issue and has nothing to do with protecting seniors and others from being taxed out of their homes!

    Prop 13 is needed in Idaho. The legislature says its too difficult to “change the law” to accomodate property tax protections. Well, they certainly manage to find other ways to “change the law” when they wish to for other reasons. For them to say it’s too difficult to protect citizens is nonsense.

    It’ll going to be very interesting in this state as the Baby Boomers begin to retire and find they can’t afford massive property tax. When they lose their homes, where are they going to go? Hmmm?

  11. Deep Throat II
    Jul 2, 2007, 3:52 pm

    Why are you people “asking” the Gov and politicians for property tax relief? They work for you, not the other way around. “Tell” them what you want done and “make” them do it, i.e. stop taxing you to death. They have no power that you don’t grant to them.

    Property taxes are one of the most stupid and onerous of taxes. Change it to a sales tax or a voluntary lottery or whatever but dump the damn property tax.

    You all know, I hope, that the real problem is not taxation but rather unbridled spending by the politicians. And you all should know that they spend spend spend because they want to route YOUR money into their pockets or the pockets of their friends.

    In fact, with no gold standard backing our hyperinflated paper dollars, the politicians don’t even need to tax us anymore. The private Federal Reserve can print up as much paper as it wants. Taxation is simply the govt’s method by which to convince the suckers that they are supporting their govt. The states may not legally be able to print dollars but they sure rake ’em in from the feds via grants and earmarks. Why not just let the cities, counties, and states print up whatever they need? That’s about what’s going on anyway under a different name.

    So let’s all stop whining about the best way to implement property taxes when we all know that the real solution is to dump property taxes altogether. And if I hear one more idiot claim that we need property taxes to pay for our absurd socialist pub ed system, I will barf on their social studies book.

    OK, I heard that. Barf.

    DT II

    P.S. By the way, housing prices are not going up because there is a shortage of homes or property, you dummies. The problem is an oversupply of dollars, not a shortage of commodities. Inflation of the money supply causes a general rise in prices. You are in the middle of a taxflation. Wake up.

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