Property tax amendment clears first of many steps
If approved, amendment would allow Legislature to tax private companies that lease government property
BOISE — A proposed constitutional amendment that would allow the Idaho Legislature to put government property leased by private companies on the tax rolls took its first step in the long road to approval.
On Tuesday, the Idaho House Revenue and Taxation Committee sent a proposal to the full House from Rep. John Gannon, D-Boise, House Majority Leader Rep. Mike Moyle, R-Star, and Rep. Steven Harris, R-Meridian, that would allow lawmakers to pass legislation in the future allowing for the taxation of state or local government-owned property being used by private corporations.
This could affect a wide variety of property, including private tenants at the state-owned Hewlett-Packard campus in Boise, private companies at airports and public-private partnerships for affordable housing where property tax breaks are used as an incentive for developers to build lower-cost residential projects.
In order to pass, constitutional amendments require two-thirds majority support from both the House and Senate, as well as approval from a majority of voters in November.
The proposal passed out of committee on a voice vote, with a few in opposition including Rep. Lauren Necochea, D-Boise, Rep. Priscilla Giddings, R-White Bird, and Rep. Tammy Nichols, R-Middleton.
Gannon stressed multiple times during his presentation that if this passes, the government would not automatically begin levying new taxes. This proposal would only give the Legislature the authority to create a law in the future requiring private companies in publicly owned spaces to pay property taxes.
Residential property values are spiking in rapidly growing areas of Idaho, especially in the Treasure Valley. Gannon said changing the law so Idaho could add more commercial property to the tax rolls would lessen the shift in property tax values from commercial to residential.
In Ada County, for example, the property tax burden is shifting more heavily onto residents. In 2017, the county’s property tax revenue was split 68 percent residential and 32 percent commercial; by 2019, that had shifted to 70 percent residential to 30 percent commercial, the Idaho Press reported in July.
“So residential has gone up, and commercial is down,” Ada County Assessor Bob McQuade said at the time. “This is a big change. Even though it’s only 2 percent, it’s a big change.”
The proposed bill, Gannon said, “opens the door for fairness in our system. We’re not going to make anybody happy making people pay property taxes in an unfair system.”
Gannon gave the example of Boise State University’s move earlier this month to purchase a 90,000-square-foot office building on Broadway Avenue, where it leases space; the purchase is part of its long-term plan to move administrative offices off-campus, according to Idaho Education News. The building’s property tax bill came to $156,318 in 2019, and the sale would take this completely off the tax rolls, even though other private companies still will be leasing space there for the time being.
Rep. Jake Ellis, D-Boise, questioned Gannon on how this proposal could impact Boise’s strategy to use public-private partnerships to build affordable housing. In lieu of state funding for housing projects, the city has been developing a model where it leases its own land to for-profit developers to build on and they do not pay property taxes on the land as an incentive to keep rents low.
Giddings voted against the proposal after hearing concerns from cattle ranchers whose herds graze on publicly owned land. Gannon said this would not affect grazing land owned by the Department of Lands, but he said he was not sure how this could affect grazing on county-owned land.
