OPINION: Speaker Moyle’s half-billion dollar property tax folly

Homeowners are in for a bitter shock this month: Their property taxes are going up — again.

For that, they can blame House Speaker Mike Moyle, R-Star — again.

On Moyle’s watch, the GOP-led Idaho Legislature has allowed the citizen-passed Homestead Exemption to languish. A creature of an early 1980s citizen initiative, the exemption is supposed to spare half of a modest home’s assessment from property taxes.

But lawmakers capped its maximum benefit at $125,000. To cover years of inflation in the real estate market, the State Tax Commission says the Homestead Exemption ought to be placed at $238,154.

So the owners of every home worth more than $250,000 — and that’s most owner-occupied dwellings — are paying more than their fair share.

Think of Idaho property taxes as an equation. As the share of taxes borne by homeowners rose from 64% in 2017 to 75.2% last year, the burden imposed on commercial businesses actually dropped from 28% to 20% during the same time frame.

Rather than address that inequity, however, Moyle threw money at the problem.

Moyle could afford to do that. Because Idaho’s booming economy generated a flood of surplus cash last year, $314.1 million was available for relief at tax time.

This year there’s less money. In all, the state will spend $246.2 million — but the lion’s share of that will be distributed to school districts. The amount of money meant to benefit homeowners has dropped from $191.8 million last year to $117.8 million this year. And the account that funneled broad-based relief to all categories of property owners fell from $24.6 million last year to nothing today.

What does that mean?

Here’s the ground view:

-- Owners of a home in Lewiston’s Normal Hill will pay $2,922, beginning with the first installment due on Dec. 20.

That’s up from $2,625 those residents owed last year but it’s still less than the $3,239 those residents owed in 2022.

However, Moyle’s tax relief only went so far in reversing the spike. In 2021, for instance, the Normal Hill homeowners paid only $2,366 in property taxes.

-- Now consider the taxes a Lewiston car lot owner paid. Each of the past four years, the taxes on that lot have dropped. In 2021, it owed $87,099. The next year, the bill dropped to $75,964.

In 2023, the car lot’s tax dropped again to $74,837. The latest property tax bill on that commercial property has declined to $72,423.

Countywide, the picture is much the same.

Assuming lawmakers had both extended this year’s tax relief and upgraded the Homestead Exemption for inflation, the amount of residential property taxes due in Nez Perce County actually would have dropped by 14.5%, according to the State Tax Commission. Much of the savings would have come from Lewiston schools, which — owing to the unique structure of their supplemental levies — would have lost about $2.5 million.

At the same time, an up-to-date Homestead Exemption would have begun to reverse the tax shift. Taxes on Nez Perce County commercial properties would have increased 7.4%.

And you can see the same pattern play out at the state level.

Even though real estate inflation tamed this year — values on residential holdings were up only 2.6% — homeowners will pay 9% more. At the same time, the value of commercial and industrial property was 5.7% higher than a year ago. But those owners saw their taxes rise only 3.1%.

Finally, look over a series of charts making their way through legislative circles. They reveal:

-- Property taxes on Idaho homes reached their peak in 2022. While Moyle’s tax relief lowered the bill last year, taxes are going up again.

-- Had the Legislature provided no extra money these past two years but upgraded the Homestead Exemption’s top benefit to $238,154, taxes on homes would have dropped in 2023 and remained stable this year.

In other words, Moyle has blown about $560 million in surplus funds to avoid taking the step that would have benefited homeowners as much if not more.

Think about what a half-billion dollars in surplus money might have accomplished for school construction. Or infrastructure. Or even repairing and expanding Idaho’s congested highway system.

Barring a reversal of fortunes, Idaho may have even less money next year to forestall the coming round of tax hikes on homeowners.

Will their rising tide of discontent be enough to persuade Speaker Moyle to finally acknowledge the folly of his ways and adjust the homeowners’ tax break?

Don’t bet on it. — M.T.