Dramatic increases have occurred in property taxes paid by residential owners. While there are many reasons for this reality, a key component is the Idaho Legislature altering how sales taxes are shared.
COVID encouraged people to become far more reliant on internet purchases. While Amazon is the primary beneficiary of the trend, other online sales have exploded as well. Idaho’s General Fund and, thus, Idaho’s Legislature benefitted from this change by treating internet sales taxes differently than sales taxes generated at the local level. This practice negatively impacts city and county resources.
The Legislature enacted special legislation that produces a financial windfall for the state from internet sales taxes. In essence, they use this fund as their collective campaign fund. They seem to believe it is better to take credit for tax cuts at the state level. This tax shift has increased the local property tax burden.
The Legislature uses internet sales taxes as a new revenue stream that swells the state coffers while ignoring traditional sales tax sharing policies. The Legislature has conveniently neglected to acknowledge that internet purchasers still initiate these sales at the local level.
As a result of the Legislature’s new policy, the state stash is rapidly growing. It currently stands at approximately $1 billion. Parking your tax dollars in the “rainy day” fund means they are not working for you. Diverting sales taxes away from cities and counties caused some local elected leaders to believe they had no choice but to increase local property taxes.
Fortunately, some local elected officials don’t buy into that rationale. They will not become party to an increasingly broken system that requires more taxes from residential owners.
We must not encourage state legislators to continue feeding their addiction to collecting, diverting and banking tax revenues.
Idaho’s Legislature needs to answer to its constituents, the property taxpayers. They must become accountable to find better solutions. Their efforts to date have been feeble. Last year they increased the homeowner’s exemption in an attempt to do a quick fix. That meager attempt saved property taxpayers some money, but it was already too little too late for many. Genuinely focusing on taxpayer relief requires reconfiguration of our tax system.
The Legislature must shoulder the majority of the blame for forcing homeowners who have been in their homes for decades to sell because they can no longer afford the property taxes. A recent glaring example occurred in Boise. After living in the same house for decades and raising her children in that home, a widow could not withstand the property tax burden. Her tax burden made her believe her only option was to sell. Sadly, this is not an isolated story. Similar situations are occurring right here in Pocatello. They will continue to do so unless the Legislature acts to balance revenue streams so cities and counties can become less reliant on property taxes.
We often hear people put down California. We need to remember we are on the course California traveled. Their state government failed to address the heavy property tax burden, and the people revolted. They introduced and passed the corrective measures called Proposition 13. One would hope that we have learned from California’s mistakes 29 years later, and Idaho’s Legislature will focus on better solutions.
Local governments need to demonstrate they understand the hardships property taxpayers carry. Too many people are taxed to the max. Property taxpayers should be protected, not bled even drier.
A further sales tax dilemma for Pocatello is that the distribution of sales tax funds depends on their share of Idaho’s population. Idaho’s growth overall registered at 14 percent in the last census. Unfortunately, Bannock County does not compare favorably to the rest of the state. Bannock County is in the middle of the pack with a population increase of just 6 percent. Bannock County’s growth rate is less than half of Idaho’s. Chubbuck should see an increase in regular sales tax revenue based on its growth numbers. Pocatello is likely to see its revenue share decline. Our meager growth allows other cities, towns and counties to claim more significant amounts due to their faster growth rates.
Local leaders and voters need to hand the property tax debacle back to the Legislature. The message must be loud and clear: “You broke it, you fix it!”
This column was written by Pocatello City Council member Roger Bray.