BOISE — As cities and counties begin to set budgets for the coming year, it is important to understand the recent changes implemented by the state legislature, as well as the impact of the huge allocation of federal rescue funds sent to local governments. Your local officials are setting budgets now that will not simply determine the services available to residents but could negatively affect increasingly overburdened property owners. Property taxes are driven solely by these local budgets. All of us deserve to know and understand what total funds our local elected officials have received and how they are allocating our hard-earned tax dollars for the future.
Over the past month, all Idahoans who filed income tax returns or filed for the grocery tax credit have received a rebate based on the enormous surplus of state tax dollars collected in FY 2019. Not only did the legislature develop this rebate system, but we also cut taxes for all Idahoans who pay income tax by both limiting the number of brackets and reducing the rate paid for all. An attempt was also made to help control the property tax rates as set by cities and counties as they develop their annual spending by capping budget increases in House Bill 389.
Cities and counties were also provided flexibility to decrease property taxes with the funds they were recently sent by the federal government. To date, these federal funds equal more than $470.9 million; that is in addition to the increase of $42.8 million locals have received from the state sales tax distribution this year, an 18.6 percent increase. Although the state of Idaho is specifically excluded from using any federal dollars to offset taxes, cities and counties face no such constriction. They have the opportunity today to fund budgetary expenses using federal tax dollars rather than raising your property tax, and we would encourage them to do so rather than increasing their budgetary spending by way of your property tax bill.
Schools also have been afforded the opportunity to use federal funds for expenses rather than turning to property owners for payment. All Idaho school districts have received three rounds of federal funds in the form of ESSR dollars. In the latest round, ESSR3, $395.9 million has been allocated to Idaho schools for their preferred uses. Much like the cities and counties, there are very few restrictions on these funds, and they can be used in place of increased property taxes.
Make no mistake, Idaho’s property tax system needs to be updated, but we should not underestimate the amount of federal dollars pouring into our local governments that could stabilize or decrease your property tax bill. The property tax you pay is driven solely by local city and county spending, not state law or regulation. Now is the perfect time for local units of government to provide tax relief through these unanticipated federal funds while continuing to work on a long-term, more comprehensive solution. The problem is complex, but local governments have a unique ability right now to “buy time” while looking for a better solution.