September 28, 2020
- Trevor Chadwick
- John Evans
- Brad Holton
- Debbie Kling
- Diana Lachiondo
- Angie Lee
- Lauren McLean (Webex)
- Jason Pierce
- Robert Simison
- Joe Stear
- Rich Sykes
- Pam White
Staff and Guests
- Joe Cox – Chief Deputy Assessor, Canyon County
- Brian Stender – Canyon County Assessor
- Leslie Van Beek – Canyon County Commissioner
- Bill Larsen - TVP
Commissioner Pam White welcomed everyone to Canyon County. She introduced fellow Canyon County Commissioner Leslie Van Beek, Canyon County Assessor Brian Stender and his Chief Deputy Joe Cox.
A-B-C-s of Property Taxes
Brian started by saying the biggest myth associated with property taxes is the Commission or other taxing district want more money and tell the assessor to raise values. That is not how it works, and Idaho’s taxation system prevents that.
His responsibilities as the Assessor is to: 1) Maintain County Base Map, 2) Track Property ownership changes, 3) Annual valuation of all property in County, 4) Apply exemptions such as the home-owners exemption, 5) Collect PTR/VA applications for the State. The State runs these two programs. If you qualify the State will pay up to $1,320 of your tax bill. State-wide last year, these two programs accounted for about $20 million.
As Assessor, he is also in charge of the DMV. This has been a mess as the software provided has not been up to the task.
- Exemptions typically shift the tax burden among payers. A home-owner exemption increase will shift the tax burden to commercial or ag. When lobbyists carve out exemptions for private interest groups, this creates a shift to homeowners. Until someone says, for example, commercial is going to pay 50% of the tax burden no matter what you do, there is no easy fix to any of this.
- Over the last 10-15 years there has been a bigger shift put on residential taxpayers. The side benefit is, we are having industry come to Idaho. Right now, industry is enjoying the benefits of this shift.
- Diana asked, why if you pull up the records on a big business in Ada County you see that they are paying significantly less in taxes than they were in 2009. Brian said it is because of lobbyist generated carve-outs and caps, that are put in place in order keep the business here.
- Brian went through the exemptions they have in Canyon County for 2020. Of a $26 billion market value summary, exemptions account for $6.8 billion. The homeowner’s exemption accounts for $5 billion and exemptions for government offices, plant investment, hospitals, religious facilities, nonprofit organizations and schools occupy a large percentage of the remainder of the exemptions.
- Brian showed a chart of values between residential and commercial/ag. The residential component of the values in Canyon County went from near 60% to almost 70% in the last four years. He believes this shifting is pretty common for most all counties.
- Regarding how a homeowner’s exemption works, for a home less than $200,000, if an assessed value goes up by a percentage, the exemption will go up the same percentage. There is a cap on the homeowner’s exemption on a value of $200,000. So, when your assessed value goes up in this case the net taxable value will go up by a larger amount.
- Joe Cox pointed out one of the exemptions that may need to be looked at. There is a site improvement exemption where investors are only paying 25% of the mark-up. Originally this exemption was put in place during the economic downturn as a means for investors to weather the storm and was an appropriate exemption at that time. Now we are growing so fast and this seems to be providing an incentive to plow up new ground.
- With regard to home assessed values, Idaho is a 100% of market value state. Assessors state-wide use the same set of principles when assessing values.
- By code, 20% of the properties have to be appraised every year. The State Tax Commission also comes and verifies that the Assessor is completing the 20% annual reinspection requirements.
- Idaho is a nondisclosure State for commercial. In residential properties the Assessor has access to what sales prices are and they don’t for commercial.
- Once they assess values, the State Tax Commission does a ratio study on their values. During this study they have a 10% variance allowable on either side of market value. The point is someone is looking at their assessed values. The State can come in and if you are not in compliance with market value, they can force your values higher or lower.
Question: Why can’t we limit the assessed value increases to a certain percentage to hold property taxes down? Brian said it wouldn’t matter. For example, he runs for Assessor and he makes a campaign promise that he is going to lower everyone’s assessed values by 10%. If we did that evenly, and we lowered everyone’s values. Levy’s would change. The dollars we want to spend would remain the same and you would spend the same amount of tax dollars on less value.
Brian said taxes are budget driven, not assessment driven. The assessment is just a reaction to a benchmark which in Idaho is 100% of market value. Really it is the tax dollars needed by budgets and the shifting of what the legislatures have adjusted to the exemptions.
Typically, the higher the sales price of the residential transaction, the smaller the amount of information they receive on the transaction. On most transactions under $200,000 they get lots of information. Then they can take those characteristics and replicate them to other homes, so you get similar values.
There is an inverse relationship on the sales price and the amount of data received on the sale. As the value of the home goes up, the amount of data on the sale that is available to use for a comparable goes down. Commercial is the same way. It is even harder because there are fewer commercial sales to generate a comparable.
When assessments are at a high enough level to where they are painful, the taxpayer will provide more information. That is common human behavior. People will participate more in the assessment if they think it is going to help them and wont if they think it is going to hurt them.
- Diana said the ultimate tax to a person is based on how fast your assessment is rising compared to somebody else. In Ada County last year, the average increase in assessment rose 15%. If you had a home in the North End or the Vista Neighborhood your taxes rose by 40% because the assessments in these areas rose so much faster than the rest of the county. Some people saw a tax cut because their assessed value only went up by 10%.
- Joe Cox said their office got conservative when Covid came on and were shooting for a conservative increase in their assessment in Canyon County. What happened was, people are fleeing Washington, Oregon, California, New York and settling here. As a result, they are seeing values accelerate throughout the community.
- Diana said she has heard the legislature say they don’t want to do anything that causes a shift. But the shift is already occurring. Reindexing the homeowner’s exemption would bring it back into some sort of equilibrium. The hard thing is, if you apply this State-wide, you will have different impacts in different parts of the State.
- One of the ideas that has been generated is to let the local county make the determination based on what is happening in the county. For example, if Elmore County is not seeing a large shift from residential to commercial, then the increase in the homeowners exemption might not be appropriate.
- For a long time, Ada County and Boise were looked at closely as a result of the growth causing increased spending. Now Canyon County, Bonneville, Kootenai and a few others are experiencing rapid growth. The fact remains, out of the 200 cities in the State, 117 have a population of 1,000 or less and 177 of the cities have a population under 10,000. So, you’re going to make a tax policy to deal with an issue happening in a minor percentage of our communities. This tax policy then would have consequences to the small communities that are not seeing the population growth.
John indicated the AIC and IAC are promoting a Transparency Strategy. The State Controller’s Office would develop a standardized expenditure reporting document that would theoretically provide information that would help with decisions on property taxes. He is hopeful for this transparency strategy will put the brakes on things till we can gather the information resulting from this.
The misperception of the legislature that cities/counties don’t control their budgets is why we have to emphasize the need to agree on this transparency strategy and get the data. Let’s develop and use a universal reporting system and then if the legislature wants to have another interim committee next year, great. At least there will be some data that will prove our point. We just have to keep asking the question, what are we doing that you don’t want us to do?
- We do have the tools now as cities/counties to communicate impacts of legislative decisions on our jurisdictions. We need to utilize social media tools to communicate with our communities the impacts that would be generated on citizens as a result of legislative actions. These social media tools and the move toward transparency and consistency across the board on expenditure reporting, should help us educate and inform our constituents.
- John said he thinks one of the things that will come out of the Interim Committee for city/county budgets is, you will either get your 3% or new construction, and you might have take your pick of these options for any increase.
- Robert asked if the Governor has weighed in at all on what he hopes the interim committee would do? It would be nice to get from him what his principles are for a solution. John said he would ask Bobbi-Jo about this.
- Ada County is going to develop a list what they expect to see out of the legislature this year. It will track with AIC and IAC will include the homeowner’s exemption, circuit breaker and school impact fees as an example. It may not go anywhere, but at least they will be able to say, this is what they advocated for and the legislature didn’t act.
- Debbie’s impression is the legislature just doesn’t understand city budgeting. They are going to work to provide this education to local legislators.
- John believes there is a distinct misunderstanding between what a budget is and what a levy is. So, we need to explain the impact on the individual taxpayer vs. what the budget is. New growth tends to dilute the individual tax burden and the legislators don’t get that. Every time you hear the word budget, you have to respond, you mean the impact on the individual taxpayer.
Cares Act Funding
- Brian indicated that some of the discussion on Cares Act participation is; so you participate and give property taxes a break in one year, later when their mortgage payment goes down people get a check. However, a year after that, when the Cares Act money is gone, and budgets have gone up some. This will become a big mess and taxpayers will be real angry when that cycles through.
- In his conversation with legislators, Joe has asked the question, what they would feel like if the city does not participate in the Covid property tax program. The first legislator said, he would assume that the city took due diligence and had excellent reasons for not participating.
- The other legislator said, he had a different take on that. There were things put in the program that make cities/counties control budgets and if cities/counties are not willing to control budgets …then that is exactly why they will not opt into the program. Legislators seem to be hung up on this perception about city/county budgets are out of control and this is not how things are.
John moved and Brad seconded to approve the minutes and financial report.