Senate tacks years onto ag exemption

BOISE – A plan to let developers reap most of the benefits of a tax break for the next 14 years has cleared the Idaho Senate.

Changes to a House-approved bill that was supposed to reign in the tax break over time were made on the Senate floor on Wednesday.

But the Senate changes will give some landowners more time to enjoy the tax break than the original bill sent over by the House.

The exemption was first passed in 2002. It allows landowners to keep their property valued at “agricultural” status until construction begins and value increases.

The tax break was originally intended to help farmers with land they had prepared to develop but had not yet sold. However, the law started being used by land speculators and others eyeing a place to build or retire in the future.

In Valley County near Tamarack Resort, land has been selling for half a million dollars. But new owners end up paying only between $30 and $70 in taxes for each lot.

Republican Brad Little of Emmett called it a “corruption of the ag exemption” that has resulted in developers getting “a heck of a deal.”

House Bill 254 passed the House 61-7 on March 7. As it was written, the bill would have restricted the exemption to land actually being farmed, while slowly weaning property owners off the tax break over the course of 10 years.

But on the Senate floor Wednesday, lawmakers changed the bill so that landowners would be taxed based on just 5 percent of the property’s value for 14 years. Selling the parcel, being annexed into a city or building on it would break the exemption under the Senate amendment.

The amended bill will now go back on the Senate calendar for a vote. If the Senate approves it, the measure will be sent back to the House.