Eye on Boise: Idaho homeowner’s exemption could lose inflation index

Legislation to remove the annual inflation index from the homeowner’s exemption has cleared a Senate committee and is headed for a final vote in the full Senate.

The Idaho Association of Realtors, which is pushing the bill, says having the maximum exemption indexed to the ups and downs of Idaho housing prices has led to instability and unpredictability, and meant the maximum exemption went down during the recession, when homeowners needed relief the most.

But Latah County Assessor Pat Vaughan told the Senate Tax Commission that in his county, the indexed exemption was a “very significant property tax break for homeowners” that “undoubtedly helped many homeowners be able to afford their mortgage and insurance and stay in their homes throughout the recession.”

Sen. Dan Johnson, R-Lewiston, joined the committee’s two minority Democrats in opposing the bill, but it passed on a 6-3 vote.

“Really what we’re talking about here … it’s a tax shift,” Johnson said. “Setting the exemption at $100,000 is not going to eliminate the tax shift. It really just comes down to whose ox is gored.”

The exemption shields from property taxes half the value of an owner-occupied home and lot, up to a maximum value that changes each year with the index. The legislation would set the maximum exemption at $100,000 and leave it there, even if home values increase. Under Idaho’s property tax system, if one type of taxpayer gets an exemption, all others pay a little more to make it up.

Homeowners pay 45 percent of the property taxes in Idaho, according to the state Tax Commission. Commercial property accounts for 28.6 percent; nonowner-occupied residential property makes up 19 percent; and all other categories, including farmland, are in the low single digits.

Sen. Steve Vick, R-Dalton Gardens, asked Idaho Association of Realtors lobbyist John Eaton why his group proposed the bill, when “it would appear that if we pass this bill, then going forward … more taxes are going to be paid by homeowners than by the other sections, if prices go up.” Eaton said Realtors also deal in second homes and other types of property, and boosting businesses means “more people who want to buy homes.”

Senate Tax Chairman Jeff Siddoway, R-Terreton, said, “If it were up to me, I probably would just get rid of all the exemptions on homes,” and lower overall rates.

Sen. Cliff Bayer, R-Boise, said the indexing, first enacted in 2006 after the exemption lost much of its value to inflation over the previous two decades, didn’t provide him with much relief on taxes on his home. “I do subscribe to some measure of stability and predictability,” he said.

The bill earlier passed the House, so it just needs full Senate passage and the governor’s signature to become law.

Powdered booze ban

Reps. Vito Barbieri and Kathy Sims unsuccessfully tried a rarely used maneuver Friday to kill the bill outlawing powdered alcohol, which is being marketed as “Palcohol.”

When the bill came up for amendments in the House, to add a clause exempting medicines from the ban, Barbieri, R-Dalton Gardens, and Sims, R-Coeur d’Alene, proposed another amendment: striking the enacting clause. That would kill the bill, giving it no effect.

House State Affairs Committee Chairman Tom Loertscher, R-Iona, said, “This amendment is very unfriendly to the bill. … This is an amendment that was not even discussed,” when the committee heard the bill. “It came out with a pretty darn good vote out of committee. This is an amendment we need to defeat.”

The hostile amendment was defeated on a voice vote. “I wanted to kill the bill,” Barbieri said. “I thought it would be a creative way to do so.”

Barbieri said he thinks the state already has enough control over the types of liquor bought and sold in the state; the state Liquor Division, which proposed the bill, could simply not purchase or distribute powdered alcohol. “And if an individual just happens to have some from another state, that shouldn’t be a crime,” he said.

So far, 27 states already have banned powdered alcohol.

Party-line vote on minimum wage pre-emption bill

The House has voted 55-14 along party lines in favor of a bill that bans local ballot measures or ordinances to increase the minimum wage. Idaho’s minimum wage is $7.25 per hour.

“This bill does not increase or decrease the minimum wage,” said the bill’s lead sponsor, Rep. Luke Malek, R-Coeur d’Alene. “It clarifies the appropriate structure of government. … Local government can be just as tyrannical as the oft-vilified federal government. Power can be abused at any level, and when it comes to minimum wage, a patchwork approach is bad policy.”

All 14 House Democrats voted against the bill; 55 Republicans voted in favor and one was absent. So far, just one Idaho city, McCall, has had a local ballot measure to raise the minimum wage; it failed.

Betsy Z. Russell covers Idaho news on the Eye on Boise blog at www.spokesman.com/ blogs. She can be reached at (208) 336-2854 or by email to betsyr@spokesman.com.