On a much more serious note about the #idleg, @ClarkWardleLaw is really concerned that the new tax bill that just passed the Idaho Senate will have a very deleterious impact on small taxing districts without significant tax bases.
#HB389 is a poorly developed grab back of random tax measures.
All taxing districts are now subject to a hard cap under HB389 on annual increases in their budgets of 8%. The proponents say that cities and counties and school districts need to live with in their budgets.
For a city with an annual budget like Nampa which has a budget of $200M for the next fiscal year increased about 3.5% from $193M last year in large part due to capital projects associated with the new Amazon Fulfillment center. So that wouldn’t be a problem.
But what about a small service district like a rural highway district that has a budget of about $5M? (Golden Gate Highway District No. 3) an 8% cap is an increase of $400k which is less than the cost of a single roundabout or intersection reconstruction.
If an economic development project were to be approved by a city or county within its boundaries and even if the project were to totally fund expansion of roads or irrigation systems through impact or connection fees and the project was a net taxable benefit
The highway district would be capped by the expansion of its budget, which means that either the improvements are exacted to keep them off the budget or the district forgoes the projects and growth doesn’t pay for itself.
This could easily be any small rural service district for fire, highways, stormwater, mosquitos, any taxing district that has a small budget.
The big cities and counties will be able to adapt, the small taxing districts without land use authority won’t, and rural economic development will be stifled.
By capping the budgetary increase at 8% even with allowing for 90% of the value of annexations or the value of the new constriction roll you will still have existing tax payers subsidizing growth.
And many of the advocates compare municipal budgeting like a family. “My family has to budget why don’t they?”
Good question. What #HB389 does in a domestic setting is this. Small family has struggled as Mom has finished an accounting degree. They are frugal and live modestly. Mom gets a job as an auditor at $60K which is more than 1.5x what she had been earning as a CNA. Good for her!
But if Mom were a taxing district, no she is punished for increasing her tax base. Notwithstanding her improved opportunities and efforts she can only accept a pay raise to $43200.
What is the point of this? MUNICIPAL BUDGETING HAS NOTHING TO DO WITH YOUR HOUSEHOLD BUDGET SENATORS. STOP USING THAT AS YOUR EXAMPLE. #IDLEG #IDFail
And a couple more notes. Jurisdictions that appropriately impose impact fees and have aggressive capital improvement plans funded by impact fees on new growth could be damaged.
And big self contained jurisdictions with significant tax bases will benefit to the detriment of smaller jurisdictions. Can Kimberly aggressively pursue economic development for Chobani or Glanbia adjacent suppliers? It will be capped and Twin Falls will remain able to.
So small bedroom communities are doomed to be the same. Small high growth communities will be capped. And growth will flow to larger municipalities who can absorb it.
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