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Legislative Alert: Contact Legislators to Oppose IACI-Sponsored Personal Property Tax Bill—HB 556

Posted By Justin Ruen, Wednesday, February 14, 2018

On Thursday, February 15 at 9 a.m., the House Revenue & Taxation Committee will consider an AIC-opposed bill that would establish a county option personal property tax exemption.  AIC strongly encourages city officials to contact their local legislators and respectfully ask that they oppose House Bill 556.

House Bill 556 is sponsored by the Idaho Association of Commerce & Industry (IACI) and would allow county commissioners to exempt all or part of business owned personal property from property taxation within the county.  Prior to granting such an exemption, the county commissioners would be required to hold a public meeting to discuss the proposal and must provide notice to affected taxing districts and urban renewal agencies.

The primary concern about this legislation is it would grant county commissioners unilateral authority to exempt business-owned equipment, machinery, furniture and other personal property from paying property taxes.  For most cities, this would mean a dramatic shift in property tax burden from big business to homeowners and small businesses. 

The impact would be even more severe for local governments that are at their property tax levy caps: the county commissioners’ decision would force those taxing districts to cut their property tax budgets to offset the loss in taxable value from the exemption.  Giving county commissioners this kind of authority over other local government budgets is bad public policy.    

Passing bonds and levies will become much more difficult in counties that exempt personal property from taxation, because of the major shift in tax burden from big business to homeowners and other classes of property.  Exempting personal property would also reduce the bonding capacity for schools. 

Urban renewal agencies (URAs), including Chobani and Clif Bar in Twin Falls, rely heavily on business personal property taxes to repay outstanding bonds.  The loss of personal property tax revenue could potentially jeopardize certain URAs’ ability to repay their bonds.

AIC, the Idaho Association of Counties, and the Idaho School Boards Association supported the personal property tax relief legislation that passed in 2008 that protected local governments budgets by providing replacement revenue to offset the loss in personal property tax revenue.  A statewide policy that provides replacement revenues continues to be the appropriate way to provide additional personal property tax relief.

We urge city officials to contact their local legislators and respectfully ask that they oppose House Bill 556.  You can find your legislators using this online tool on the Idaho Legislature’s website. 

 

 

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