BOISE — A controversial $21 million property tax relief bill that was opposed by Idaho cities could get new life in a $34 million proposal, which is getting support by both the cities and counties.
The Senate Local Government and Taxation Committee sent House Bill 735 to the Senate floor for amendments Monday.
As originally crafted, the legislation gave Idaho counties two big victories: It eliminated the indigenous medical program — which makes counties the payer of last resort for people who otherwise can’t afford medical care — and it shifted responsibility for public defense services from counties to the state.
In return, the bill redirected $36 million in local sales tax revenue sharing funds away from cities and counties into a new public defense fund, which the state would use to pay for public defense services.
HB 735 also provided $21 million in state general fund support to the counties each year for the next two years to offset any remaining indigenous care costs. Counties would reduce their property tax base by an equivalent amount, ensuring some level of local property tax relief.
The Association of Idaho Cities objected to the legislation, in part because they previously haven’t had any financial responsibility for public defense.
However, following discussions with legislative leaders, the cities agreed to support the bill if it were amended.
Among other changes, the proposed amendments cap the amount of city/county sales tax revenues that would be diverted to pay for public defense.
Cities would contribute $16 million per year, beginning in 2025. Counties would initially contribute $20 million; that amount would increase by up to 5% per year for five years, after which it would also be capped. If the cost of providing public defense services exceeds that amount, the state would pick up any remainder.
The amount of state funding going to counties in each of the next two years would also be increased from $21 million to $34 million.
“That would result in a 5% to 6% reduction statewide in county levied property taxes,” said Seth Grigg, executive director of the Idaho Association of Counties.
Relieving counties of responsibility for public defense services has been something the Association of Counties has been working toward for at least a decade, Grigg said.
“The combination of this and the repeal of the indigenous medical program — both those measures will serve to provide long-term tax savings to county taxpayers,” he said.
Garden City Mayor John Evans, speaking on behalf of the Association of Idaho Cities, said the association supports HB 735 as amended.
The House approved the original bill on a 63-1 vote earlier this month. Should the bill be amended and approved in the Senate, the House would have to accept any amendments or the bill dies.