Breaking News! How much will your taxes be? $13 a year is probably a cheap campaign promise. Below is why we have that opinion.
You might have heard the proponents cite "an average home" in Bonneville County will pay a new tax of only $13 per year if the May 16th ballot question is passed. But it looks like that is probably just a campaign promise. It could be up to $110.00 per year.
Based upon several phone calls and emails with the Idaho State Tax Commission, most of the email is below, we believe and all the following is our opinion:
The ballot language says nothing about what the cost will be nor are there any financial caps in the ballot question.
When you got to cast your vote the ballot will say, according to the early ballot we received from Bonneville County, "Shall a community college district be organized to create the College of Eastern Idaho which shall be a successor entity to Eastern Idaho Technical College."
Notice how vague and open this language is?
So where did the $13 amount that a few have thrown around come from? We believe a few proponents put together a sample budget and noticed, according to a document supporting the taxing district, they will lose about $851,000 the first year (and maybe that much each and every year after). So their proposal has the college asking Bonneville County for that money, which will equate, they say, to about a $13 per year in new tax for the "average home owner."
But with tax increases the "devil is in the details" and it appears this is just a campaign promise to get people vote for it.
Here is what you need to know: If the ballot measure is passed, the Idaho State Board of Education will create 5 geographic zones in the county. The state will then appoint 5 local citizens to be on the Community College's first board. These appointed future board members, whom we don't know who they will be, will finalize and approve the college's first year budget.
The first year budget is by far the most critical to tax payers and it has no limits to what they can ask for, except Idaho code 33-2111, which limits the new tax to $125.00 per $100K in property value.
The newly appointed board can set their first year budget and charge you up to $125.00 per $100K in property value, without any vote of the people! We feel this is a blank check! There is nothing in code or in the ballot measure that will limit the new future board to keep your taxes to just a $13 per year increase! CSI charges $98 per year, and NIC charges $112 per year (per $100K in value) and their buildings are paid for like EITC!
The way this could work is that the new board could look at the proposed budget. Right now those pushing for the school have a preliminary budget that is almost $900,000.00 in the red. This is where they are getting their $13 a year figure from.
However, this first year board is not bound to any limits but the state statute of $125 limit per year per $100K in value. This newly appointed board may decide that since this is "the first year" and they have only the $125 limit,they should "start things off right" and include many more budget items than what is in the current proposed budget.
This future board might decide to add in projects, staff raises, and a host of other spending items to their first budget, creating a $5 million or $7 million deficit! In fact, the Idaho State tax commission told us (see below) based upon 2017 taxing value of Bonneville County, the future appointed board of the community college district could spend up to $7,517,210 the first year, money that they will get from new property taxes. If they go for the max allowed by state law, it would raise our new tax to be$125.00 per $100k in taxable value.
"But they won't raise your taxes that high" might be the cry from the proponents. Why not? They have no rules or guidelines in the ballot measure once it is passed but that single state law that limits the tax to the $125 amount!
NOTE: the "average homeowner has a taxable value of just below $100K, so the new tax could be about $110.00 per year in year one, if the newly appointed board decides to tax the top amount.
Know this also: After the first year, state law allows the board to raise your tax rate each year by up to 3%, and if the board does not collect it in any given year they can come back and get it at any time. It's called forgone revenue.
And the board can always put forth a future bond that will require a 2/3rds vote of the people to raise your taxes again, like the $180,000,000.00 request CWI did in Nampa last fall, which by the way failed.
To be sure, we taxpayers have ZERO assurances of what our first tax rate will be. Except it will be at or under the state mandated $125.00 per $100K in taxable value.
Those campaigning and making promises do not know what the future board will actually approve. They can't know, since the board has not be selected or appointed. To be sure, we feel this $13 promise is as good as promising anything under the moon.
If you want the details, here is the pertinent parts of the emails we received from staff at the Idaho Tax Commission. ( our emphasis added in a key part below)
If the election is successful and the Jr. College district is formed the first time they can levy property taxes would be December 2018. They would have to certify their budget to the county commissioners by September 2018 and the property tax bills would be due December 20th, 2018.
To outline the property tax budget process found in I.C. §63-802 is a follows: Determine the highest of the immediate prior 3 years non-exempt property tax budget, increase by 3%, new construction and annexation values multiplied by the immediate prior year’s non-exempt levy rate, and forgone amount. This produces the maximum allowable non-exempt property tax budget, this may not be what they can levy for as they have to reduce this amount by property tax substitute funds the remaining amount is the maximum a district may levy for property taxes. If the district chooses not to levy on the entire amount then what is left on the table is computed as forgone amount which the district may bring back into its budget when a need arises. Forgone amount ARE NOT dollars they are just a number in a spreadsheet that I maintain and are computed each year.
To compute a levy rate you divide the property tax budget by the total net taxable value of the district. This produces the levy rate (9 decimal places) which is charged to each taxpayer.
A district’s 1st property tax levy is critical to them as it establishes the base property tax amount upon which future 3% budget increases would be based on. The district’s maximum limitation for its first property tax budget can be computed by taking the 2018 net taxable value and multiplying it by the maximum levy rate of any eligible fund. For example the maximum levy rate for the district maintenance and operation (M&O) budget is 0.00125 (I.C. §33-2111), the 2017 year end net taxable value for the county is 6,013,767,703. Using these amounts the estimated maximum property tax budget for the district would compute out to be $7,517,210. Of course it goes without saying that the district would use 2018 net taxable values established by September 2018 not the 2017 year end values. Assuming they set their first budget at $2 million for property taxes the district would start getting a 3% increase of the $2 million starting in 2019 forward. They would be able to start creating forgone amount starting in 2019 as 2018 property tax budget would determine the base amount on which 3% increases would be computed. In addition in 2019 they would start getting a new construction roll value from the county which they would multiply by the immediate previous year’s non-exempt levy rate.