We’re continuing our deep dive into property taxes in the Treasure Valley, and how this tax is contributing to the lack of affordable homes in the region. Previously, we talked about how much rising property values contribute to tax bills. But behind those numbers are individuals and families who live in the Treasure Valley, and who may be struggling to keep up with rising housing costs.
This interview is part of our new series called "Growing Pains."Over the next week or so, we'll explore stories and issues surrounding the Treasure Valley's rapid growth and increasing unafforability. Subscribeto our podcast to hear every interview, and download the Boise State Public Radio app to send us a voice message using our Talk To Us feature.
Support for "Growing Pains" comes from Broadcast Society members Jennifer Dickey and Andy Huang. Member support is what makes these interviews possible. Support this coverage here.
Read the full transcript here:
GEMMA GAUDETTE: This is Idaho Matters, I'm Gemma Gaudette. We are continuing our series, Growing Pains, and today we're focusing on property taxes in the Treasure Valley.
And now we're talking about how tough rising property taxes have been on homeowners. Back again with us is Alan Dornfest, Property Tax Policy Bureau Chief with the Idaho State Tax Commission. Alan, let's talk about 2019. The total taxable value of homes went up again last year. Can you tell us how much it went up? And is that a new record?
ALAN DORNFEST: Well. Yeah, I don't have the exact numbers in front of me here, I think that Samantha has my report on that. I was just going to page through. So what I look at and this is not Treasure Valley necessarily, okay, but the the assessed value, meaning the market value, basically, of homes went up about just under 22% from '18 to '19. If I pull new construction out, it's about 17% value increase. And that was very high. Yeah, there's my report. Thank you for bringing that up. So that is a very high it looks like. Since I've done this study, which is about 25 years now, that does seem like the highest number that we've seen. So that's value, though, not tax per se.
GAUDETTE: But. Even though it's value, not tax, taxes play into that and they go up. I mean, my property taxes have gone up year after year.
DORNFEST: Right. And I'd like to point out two things there. One is the average tax went up about 9%. So not the 21% or the 17%. So about half of what you saw as far as the value increase. And so it's a zero sum game. So that means some different property types tended to pay less and some paid more. So the value increase on commercial property, for example, both in Treasure Valley and elsewhere, was quite a bit less typically than on residential. So you get tax shifts between different classes of property because of this change in value. In other words, the share of the pie, again represented by residential, grew. The share of the pie represented by commercial did not grow it.
GAUDETTE: Do you know how much was collected last year in property taxes around our state?
DORNFEST: Sure, it's just over $2 billion dollars.
GAUDETTE: So then how did that compare to 2018.
DORNFEST: Right. It was up about 6.5%, which if you look at a long term scenario, since we came out of recession, I think the average has been a little over 5% a year. So it's a little bit heavier than the typical year. But remember, that's overall growth in taxes. And I would suggest that residential probably felt a higher increase, like I said, about 9%. And so some categories of property had a lower increase.
GAUDETTE: Hmm. Alan, is this something that we see, you know, around the country that property tax prices go up or does this have to do with this whole idea that this is a very popular place to live, and so therefore there is more building and more people moving into the area?
DORNFEST: Well, my research shows that there's been a lot of demand, high pressure in major markets around the country. I can't be specific, but I do remember that our property tax system, being based on current annual market value, is very responsive to those changes there. There are other charts we can show that I provided for Samantha, for instance, that show property values on the residential side and taxes down turning during the last bad recession. Other states don't always have as responsive of a tax system, but remember that it's an annual tax. So people who study this on a national level think that it's better to have a system that responds since you're paying the tax every year.
GAUDETTE: Hmm. I know you have to go. So, Alan, thank you so much for your time today. We've been talking with Alan Dornfest, he is the Property Tax Policy Bureau Chief with the Idaho State Tax Commission. Appreciate you joining us and your expertise today. Thanks, Alan.
DORNFEST: OK, thank you very much for having me on.
GAUDETTE: Let's look closer to how those rising values Alan Dornfest talked about are affecting homeowners. Here's our producer, Samantha Wright.
RECORDED - SAMANTHA WRIGHT: We've talked a lot about numbers and how much property values and sometimes taxes have gone up. But those numbers are really people, regular folks who live in the Treasure Valley and may be struggling. Remember Erin Brady, who appraises houses at the Ada County assessor's office? She's also a homeowner.
RECORDED - ERIN BRADY: My husband and I actually bought the house just a little over three years ago. And just in three years, our home value has increased almost 40%.
RECORDED - SAMANTHA WRIGHT: She's sitting on a good investment, but it's been tough.
RECORDED - ERIN BRADY: Certainly paying the property tax liability on that. You know, I feel the sting. I personally can relate to property owners who have that complaint. I mean, my property tax liability has ballooned over the last -- since my husband and I purchased the home as well.
RECORDED - SAMANTHA WRIGHT: And her boss, Ada County assessor Bob McQuade, has been in the same boat.
RECORDED - BOB MCQUADE: Years ago, our house took a significant increase in value. And I remember looking at the increase in the assessed value. And my first thought was my taxes are going to go up. And if it keeps going up at this rate, are we going to be able to keep our house? And I'll never forget that, it was just a sickening feeling because we like our house, we've lived there for 30 years and we plan on staying there. But, you know, can we afford to keep that?
RECORDED - SAMANTHA WRIGHT: McQuade says for many people, higher property taxes are just plain scary.
RECORDED - BOB MCQUADE: It can be, especially for, you know, for people who are just living on Social Security, maybe a little bit more. A very small pension. Yeah, it's real scary. Probably a lot of people. I don't have a lot, but, you know, a thousand, five thousand, whatever, sell their house because they're getting to the point where they can't pay the tax anymore. They've paid last year's taxes, but they don't think they can do it next year. So I'm going to sell my house this year.
RECORDED - SAMANTHA WRIGHT: Jackie Roe was facing that kind of decision earlier this year when reporter Margaret Carmel spoke with her. Jackie and her husband have lived in their small, bright yellow house on the Boise Bench for 53 years and watched their taxes balloon from less than $100 a year to almost $1500. I check back in with Jackie to see how she was doing.
RECORDED - JACKIE ROE: We seem to manage every year to get the taxes paid. It always comes first at the end of the year and sometimes when we didn't have it, we just would pay half at a time and hopefully come up with some income to pay the other half. For the most part, we've been very lucky.
RECORDED - SAMANTHA WRIGHT: She and her husband sold some things and she's done all she can to cut costs and to pare down expenses.
RECORDED - JACKIE ROE: We don't have a fancy house or big house, fancy cars or any of that.
RECORDED - SAMANTHA WRIGHT: But I asked her how long she and her husband can stay in their home.
RECORDED - JACKIE ROE: You know, I don't know. It just depends upon how long the good Lord wants me to stay here, what we can do. But right now, I've got enough put away. But even if they go up, we may have to give up something else, but I can cover taxes for a few more years, and that's important. Otherwise, you know what else can do?
GAUDETTE: That was our producer, Samantha Wright, right back with us now is BoiseDev.com Reporter Margaret Carmel and Idaho Senator Maryanne Jordan, a Democrat from Boise. So, Senator Jordan, you also live on the Boise bench. Have you seen your property taxes go up over the years, as was mentioned in the report Samantha just filed?
SENATOR MARYANNE JORDAN (D-BOISE): Hi, Gemma. Yeah, we definitely have. And when we really felt the hit, especially up on the bench, was when the homeowner's exemption was capped in 2016 at $100,000. And it was sort of a perfect storm because that cap came right around the time that property values on the bench began to increase. And so the taxable values of our homes are significantly higher than they would have been had that cap not been implemented.
GAUDETTE: You know, Senator, you have many older neighbors who are having trouble with these higher property taxes. I mean, in fact, I live in a neighborhood where a lot of people in my neighborhood purchased their homes back in the 70s and the 80s, and they have not left. Right. And so they're aging in their homes. However, the property taxes can become a problem. So what are you hearing from your neighbors who who are older?
JORDAN: Well, it is a significant issue for folks on fixed income and people who are retired, and there's a couple of things I think, that really contribute to this in a big way that we've tried hard to work on in the legislature and haven't had a whole lot of luck. One is that the circuit breaker, which allows a credit for lower income seniors, the amount of that has been fixed since 2006. Well, we all know what's happened to property values in Boise since 2006. And it also is an income limitation of $30,450. And there's no distinction there between a single or married person. So you would have the expenses of two persons living in a household and have the same income limitation that you might for a single person. And for either situation, $30,450 in this economy is not a whole lot of money to try to get by and deal with increased property taxes.
And then the other thing that's happened that's been really significant is that I mean, I look at my tax bill and 31% of my property tax bill is going to school bonds and levies. And Article 9, Section 1 of the Idaho Constitution, says that it's the duty of the legislature to establish and maintain a general uniform and thorough system of public free common schools. And over the years, with all of the tax cuts that have happened at the state level and the competition for general fund dollars with education and other programs have led school districts to have to go out to the property taxpayers for help to keep schools going. And I truly believe that until the legislature reinvigorates a commitment to education, that we're going to continue to have this problem.
GAUDETTE: So, Margaret, to play the devil's advocate here, isn't having your property values go up, you know, a good thing. I mean, especially at the rate they've been going up in in the Treasure Valley in Boise in particular, when we just saw what medium home price is now. $400,000?
MARGARET CARMEL: For sure, I mean, whenever your property value goes up, that means you're sitting on a more valuable asset. But the thing is that more valuable asset only helps you if you're intending to sell. So, for instance, someone like Jackie Roe, who would like to stay in her house on the bench, pretty much, you know, for the rest of her life, all it does is charge her more money. And this idea that, like the American economy is kind of built on this idea that your housing prices are always going to go up because you're always going to be looking for a newer and bigger house. Well, let's say if Jackie Rowe decides to cash in and sell her house, can she buy a new one?
GAUDETTE: Right, where can she go?
CARMEL: Can she afford it? Probably not. You know, and especially with this historically low inventory rate, there might not be a house for sale. And if there is, how would she jump up in the market if that upper part of the market has already has exploded, too? And so it's kind of -- there's this drumbeat of, well, you're building equity, you're building all these things. But it's like, you're building for what? And then it gets kind of into the question of, why would you want that property to increase in value if you don't intend to do anything with it?
GAUDETTE: We are going to continue our conversation. We need to take a quick break. When we come back, we'll look at a few possible solutions to the growing property tax problems for some homeowners.
Stay with us. More Idaho Matters next.