Idaho lawmakers seek to limit property tax increases as home values soar

Soaring home values have increased property taxes for millions of homeowners in recent years, prompting action from state lawmakers to lighten the burden.

“The biggest problem was they just went up so quickly. … I think that’s one of the reasons why it became this rallying cry from the people asking for tax relief,” said Idaho state Rep. Jason Monks, a Republican.

The typical home value in Idaho increased from $275,852 in November 2019 to $434,224 this November – a 57% increase over four years, according to data provided by real estate giant Zillow, which tracks the average of the middle one-third of home values.

Rising home prices typically lead to higher property tax assessments, potentially pushing up tax bills even when tax rates remain steady. Those rates are generally set by local governments, not legislatures. But public pressure has compelled lawmakers in several states, including Idaho, to use surplus state revenues to mitigate property tax hikes.

In Ada County, the measure that Monks and his colleagues approved in March delivered nearly $100 million in property tax relief. That amounted to a median cut of more than $500 per home, the Idaho Capital Sun reported.

“It was wildly successful,” Monks said. “Really everybody across the state received tax relief, which was the objective of the bill.”

State legislatures expected to address property tax relief this year

Jared Walczak, vice president of state projects at the Tax Foundation, a pro-business research organization, said he expects many other states – blue and red – to tackle the issue this year.

“In virtually every state where the legislature meets this year, property tax relief bills will be filed,” Walczak said. “This is a front-of-mind issue for many legislators across the country.”

But property taxes are intrinsically complex.

States can set broad property tax policies – such as tinkering with assessment rates on real estate. But it’s generally local governments, including school districts and municipalities, that set specific tax rates and heavily rely on the revenue for day-to-day operations.

The effort across the country to provide property tax relief has sparked some concern that states could go too far, jeopardizing revenue for school districts and local governments. And some policymakers worry about overly broad relief that could benefit the wealthiest property owners at the expense of those most in need.

In Idaho, legislators had to override a veto from Republican Gov. Brad Little, who was worried about jeopardizing funding for transportation projects and the cutting of a local election date. After the veto override, the governor said he was satisfied with legislative cleanups and overall was supportive of the property tax changes.

The issue is particularly ripe in the Mountain West, where home values skyrocketed after remote work gave Americans more residential freedom. Many well-heeled workers fled the East Coast and…