Who Doesn’t Pay Property Tax?

Yesterday I wrote about the mechanics of the property tax. Before we can fix the system, we need to understand it. Rep. John Gannon of Boise reached out with some additional data points that I think are important to add to this conversation.

Remember when I mentioned that property tax relief for one group simply shifts the tax burden onto others? You might be surprised to learn how many organizations pay little to no property tax at all. For example, hospitals are classified as non-profits and are exempt from property taxes, which means what they would otherwise pay is distributed among all other taxpayers.

State legislatures and local governments often use tax breaks to incentivize businesses to relocate or remain in the area, with the promise of creating more jobs for our communities. But is it always worth shifting the tax burden onto homeowners and small businesses to attract large corporations like Meta and Micron? That’s a discussion we need to have.

Rep. Gannon took the time to outline several situations where various organizations are exempt from some or all property taxes. I am publishing his full letter, with permission. Read it in its entirety and decide for yourself if these exemptions are good ideas. Then, reach out to your legislators and start a conversation.

I appreciate your property tax discussion. I hope you will add very significant exemptions to the discussion. As you know, when one property doesn’t pay, other properties pay more, and you have made that point. But, there are many very significant exemptions which negatively affect homeowners and small businesses.

1. Micron Exemption. Micron is capped at a $400 million value, even though it was valued at 1.6 billion in 2021. It also pays on personal property valued at $200 million. Of course, all the new construction there will be exempt because of the cap unless present law is changed.
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2. Exemption of public properties leased to private business. For example, HP no longer pays property taxes on the part of the campus and buildings it leases from the state. This was purchased for $100 million by the State so no property tax recovery on that part. HP pays a personal property tax. Public airport properties leased to private entities are exempt. So the publicly owned hangars, land, and buildings leased to private entities are usually exempt. I worked on a constitutional amendment which even then Majority Leader Moyle supported to change this. But vested interests opposed this and pressured legislators about how this would hurt airports.
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3. Exemption of vacant commercial buildings. Ok, so if a home is vacant, maybe because the elderly owner is in a nursing home, there is no break. But if a mall has a vacancy, that space gets a significant tax reduction.
4. Exemption for claimed agricultural use: Do you remember when the City of Boise paid 1.2 million for Foothills land that was grazed by a livestock company every once in a while? It paid about several hundred a year in property taxes. I think it was assessed at about $30,000. I would have to go back to my notes from that transaction to be sure of the exact amounts, but it wasn’t anywhere near 1.2 million. We should be sure that the Ag exemption is used for farms but when ag land is sold there can be a way to recover several years of past taxes since the Ag land has essentially morphed into an investment.
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5. Urban Renewal. I authored and worked to make Meta pay property taxes on its data center last year. They got and still get in the future, a sales tax break on their equipment like servers which I opposed and passed narrowly in the House in 2019. This could be worth tens of millions of dollars. Then the City of Kuna proposed an urban renewal district for Meta, which meant of course – no general property tax contribution with minor exceptions. After I pushed it, it got traction and it was tweaked into a new bill. The new bill was sponsored by Representative Ehlers and myself and was passed overwhelmingly and became law. A sales tax break and a property tax to urban renewal was excessive. Anyway, urban renewal does remove a lot of value from the property tax rolls and needs to be used carefully and watched.
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6. Boise County’s biggest economic stimulator and I believe employer is Bogus Basin, but it has had some kind of “educational” exemption for several years. Boise County is financially in a difficult situation and could sure use the help. Skiers can afford to pay property taxes. Only part of Bogus is exempt as I understand it.

The bottom line is that these kinds of overly generous exemptions add up, and we would have a reduction of ALL properties’ tax burdens if they were paying their fair share.

Representative John Gannon

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