Idaho lawmakers resurrected and reworked a property tax relief bill that Gov. Brad Little vetoed earlier this week, saying the original legislation put a transportation bond sale in jeopardy.
Little vetoed House Bill 292 because it re-ordered the priority of statutory claims on sales taxes, putting property tax relief ahead of the state’s Transportation Expansion and Congestion Mitigation program. By removing minimum guarantees for TECM debt service, the bill “forced a pause of the TECM bonds that were scheduled for sale this week,” Little wrote in his veto statement.
The House and Senate overrode Little’s veto of HB 292 while at the same time passing a trailer bill, HB 376, prioritizing sales tax allocations to the transportation program over the homeowner property tax relief account and school district facilities fund that HB 292 creates.
“It was an unfortunate situation that occurred, but the Legislature has taken steps to correct it,” said Gerald Hunter, president and executive director of the Idaho Housing and Finance Association.
IHFA had $368.1 million in sales tax revenue bonds for the TECM program on a day-to-day basis with plans to price sometime over the next two weeks, Hunter said.
“We were talking about pricing this week, but it wasn’t absolute,” Hunter said.
Alexander Zaman, a director with Citi and lead manager on the deal, declined to comment on whether the legislation had caused a delay in the bond sale.
The vetoed property tax relief bill also raised questions about debt that is already outstanding.
Idaho’s first $184.6 million TECM deal priced in April, carrying ratings of Aa1 from Moody’s Investors Service and AA-plus from Fitch Ratings. The original $184.6 million TECM deal priced in April, carrying ratings of Aa1 from Moody’s Investors Service and AA-plus from Fitch Ratings.
“Our bond counsel believes the impacts of H292 will, in fact, result in an impairment and could lead to damage claims from bondholders of the first TECM transaction,” Hunter wrote in a letter attached to Little’s veto statement.
House Bill 292, plugged as giving homeowners a break on property taxes, was a “hodgepodge,” said Little, who asked for a simpler property tax relief solution when he vetoed it. He came out in support of the revised version Wednesday.
The 28-7 Senate vote upholds HB 292, which promises $355 million in property tax relief and earmarks $100 million to schools to pay down existing bonds or levies, also to provide property tax relief.
The Senate’s vote came after a frenzied two days pitting Little, a Republican, against the Legislature and then the House against the Senate, both of which have Republican majorities. The Senate introduced a gut-and-replace property relief tax bill Monday that the House shot down in favor of its own effort.
The Senate’s version would have cut a segment that eliminates a March election date for school bond measures that educators like, because it comes before June school budget passage deadlines.
The Senate approved the House’s trailer bill, HB 376, which prioritizes $80 million of sales tax money to bond for transportation projects over property tax relief; and HB 292 in separate votes.
Democrats, who opposed the bill, agreed with Little in saying the bill was unnecessarily complex and a “hodgepodge.” The bill represented a compromise on multiple pieces of legislation.
“I will have to plug my nose, but will vote yes,” Sen. Melissa Wintrow, D-Boise said on the floor prior to the vote.
Sen. Alison Rabe, D-Boise, said she “would like to see a property tax bill that is simpler, and one that doesn’t need a trailer bill fix. I want a simpler fix that provides targeted relief to homeowners, which I am not convinced this provides. I wish it would do more, but we have to go with what we have.”
The bill fixes the problems regarding transportation funding, said Senator James “Rick” Just, D-Boise.
“It would insure that TECM is the first priority of monies using the sales tax every year,” Just said. “This is the best property tax relief we have seen in years. Unfortunately, schools will lose that important March election date and that is bad for schools. That is why it’s bad to shove two different ideas in one bill.”
School districts currently rely almost entirely on school bonds and levies to build school facilities, placing a heavy burden on local taxpayers. Rising property taxes have lowered bond measure passage rates, leaving districts to get creative with how they manage overcrowding, and dilapidated buildings.
Idaho taxpayers rejected 70% of school bond measures on the March 14 ballot, approving $274.59 million of the $1 billion floated, according to Idaho Education News.
The legislation would reduce the burden on taxpayers by subsidizing school bonds and levies. It would divide $100 million between school districts, based on average daily attendance. It would prioritize eligible uses starting with paying off existing school bonds, then paying off existing school levies, saving for future facilities needs and finally new bonds.
“It’s no secret that this was not my first choice,” Sen. Scott Grow, R-Eagle, who co-authored HB292 and has been pushing for property tax relief legislation for three years, said after the Senate’s vote. “But by continuing to work with all those who needed to buy in, we arrived at a result that accommodates many perspectives. And, we ended up with a good bill.”