With a repeal of Idaho’s personal property tax on a number of Republican lawmakers’ agendas this session, the Senate Education Committee met Tuesday afternoon to hear how a repeal might impact education in the state.
In a presentation given by Alan Dornfest, a property tax policy supervisor at the Idaho State Tax Commission, lawmakers received an overview of Idaho’s property tax system and the uncertainties that might face school districts in the event of a full repeal of the personal property tax.
“There are many unanswered questions as I stand here today,” Dornfest said to the committee.
According to his presentation, Idaho’s property tax system consists of three parts: real property, operational property and personal property. The tax rate for any given district is determined by the amount of money required in the district’s budget and the taxable value of property within each district as determined by the Idaho State Tax Commission. If the personal property tax is repealed, the rates for the remaining two types of property tax can simply go up to make up the lost revenue. But the real impact of a repeal may be much more complicated due to caps on tax rates, said Dornfest.
“If the personal property tax component in the Boise School District suddenly disappeared, they would lose about $4.6 million,” he added.
The potential effect varies by district. Blaine School District garners only 2 percent of its budget from property tax, while Richfield District finds 52 percent of its budget in property tax, the highest rate in the Gem State.
However, numbers are still changing and the true effects of a full repeal cannot yet be accurately predicted, Dornfest warned. Personal property tax consists of items such as machinery and fixtures and may also include property like railroads and pipelines, but there is some question as to whether such items should be considered personal property or operational property.
“We can’t say at this point whether dollars shown on this report would be lost, replaced, or shifted,” Dornfest said. “Furthermore, we can’t say these are the right numbers without knowing the final definitions.”