Is Idaho's proposed One Percent Initiative (a 1992 ballot measure to cap property taxes at 1% of market value) workable, and if not, can it still be put on the ballot?

Plain-English summary

Representative Michael Simpson asked the AG to evaluate the proposed One Percent Initiative, a 1992 ballot measure modeled on California's Proposition 13. The initiative would have capped property taxes at one percent of market value and required two-thirds approval of all "qualified electors" for any "special taxes" exceeding the cap. The AG took seven specific questions through detailed analysis and reached a uniformly negative result on workability, paired with a definitive answer on ballot access.

On the two-thirds threshold, the AG concluded the requirement was unworkable as written. Idaho cannot tell how many "qualified electors" exist in any taxing district at any moment. Many special districts (water, fire, hospital, irrigation, recreation) have no voter registration; voter registration in counties and cities is imperfect because of stale rolls. Reading the requirement literally would turn every non-vote into a "no" vote, which the AG concluded would violate art. 6, sec. 1 of the Idaho Constitution.

On the meaning of "special taxes," the AG found the term ambiguous. Idaho's constitution and code use "special tax" sporadically (40+ times in the property-tax context alone, for purposes ranging from district court funds to fire and ambulance services to highway bonds). It was unclear which of these the initiative was meant to subject to the two-thirds threshold.

On apportionment, the AG identified a fatal structural gap. The initiative said the one percent "shall be collected by the counties and apportioned according to law," but no existing law gives counties authority to adjust levies set by independent taxing districts. The two possible solutions (give the courts the apportionment power or impliedly grant counties tax-czar authority over all districts within their borders) were each problematic, and the AG concluded a reviewing court would strike the initiative as inoperable.

On uniformity, the AG showed by hypothetical example how the initiative would force levies in different taxing districts to bear no rational relation to those districts' needs or the wishes of their taxpayers. Two adjacent school districts with the same starting levy would end up with different effective levies because their property happened to be in different combinations of city, fire, and county taxing zones. That conflicts with the art. 7, sec. 5 uniformity requirement and with the art. 9, sec. 1 "uniform and thorough" public-school requirement.

On bonded indebtedness, the AG identified four problem areas: voter-approved bonds (potential conflict with art. 8, sec. 3), tax increment financing under the Local Economic Development Act (potential federal Contract Clause violation under United States Trust Co. v. New Jersey), registered warrants for emergencies (no priority under the initiative would gut the emergency-funding mechanism), and special levies for tort claims, indigent medical care, noxious weed control, and similar functions (no exemption or priority under the initiative).

On the basic structure of Idaho ad valorem taxation, the AG concluded the initiative is contrary to the system of local self-determination contemplated by art. 7, sec. 6 and explained at the 1889 Constitutional Convention. Local taxing authority would no longer reflect each district's needs but would depend on the unrelated decisions of other districts.

Despite all of this, the AG concluded under Associated Taxpayers of Idaho v. Cenarrusa (1986) that the initiative could still be placed on the ballot. The Idaho Constitution guarantees the right to propose legislation through the initiative process, and that right is not limited to "good" or "constitutional" legislation. Voters may approve or reject the proposal; if they approve it, the legislature can repeal or amend it.

Currency note

This opinion was issued in 1991. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. The One Percent Initiative was a specific 1992 ballot measure; this opinion has primarily historical significance now. Treat this page as historical context, not current legal advice.

Background and statutory framework

The One Percent Initiative was the second attempt at a California-style property tax cap in Idaho. The first, in 1978, led to Idaho Code § 63-923 (which the 1991 initiative would have repealed). The 1991 sponsors submitted their proposal to the Secretary of State on March 25, 1991. Under Idaho Code § 34-1809, the AG reviewed the proposed initiative and issued a Certificate of Review on April 5, 1991, concluding that "most of the substantive provisions of the initiative would be found to be unconstitutional if passed." The drafters made some changes but did not address the AG's main concerns.

Idaho's property tax structure has three layers. Each taxing district adopts its own budget (Idaho Code §§ 63-621 through 63-626) and certifies the dollar amount of revenue needed to the board of county commissioners (§ 63-624). The board sets a levy as a percent of market value sufficient to meet the certified budget. The State Tax Commission reviews the levies for legality (§ 63-917). The county auditor delivers tax rolls to the county treasurer, who prepares notices and collects (§§ 63-1003, 63-1103). Collected taxes are deposited into the county treasury and apportioned to each taxing district based on the amount designated for that district on each tax bill (§ 63-918).

The constitutional backbone is art. 7, sec. 5 (uniform levies within each taxing authority's territorial limits), art. 7, sec. 6 (legislature cannot impose taxes for cities and counties but may invest those entities with the power to tax), art. 8, sec. 3 (bonded indebtedness requires two-thirds of qualified electors voting at the election), and art. 9, sec. 1 (uniform and thorough public schools). The AG read the initiative against this backbone and found multiple unresolvable conflicts.

Comparative jurisprudence on California's Proposition 13 came from Amador Valley Joint Union High School District v. State Board of Equalization, 22 Cal. 3d 208 (1978), which upheld Proposition 13 against a federal Contract Clause challenge. The AG noted that Amador's "actual default required" reasoning is harder to square with U.S. Supreme Court doctrine in United States Trust Co. v. New Jersey, 431 U.S. 1 (1977), and Energy Reserves Group v. Kansas Power and Light, 459 U.S. 400 (1982).

The ballot-access answer rests squarely on Associated Taxpayers of Idaho v. Cenarrusa, 111 Idaho 502 (1986). The Idaho Supreme Court held that the constitutional right to propose initiatives is not limited to good or constitutional legislation; voters get to decide.

Common questions

Why does the AG conclude the two-thirds threshold is unenforceable?
Because there is no way to count "qualified electors" in real time. Special districts often don't require voter registration at all; voters in those districts only sign an affirmation of residency just before voting. Counties and cities have voter registration but rolls run up to four years stale (Idaho Code § 34-435). The denominator for "two-thirds of qualified electors" is unknowable, so the requirement is mechanically impossible to apply.

What's the constitutional problem with treating non-votes as no-votes?
Art. 6, sec. 1 of the Idaho Constitution says "All elections by the people must be by ballot." Counting non-voters as voting "no" defeats the right of those who choose to abstain to have their non-vote counted as a non-vote. The AG concluded a reviewing court would not allow this.

Why is the apportionment mechanism so important?
Because the initiative caps total taxes at one percent of market value but does not say who decides which taxing districts have to cut their levies when the combined total goes over. The State Tax Commission can identify the problem; only the courts can strike down levies; nobody has authority to impose corrected levies. Without a workable apportionment authority, the cap cannot be enforced.

Could the legislature fix this after passage?
The AG considered this. The Local Economic Development Act provides a model for tax increment financing that the legislature could amend to address some bond-related issues. But the structural defects (apportionment, uniform-levy conflict, two-thirds threshold) are baked into the initiative's text and would require either constitutional amendment or rewriting the initiative.

If the initiative passed and was struck down, what would happen?
Idaho Code § 63-923 (the vestige of the 1978 initiative) would already be repealed by the new initiative. The state's property tax system would continue as before, but with a year or more of legal uncertainty.

Citations

Idaho Constitution: art. 2, sec. 1 (separation of powers); art. 3, sec. 19 (no local or special laws on assessment and collection of taxes); art. 6, sec. 1 (all elections by the people must be by ballot); art. 7, sec. 4 (public property exempt from taxation); art. 7, sec. 5 (uniform levies); art. 7, sec. 6 (legislature may invest taxing authority in local governments); art. 8, sec. 3 (bonded indebtedness); art. 9, sec. 1 (uniform and thorough public schools); art. 9, sec. 5.

U.S. Constitution: art. I, sec. 10 (Contract Clause).

Idaho Code: chapter 29, title 50 (Local Economic Development Act); §§ 6-927, 6-928 (tort claims); 22-2482 (noxious weed control); 31-601, 31-602 (county powers); 31-867 (district court fund); 31-1420, 31-1421 (fire protection districts); 31-1608 (registered warrants for emergencies); 31-3503 (catastrophic medical indigency); 31-3901, 31-3908 (ambulance services); 33-804 (school plant facilities); 34-435 (voter registration); 34-1809 (initiative review); 40-808 (highway bonds); 42-3202 (water and sewer district elections); 46-722 (armories); 50-1006 (extraordinary city expenses); 50-2005 to 50-2910 (Local Economic Development Act detail); 63-105DD (homeowner's exemption); 63-621 to 63-1103 (property tax procedures); 63-923 (1978 initiative vestige); 65-103, 65-104 (service memorials).

Idaho cases: Alpert v. Boise Water Corp., 118 Idaho 136, 795 P.2d 298 (1990); Associated Taxpayers of Idaho v. Cenarrusa, 111 Idaho 502, 725 P.2d 526 (1986) (Idaho Supreme Court; ballot access for facially unconstitutional initiatives); Bailey v. Ness, 109 Idaho 495, 708 P.2d 900 (1985); City of Grangeville v. Haskin, 116 Idaho 535, 777 P.2d 1208 (1989); Fenton v. Board of County Commissioners, 20 Idaho 392, 119 P. 41 (1911); Hamilton v. Village of McCall, 90 Idaho 253, 409 P.2d 393 (1965); Miller v. Miller, 113 Idaho 415, 745 P.2d 294 (1987); Oregon Shortline Railroad Company v. Gooding County, 33 Idaho 452, 196 P. 196 (1921); School Dist. No. 25 v. State Tax Commission, 101 Idaho 283, 612 P.2d 126 (1980); State v. Nelson, 36 Idaho 713, 213 P. 358 (1923) (Idaho Supreme Court; local self-determination in taxation); Sun Valley Co. v. City of Sun Valley, 109 Idaho 424, 708 P.2d 147 (1985); Twin Falls Clinic and Hospital Bldg. v. Hamill, 103 Idaho 19, 644 P.2d 341 (1982); Washington Court v. Paradis, 38 Idaho 364, 222 P. 775 (1923).

Other cases: Amador Valley Joint Union High School District v. State Board of Equalization, 22 Cal. 3d 208, 583 P.2d 1281 (1978); Energy Reserves Group v. Kansas Power and Light, 459 U.S. 400 (1982); Cord v. Salt Lake City, 434 P.2d 449 (Utah 1967); United States Trust Co. v. New Jersey, 431 U.S. 1 (1977).

Other authorities: Constitutional Convention Proceedings, Vol. II, p. 1659.

Source

• Landing page: https://www.ag.idaho.gov/office-resources/opinions/
• Original PDF: https://ag.idaho.gov/content/uploads/2018/04/OP91-09.pdf

Original opinion text

ATTORNEY GENERAL OPINION NO. 91-9

TO:
The Honorable Michael Simpson
House of Representatives
786 Hoff Drive
Blackfoot, Idaho 83221

Per Request for Attorney General's Opinion

QUESTIONS PRESENTED

You have requested the Attorney General's legal opinion on the following questions raised by the One Percent Initiative:

1. Section 2 of the One Percent Initiative requires "a two-thirds vote of the qualified electors" in order to impose special taxes in excess of the one percent cap. Does this mean two-thirds of the electors voting, or two-thirds of all the qualified electors?

2. Section 2 of the One Percent Initiative creates a process for approving "special taxes" in excess of the one percent cap. What taxes would be covered by this process?

3. Section 1 of the One Percent Initiative states that the one percent "shall be collected by the counties and apportioned according to law to the taxing districts within the counties." How would this apportionment of taxes be done "according to law"?

4. Article 7, section 5 of the Idaho Constitution requires that all taxes "be uniform upon the same class of subjects within the territorial limits of the authority levying the tax." How would the one percent property tax initiative be implemented in light of this constitutional provision?

5. Does the One Percent Initiative, with its cap on property taxes and its requirement of approval for additional taxes by two-thirds of all qualified electors, conflict with art. 8, sect. 3 of the Idaho Constitution, which allows creation of bonded indebtedness with consent of two-thirds of the qualified electors voting in the election? Or with any other specialized taxing requirements of local government?

6. Article 7, section 6 of the Idaho Constitution prevents the Idaho legislature from imposing taxes on behalf of cities and counties, but allows the legislature, by statute, to invest such power to assess and collect taxes in local governmental entities. Does the One Percent Initiative comport with this basic structure of ad valorem taxation in Idaho?

7. Assuming that the One Percent Initiative fails to comport with the taxing structure created by the Idaho Constitution, should the initiative be removed from the ballot?

CONCLUSIONS

1. As written, the One Percent Initiative would require a super-majority of two-thirds of the qualified electors in any given district considering a "special tax." This voting standard for imposing special taxes in excess of the one percent cap will be impossible to implement because there is no means to determine the number of qualified electors in an area.

2. The term "special taxes" has no obvious meaning as used in the initiative. It would require a court decision in order to determine the meaning of this phrase.

3. The requirement in section 1 of the One Percent Initiative that taxes "shall be collected by the counties and apportioned according to law to the taxing districts within the counties" is inoperable because, under existing law, counties have no authority to adjust taxes imposed by taxing districts within their counties.

4. Idaho Constitution, art. 7, § 5, requires tax levies of taxing districts to be uniform within the boundaries of the districts. Therefore, the adjustment required by the One Percent Initiative is not simply to reduce levies to one percent of market value. The constitution also requires that the resulting levies be uniform. The inevitable result is that property taxes in each taxing district will bear no rational relation to the need of that district or the wishes of the taxpayers of that district.

5. The Initiative's requirement that "special taxes" be approved by two-thirds of the qualified electors would, taken literally, conflict with Idaho's constitution, which allows creation of bonded indebtedness by a two-thirds vote of the qualified electors voting in the election. It would undermine the ability of government to function in times of emergency. It would conflict with special levies to fund such unpredictable but legally-required items as tort claim judgments and catastrophic medical indigency bills. It could also jeopardize the contract rights of bondholders who have purchased tax increment bonds under Idaho's Economic Development Act. Finally, it would introduce such a note of uncertainty as to threaten the ability of local governments to issue bonds at reasonable interest rates.

6. Art. 7, § 6, of the Idaho Constitution gives local communities the power to impose upon themselves for their needs such property tax burdens as they themselves determine through their governing officials. Statutory limits may be placed upon this local authority provided the limits are uniform as to each type of local government. The One Percent Initiative would deny this constitutional principle of local self-determination and would force discrimination in local taxing authority. This the initiative cannot do. Consequently, to impose a one percent limitation would require dismantling the system of property taxation under which we have operated since statehood.

7. An initiative, however badly drafted or facially unconstitutional, may be placed on the ballot for consideration by the voters.

[The full analysis is over 25 pages and develops each question in detail, including hypothetical examples illustrating how the uniform-levy requirement of art. 7, sec. 5 would force irrational results, and a thorough treatment of bonded-indebtedness, tax increment financing, registered-warrant, and special-levy implications. The complete original text is available at the linked PDF above.]

DATED this 25th day of November, 1991.
LARRY ECHOHAWK
Attorney General

Analysis by:
David G. High
Deputy Attorney General
Chief, Civil Litigation Unit