Did the legislature accidentally re-activate Idaho's old 1-percent property-tax cap when it passed the 1995 school-funding bill, and if so, can counties or courts actually enforce a 1-percent cap?
Plain-English summary
In 1978, Idaho voters passed Initiative Petition No. I, capping ad valorem property tax at 1 percent of the property's actual market value. The legislature responded immediately, codifying the initiative as Idaho Code § 63-923 but layering a budget-cap statute (§ 63-2220) on top with the words "Except as provided in Section 63-2220" inserted into § 63-923. The result was a 1-percent cap on paper but a budget-cap regime in practice. Successive amendments swapped § 63-2220 for § 63-2224 (Truth in Taxation) in 1990 without ever directly amending the underlying 1-percent cap. Then in 1995, House Bill 156 overhauled school funding by repealing Truth in Taxation entirely and creating a new budget-limitation regime in § 63-2220A. The legislature did not amend the 1-percent cap in § 63-923. So as of January 1, 1995, the 1-percent cap referred to a section (63-2224) that no longer existed.
Tax Commission Chairman Mike Southcombe asked the AG two questions. First, what is the current status of § 63-923? Second, can House Bill 156 be implemented at all given the dangling 1-percent cap?
Deputy AG Carl Olsson, writing for AG Alan Lance, gave nuanced answers. On § 63-923's status: as a textual matter, the statute now says property tax cannot exceed 1 percent of market value, full stop. But the statute is incapable of implementation. There is no statutory mechanism for any state entity to scale down levies set by independent taxing districts (cities, school districts, fire districts, irrigation districts, highway districts) to bring combined levies under 1 percent. The Tax Commission can only flag excessive levies and refer them to a prosecutor or AG for a lawsuit to set them aside. The courts cannot impose new levies. To make § 63-923 work, you would have to either invent a new tax-apportionment system from the bench (impossible within the eleven-week window between September levy-setting and November tax-bill mailing), or read the statute as silently transferring legislative budget authority from every taxing district to county commissioners. Neither would be tenable. The AG's conclusion: a reviewing court would strike § 63-923 down as too unclear and inoperable to enforce, citing Gord v. Salt Lake City, 434 P.2d 449, 451 (Utah 1967).
The AG also flagged a constitutional problem even if implementation were possible: Idaho's uniformity clause (Idaho Const. art. 7, § 5) requires each taxing district's levy to be uniform within its boundaries. Reducing the levy on one over-cap property in a way that left other taxing districts with district-wide levy reductions could starve school districts (potentially violating art. 9, § 5's uniform-thorough-education requirement) and shift tax burdens irrationally between cities and rural areas.
On House Bill 156: implementable in full. § 63-923 imposes no impediment because § 63-923 itself cannot be implemented.
Currency note
This opinion was issued in 1995. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Common questions
Why didn't the AG just say § 63-923 is repealed?
Because the legislature didn't repeal it. The most recent direct amendment to § 63-923 was in 1990, swapping in a cross-reference to § 63-2224. The 1995 legislature repealed § 63-2224 but left § 63-923 alone. Statutes don't automatically die when their cross-references die. The AG's job was to interpret the existing text, and the existing text said 1 percent applied. The AG had to address whether that text was implementable, which is a different question from whether it was repealed.
What does it mean that a statute is "incapable of implementation"?
In this context, it means there is no procedure in Idaho law to translate the 1-percent cap into actual tax bills. Each taxing district sets its own budget. Each county commissioner converts each district's budget into a levy. The Tax Commission reviews levies for excessiveness. The treasurer collects taxes per the levies and apportions revenue back to the districts. None of those actors has authority to scale down levies to enforce a global 1-percent ceiling. The courts can void specific illegal levies but cannot create new ones. So the cap exists on paper but produces no operational outcome.
Why would a court strike it down rather than just enforce what it can?
Because the court cannot enforce what it can. The lawsuit pathway laid out in § 63-917 has the Tax Commission flag excessive levies, refer them to prosecutors or the AG, and have those levies "set aside as illegal." But under the 1-percent cap, the issue isn't a single illegal levy. It's the cumulative effect of many district levies pushing the total over 1 percent on certain properties. There is no legal mechanism to identify which district's levy should yield, and no court can manufacture one without rewriting the statute. The AG cited the Utah Supreme Court's Gord decision for the principle that courts strike down statutes that are "so unclear or confused as to be wholly beyond reason, or inoperable."
What about just letting county commissioners scale levies down?
The opinion considered that as a fallback. The Idaho Code (§ 31-601) lets counties exercise powers necessarily implied from those expressed, and Bailey v. Ness (1985) and Alpert v. Boise Water Corp. (1990) recognize implied municipal-government authority. But making county commissioners the ultimate taxing authority over independent districts would centralize tax authority in the boards, effectively destroying the separate budget authority of every other taxing district. Doubtful exercises of implied power are resolved against the power, per City of Grangeville v. Haskin (1989). The AG concluded county commissioners do not have implied authority to override school district budgets, fire district budgets, etc., to enforce a 1-percent ceiling.
How would the uniformity clause break things further?
Idaho Const. art. 7, § 5 says each taxing district's levy "shall be uniform" within the district. If a parcel in City A is over the 1-percent ceiling, and County, School District 2, Fire District, and City levies all have to scale down for that parcel, then the same district levies have to apply uniformly to other parcels in those districts, even ones that were below the 1-percent ceiling on their own. The opinion's hypothetical works through the math: scaling down to fit the worst-case parcel results in the school district that wasn't at issue ending up with a 25-percent funding cut, while the school district whose levy was the original problem keeps its full levy. That kind of mechanical interaction with an unrelated district's residents is hard to defend, and probably violates Idaho's uniform-thorough-education clause (art. 9, § 5).
What did this opinion mean for the 1995 Tax Commission?
It meant the Tax Commission could implement House Bill 156 (the school-funding shift) without trying to enforce § 63-923. The AG's conclusion gave the Tax Commission cover to ignore the dangling 1-percent cap when reviewing levies, on the theory that any court asked to enforce § 63-923 would strike it down rather than try to implement it. The legislature could and did revisit the question in subsequent sessions, ultimately repealing or replacing § 63-923 as part of broader property-tax reforms.
Background and statutory framework
Idaho's property tax system is layered. Each city, county, school district, fire district, irrigation district, highway district, or other authorized district develops a budget (Idaho Code §§ 63-621 through 63-626). The board of county commissioners "make[s] a tax levy as a percent of market value for assessment purposes" sufficient to meet certified district budget requests (§ 63-624). Levies are reviewed by the Tax Commission (§§ 63-915, 63-917) for excessiveness; excessive levies are referred to prosecutors or the AG for lawsuit (§ 63-917). The treasurer collects (§ 63-1003) and the county auditor apportions (§ 63-918) the revenue to each district. The whole cycle runs from the second Monday of September (levy-setting) to the fourth Monday of November (tax-bill mailing per § 63-1103).
Initiative Petition No. I (1978) layered a 1-percent maximum across this system. Codified as § 63-923, it included a 2-percent annual cap on increases in market value for assessment purposes. Idaho's response over fourteen years (1980-1994) was to nullify the 1-percent cap with a cross-reference to a budget-limitation statute, first § 63-2220 (one-percent cap inside, 1980-1981), then § 63-2220 (budget cap only, 1981-1990), then § 63-2224 (Truth in Taxation, 1990-1995). The 1995 House Bill 156 repealed Truth in Taxation outright in favor of a new budget-limit regime in § 63-2220A, leaving § 63-923's "Except as provided in Section 63-2224" text dangling.
Carl Olsson's analysis traces the structural reasons § 63-923 cannot be implemented: no actor has authority to apportion levies to fit a cumulative cap, the courts cannot manufacture authority, and the uniformity clause prevents an ad-hoc district-by-district approach. The opinion also notes a fiscal-impact wrinkle: the fiscal impact statement attached to House Bill 156 estimated the General Fund hit at $40 million, $44 million, and $47.5 million for fiscal years 1996, 1997, and 1998. The Tax Commission's own estimates put the additional revenue loss at $200 million per year if § 63-923's 1-percent cap were implemented. Olsson treated that gap as evidence that the legislature did not intend to revive the 1-percent cap.
Citations
- Idaho Const. art. 2, § 1; art. 7, § 5; art. 9, § 5
- Idaho Code §§ 31-601, 31-602, 31-1605, 63-621 through 63-626, 63-901, 63-915, 63-917, 63-918, 63-923, 63-1003, 63-1103, 63-2220, 63-2220A, 63-2224 through 63-2226
- Alpert v. Boise Water Corp., 118 Idaho 136, 795 P.2d 298 (1990)
- Bailey v. Ness, 109 Idaho 495, 708 P.2d 900 (1985)
- City of Grangeville v. Haskin, 116 Idaho 535, 777 P.2d 1208 (1989)
- Miller v. Miller, 113 Idaho 415, 745 P.2d 294 (1987)
- Gord v. Salt Lake City, 434 P.2d 449 (Utah 1967)
Source
- Landing page: https://www.ag.idaho.gov/office-resources/opinions/
- Original PDF: https://ag.idaho.gov/content/uploads/2018/04/OP95-03.pdf
Original opinion text
ATTORNEY GENERAL OPINION NO. 95-03
To:
R. Michael Southcombe, Chairman
Idaho State Tax Commission
STATEHOUSE MAIL
Per Request for Attorney General’s Opinion
QUESTIONS PRESENTED
1.
What is the current status of Idaho Code § 63-923?
2.
How is the new law, House Bill 156, to be implemented given the status of Idaho
Code § 63-923?
CONCLUSION
1.
Through legislative oversight, the provisions of Idaho Code § 63-923 are not
modified by any other statute. Idaho Code § 63-923 is, however, incapable of
implementation and likely to be struck down if presented to a court.
2.
Idaho Code § 63-923 imposes no impediment to the full implementation of House
Bill 156.
BACKGROUND
On November 7, 1978, the electorate of the State of Idaho adopted Initiative Petition
No. I. The chief provision of this initiative was to limit the maximum amount of ad valorem
tax on any property subject to assessment and taxation within the State of Idaho to one
percent (1%) of the actual market value of such property. The initiative also purported to
limit increase in market values to a maximum of two percent (2%) for any given year.
The legislature immediately amended the provisions of Initiative Petition No. I. In
1979, House Bills 166, 280, 306, and 308 were introduced to either amend Initiative Petition
No. I or to ameliorate its effects on certain taxing districts. Aside from actually amending
the language of Initiative Petition No. I, codified as Idaho Code § 63-923, the principal
thrust of the legislature’s concern with the initiative petition was embodied in a new statute,
Idaho Code § 63-2220. This new section was an attempt to place a cap on ad valorem taxes
by limiting the budget requests of taxing districts. The one percent (1%) limitation codified
in Idaho Code § 63-923 was not, however, referred to in Idaho Code § 63-2220. The code,
therefore, reflected two (2) distinct strategies for controlling ad valorem taxes—a cap on
taxes of one percent (1%) of assessed value and a limitation on budgets funded by the
property tax.
In 1980, the legislature amended Idaho Code § 63-923 to make Idaho Code § 632220 the exclusive state strategy for limiting ad valorem taxes. The legislature did this by
inserting the words “Except as provided in Section 63-2220, Idaho Code . . .” at the very
beginning of Idaho Code § 63-923. The effect of this language was to nullify the impact of
Idaho Code § 63-923, although Idaho Code § 63-2220, itself, contained a one percent (1%)
limitation. This one percent (1%) limitation was removed from Idaho Code § 63-2220 in
1981, thus eliminating entirely the one percent (1%) strategy for limiting ad valorem taxes.
The state changed its approach to limiting ad valorem taxes in 1990. House Bill 366
repealed the budget limitation strategy codified in Idaho Code § 63-2220 and substituted
what became known as Truth in Taxation. This was codified in Idaho Code §§ 63-2224
through 63-2226. These sections sought to limit ad valorem taxes by maximizing public
comment whenever a taxing district requested an amount of ad valorem tax revenues which
would cause the tax rate to increase from the rate in effect during the previous year. The
critical language which, in 1980, had been inserted into Idaho Code § 63-923, “Except as
provided in Section 63-2220, Idaho Code . . .” was amended to read, “Except as provided in
Section 63-2224, Idaho Code . . . .” The approach, however, was still to nullify the effect of
the one percent (1%) limitation contained in section 63-923, Idaho Code, while
simultaneously attempting to control ad valorem taxes using a strategy other than the one
percent (1%) limitation.
In 1995, the strategy for controlling ad valorem taxes changed again. The approach,
introduced in House Bill 156, is two-fold. First, there was a shift in some of the funding for
public schools from the property tax to general fund revenues. Second, a variant of the
budget limitation strategy originally codified in Idaho Code § 63-2220 was reimposed. In
adopting this revised approach to limiting ad valorem taxes, the legislature repealed Truth in
Taxation (Idaho Code §§ 63-2224 through 63-2226), but did not amend the one percent
(1%) limitation of Idaho Code § 63-923. This failure to amend means that, on its face, Idaho
Code § 63-923 now requires the implementation of the one percent (1%) limitation as well
as the new approach set forth in section 63-2220A.
ANALYSIS
Question 1:
From 1981 through 1994, Idaho Code § 63-923, the one percent (1%) limitation on
ad valorem taxes, was effectively nullified. The one percent (1%) limitation was effective,
“Except as provided in” either section 63-2220 or section 63-2224, Idaho Code. Each of
those provisions permitted imposition of tax in excess of one percent (1%) of market value
while attempting to limit ad valorem taxes using approaches different than the one percent
(1%) limitation of section 63-923.
Effective January 1, 1995, Idaho Code § 63-2224 was repealed. On its face,
therefore, the one percent (1%) limitation of Idaho Code § 63-923 is no longer limited by
reference to other statutes. Nevertheless, it is unlikely that Idaho courts will enforce the one
percent (1%) limitation. It was not the intent of the legislature to terminate the statutory
nullification of Idaho Code § 63-923. Even if it were, the statutory scheme set forth in Idaho
Code § 63-923 cannot be implemented.
THE LEGISLATURE DID NOT INTEND TO ELIMINATE ITS
PREVIOUS STATUTORY NULLIFICATION OF IDAHO CODE § 63-923
There are several compelling reasons to support the view that the Idaho Legislature
did not intend to eliminate the statutory nullification of Idaho Code § 63-923. First, it was
clearly the legislature’s purpose for fourteen (14) years to restrain the one percent (1%)
limitation while attempting to curb ad valorem taxes through other means. Second, the
current language of Idaho Code § 63-923 provides that it is limited in its effect by a statutory
provision which has been repealed. This leads to the inescapable conclusion that the
legislature’s failure to amend Idaho Code § 63-923 was an oversight rather than a policy
determination. Third, supporting the hypothesis that the failure to limit Idaho Code § 63923 was unintentional is the fact that the fiscal impact statement attached to House Bill 156
grossly underestimates the fiscal impact unless one assumes that the legislature had no
intention of reviving the one percent (1%) limitation.1 Fourth, the minutes of the House
Revenue and Taxation Committee, wherein House Bill 156 was debated extensively, are
devoid of any reference to Idaho Code § 63-923. Fifth, while Idaho Code §§ 63-923 and 632220A are not in conflict, in practice it will be difficult to reconcile the application of the
sections. Sixth, the one percent (1%) limitation cannot be implemented given Idaho’s ad
valorem tax structure.
IDAHO CODE §§ 63-923 AND 63-2220A ARE NOT IN CONFLICT,
BUT ARE DIFFICULT TO RECONCILE IN PRACTICE
There are a number of ways to affect the level of taxes imposed on property. Limits
can be placed on the taxing district’s budget request. This will result, other things being
equal, in a lower levy. Another approach is to place limits on the amount of the levy. In
fact, at various places in the Idaho Code, maximum levies are provided for various taxing
districts and funds. Idaho Code § 63-2220A adopts the strategy of limiting taxing district
budget requests in order to place a limit on the amount of ad valorem taxes a taxing district
can impose.
Idaho Code § 63-923 adopts a different limitation mechanism entirely. Rather than
limit budget requests or levy amounts, Idaho Code § 63-923 attempts to restrain ad valorem
taxes by placing a limit of one percent (1%) of the assessed valuation as the total tax levy
that can be imposed on any given piece of property. Theoretically, then, there is no conflict
between the approaches codified in sections 63-923 and 63-2220A. Theoretically, each
section imposes a ceiling on ad valorem taxes. Whichever section imposes the lower ceiling
on property in a given tax district will impose the tight constraint on ad valorem taxation
within that district. As discussed in the following section the difficulty lies not with the
theory, but with the practical application of the one percent (1%) limitation to Idaho’s ad
valorem tax structure.
OVERVIEW OF IDAHO’S AD VALOREM TAX STRUCTURE
Although each city, county or other authorized taxing district levies a discrete tax, the
districts do not actually “set levies.” Instead, each district develops a budget that determines
the amount of revenue from property taxes the district will need during its next fiscal year.
See Idaho Code §§ 63-621 through 63-626. This dollar amount is then “certified” by each
taxing district to the board of county commissioners in which the district exists. Idaho Code
§ 63-624. If the district is a multi-county district (if its boundaries overlap county
boundaries), the total amount of revenue required from property taxes is apportioned
between the counties, based on the percentage of the taxing district’s taxable value located in
each county. Idaho Code § 63-624.
On the second Monday of each September:
The board of county commissioners shall make a tax levy as a percent of
market value for assessment purposes of all taxable property in the taxing
district, which when applied to the tax rolls, will meet the budget requirements
certified by the tax districts.
Idaho Code § 63-624. See also Idaho Code §§ 31-1605 and 63-901.
The board’s clerk must prepare four copies of the record of all levies set by the board
of county commissioners and deliver one copy to the Tax Commission. Idaho Code § 63915. The Tax Commission must “carefully examine” this report to determine if any county
has:
Fixed a levy for any purpose or purposes not authorized by law or in excess of
the maximums provided by law for any purpose or purposes . . . .
Idaho Code § 63-917. If the Tax Commission finds an unauthorized or excessive levy, it
must report the levy to the prosecuting attorney (in the case of levies other than those
imposed by the county or to the attorney general in the case of county levies) who must
bring suit to have such levy set aside as unlawful. Idaho Code § 63-917.
When the levies are approved, the auditor delivers the tax rolls with the tax
computations to the county treasurer. Idaho Code § 63-1003. The treasurer prepares tax
notices which must be mailed to taxpayers by the fourth Monday of November. Idaho Code
§ 63-1103. The notice must separately state the exact amount of tax due for each taxing
district levying on the property to which the notice relates. Idaho Code § 63-1103(6).
All taxes collected by the treasurer are deposited into the county treasury and then
“apportioned” from the county treasury to each taxing district. Idaho Code § 63-918.
Because the amount of tax due for each taxing district is displayed on each tax bill, the
amount to be apportioned to each taxing district is simply the amount collected which is
designated as the district’s tax.
HOW IDAHO CODE § 63-923 AFFECTS THE LEVY, COLLECTION
AND APPORTIONMENT OF TAXES
Idaho Code § 63-923 inserts a one percent (1%) limitation on the amount of tax that
can be imposed on any real property.
The section does not limit the budgets certified by the taxing districts, or the levies set
by boards of county commissioners. The duties of the county auditor and the board of
county commissioners remain the same. The levies set by the county will still be reported to
the Tax Commission and reviewed by that body to determine if any county has fixed a levy
that is “in excess of the maximums provided by law.”
It is at this point in the system that implementation of Idaho Code § 63-923 has its
impact. The Tax Commission will be unable to approve any levies which, in combination,
cause taxes to exceed one percent (1%) of the actual market value of any property.
A.
Recourse to the Courts
Two possible solutions present themselves. First, the Tax Commission could handle
the matter as it presently does “according to law.” The law mandates the Tax Commission
to report all excessive levies to county prosecutors or to the attorney general. The prosecutor
or the attorney general must then “immediately bring suit . . . to set aside such levy as being
illegal.”
As a practical matter, the courts are not equipped to handle the massive influx of
lawsuits that would result. Furthermore, taxing districts with multi-county boundaries could
have their lawsuits brought in more than one county, thus giving rise to questions of
jurisdiction or to inconsistent verdicts in different courts on the same issue. Finally, the
inexorable deadlines of the annual property tax levy and collection process: As outlined
above, these lawsuits would have to be filed and resolved between the date the levy is set
(the second Monday of September) and the date the tax notices are mailed (the fourth
Monday of November). The Idaho courts could not possibly handle these lawsuits in an
eleven week period.
Even if Idaho district courts could process these property tax lawsuits in eleven
weeks, the legal problem created by Idaho Code § 63-923 would not be solved. The district
courts are presently empowered only to “set aside” property tax levies found to be “illegal.”
They cannot themselves impose the levies once the illegal levies are set aside. Recourse to
the courts is ultimately futile as a means of implementing Idaho Code § 63-923.
This implementation procedure would effectively impose on the judicial branch of
government the duties of administering the ad valorem tax system of the state, which duties
are both ministerial and at the same time profoundly policy-laden. Such an imposition of
ministerial and policy-making duties lies beyond the functions provided for the judicial
branch of government in article 5 of the Idaho Constitution and would violate the separation
of powers principle of art. 2, sec. 1 of the Idaho Constitution. It is one thing for the courts to
review the legality of administrative actions already taken, it is quite another thing to impose
those duties on the courts themselves. Miller v. Miller, 113 Idaho 415, 418, 745 P.2d 294,
297 (1987). It is our opinion that the Idaho judiciary would properly decline to assume the
duties of tax apportionment that would be imposed on it by Idaho Code § 63-923.
B.
Counties as Ultimate Tax Authorities
The second solution is to assume that Idaho Code § 63-923 impliedly grants to
counties the power to collect and apportion taxes to the various taxing districts within and
between counties.
Such an implied grant of power or authority is authorized whenever such power is
found to be necessary, usual and proper to carry out express authority. Bailey v. Ness, 109
Idaho 495, 708 P.2d 900 (1985). Implied powers of boards of county commissioners are
also recognized by statute:
Every county is a body politic and corporate, and as such has the powers
specified in this title or in other statutes, and such powers as are necessarily
implied from those expressed.
Idaho Code § 31-601 (emphasis added).
The county’s powers are exercised by its board of county commissioners. Idaho
Code § 31-602. The Idaho Supreme Court has validated exercise of implied powers by local
governments. Alpert v. Boise Water Corp., 118 Idaho 136, 795 P.2d 298 (1990). However,
if there is a “fair, reasonable, substantial doubt” about whether a power exists, the doubt is
resolved against its existence. City of Grangeville v. Haskin, 116 Idaho 535, 777 P.2d 1208
(1989).
Such a solution to the problem of apportioning taxes under the one percent limit
would work only if the board of county commissioners is given ultimate taxing authority
over all other taxing districts in the county. At present, each county contains several
independent taxing districts: The counties themselves, cities, school districts, highway
districts, fire districts, irrigation districts and so forth. Each district has its own statutory
authority to impose taxes up to a certain mill levy limit. The combined total of mill levies
exceeds one percent (1%) of market value on properties in many areas of the state.
A board of county commissioners presently has no statutory authority to adjust the
levies of these other independent taxing districts. If such authority is impliedly granted by
Idaho Code § 63-923, then each board will become the ultimate tax authority in its county.
Faced with the problem of scaling taxes down to one percent (1%), the board would have
several options. It could either scale down taxes in equal proportion across all taxing
districts, or it could eliminate entirely the tax levy in some districts in order to maintain tax
revenue for other districts that are perceived as providing more essential services. Such a
solution would centralize all taxing authority in the board of county commissioners and
effectively eliminate statutory budget authority of all other independent taxing districts.2
There is no express grant of authority to the Tax Commission to adjust levies and
apportion taxes. Neither the Idaho Constitution nor the Idaho Code would permit imposition
of such a duty on the courts. Finally, any attempt to centralize such authority in the boards
of county commissioners would make the boards into ultimate taxing authorities and
virtually destroy all the other independent taxing districts that now answer to the local
electorate.
It follows, from the above discussion, that Idaho Code § 63-923 cannot be
implemented as written. It is our opinion that a reviewing court faced with the options of
striking down this section or upholding it by creating from whole cloth a new tax
apportionment system for the State of Idaho, would choose the former option.
Courts are driven to the extreme measure of striking down a statute only when “it is
so unclear or confused as to be wholly beyond reason, or inoperable, . . . .” Gord v. Salt
Lake City, 434 P.2d 449, 451 (Utah 1967). Idaho Code § 63-923 fits these criteria. There is
no possible means to implement it “according to law.” Consequently, a reviewing court
would strike it down.
THE CONSTITUTIONAL REQUIREMENT OF UNIFORM LEVIES
This opinion has already concluded that Idaho Code § 63-923 cannot be implemented
because it fails to provide a mechanism whereby counties, or any other governmental entity,
can collect taxes and then apportion them subject to the one percent (1%) limit. Assuming,
however, for the sake of argument, that counties were authorized to perform this task, it
would then be necessary to inquire as to the standard they would use in making the
apportionment.
We turn, therefore, to the question of how Idaho Code § 63-923 can be implemented
in light of the uniformity requirements of art. 7, sec. 5 of the Idaho Constitution. That
provision requires that each taxing district levy must be “uniform upon the same class of
subjects within the territorial limits of authority levying the tax . . . .”
Reading Idaho Code § 63-923 together with art. 7, sec. 5 of the Idaho Constitution
The board of county
yields the following possible apportionment mechanism.3
commissioners would first have to determine whether the cumulative levies on any property
subject to ad valorem tax exceed one percent (1%) of the actual market value of the
property. If so, the commissioners might then decide to reduce the levies proportionately to
an amount that no longer exceeds one percent (1%) of actual market value. These reduced
levies must then be uniformly applied to all property subject to tax within the geographical
boundaries of each taxing district whose levy applies to the property.
A simplified hypothetical example may help clarify how the levies, once set, could be
adjusted by a board of county commissioners. For this hypothetical example, assume a
single county has two school districts. The hypothetical county also contains two cities and
a fire district which serves one city (“City A”) and part (but not all) of the county. The ad
valorem budget, tax base and levy (unadjusted for the one percent (1%) limitation of each
district) are:
Hypothetical County
Budget
Tax Base
Levy
$2,000,000
$1,000,000,000
0.30%
School District 1
$750,000
$250,000,000
0.30%
School District 2
$937,500
$312,500,000
0.30%*
Fire District
$1,000,000
$420,000,000
0.24%
City A
$1,500,000
$300,000,000
0.50%
City B
$750,000
$187,500,000
0.40%
District
County
*Maximum statutory levy
Now, compare the taxes imposed on properties located in three different parts of the
county. Example 1 is property located in City A and is subject to taxes by that city, the fire
district, School District 2 and the county. Example 2 is rural property located in School
District 1 and the county. Example 3 is property located in City B, School District 1 and the
county. Each is subject to the following levies:
District
County
Example 1
Example 2
Example 3
0.30%
0.30%
0.30%
0.30%
0.30%
School District 1
School District 2
0.30%
Fire District
0.24%
City A
0.50%
City B
0.40%
Total Levies:
1.34%
0.60%
1.00%
The taxes levied on the property in Example 1 exceed the one percent (1%) limitation. To
reduce the taxes on this property to one percent (1%), the levies imposed on it must be
reduced to .74626864 of the levy first computed. The adjustment is:
Levy
Adjustment
Adjusted
Levy
0.30%
0.7462686
0.224%
School District 2
0.30%
0.7462686
0.224%
Fire District
0.24%
0.7462686
0.179%
City A
0.50%
0.7462686
0.373%
District
County
School District 1
City B
Total Levies:
.40%
1.34%
0.7462686
1.00%
Art. 7, sec. 5, mandates that these reduced levies apply uniformly to all property within a
taxing district’s boundaries. The property in Examples 2 and 3 can no longer be taxed at
0.30% by the county, when the property in Example 1 is only taxed at 0.224%. Thus, the
lower county levy applies to all property in the county, even though some of that property is
not taxed above one percent (1%). As a result, the adjusted tax rates on all three properties
in the hypothetical county become:
District
County
Example 1
Example 2
Example 3
0.224%
0.224%
0.224%
0.30%
0.30%
School District 1
School District 2
0.224%
Fire District
0.179%
City A
0.373%
City B
Total Levies:
0.40%
1.00%
0.524%
0.924%
Several things should be noted in this final step of the hypothetical. First, the
adjustment required by Idaho Code § 63-923 is not simply to reduce tax levies to one
percent (1%) of market value. A second step, mandated by art. 7, sec. 5 of the Idaho
Constitution, requires that the resulting levies be uniform. As a practical matter, this means
that the property in the county with the highest levy is the one that must first be brought
down to the one percent (1%) level. All other properties are then proportionately reduced.
This means that some properties upon which tax levies did not originally exceed one percent
will enjoy levies that are reduced yet lower.
Second, School District 1 and School District 2 each began with a 0.30% levy—
presumably the amount that local school boards, parents and taxpayers felt was the amount
necessary to provide a comparable education for the children in these two school districts.
After the adjustment, however, School District 1 still has a 0.30% tax levy, whereas School
District 2 has a 0.2240% tax levy. That children in the latter district experience a 25% cut in
school funding might well be found to violate the requirement in art. 9, sec. 5 of the Idaho
Constitution that all Idaho students be provided a “uniform” and “thorough” education.
Third, it should be noted that City A had a 0.50% tax levy before the adjustment and
City B had a 0.40% tax levy. After the adjustment, City A finds itself with a 0.373% tax
levy, whereas City B still has a 0.40% levy. Those who live in City A have no voice
whatsoever in this 26% tax cut, or in the corresponding loss of services the cut will mandate.
The cut is triggered solely by events in other taxing districts.5
In short, the combined requirements of a one percent (1%) property tax limitation and
the uniform levy requirements of art. 7, sec. 5 of the Idaho Constitution create the inevitable
result that property taxes in each taxing district will bear no rational relation to the needs of
that district or to the wishes of the taxpayers of that district.
Question 2:
Since Idaho Code § 63-923 cannot be implemented, it has no effect on the
implementation of those statutes affected by House Bill 156.
AUTHORITIES CONSIDERED
1.
Idaho Constitution:
Art 2, § 1.
Art. 7, § 5.
Art. 9, § 5.
2.
Idaho Code:
§ 31-601.
§ 31-602.
§ 31-1605.
§ 63-621 through 63-626.
§ 63-901.
§ 63-915.
§ 63-917.
§ 63-918.
§ 63-923.
§ 63-1003.
§ 63-1103.
§ 63-1103(6).
§ 63-2220.
§ 63-2220A.
§ 63-2224 through 63-2226.
3.
Idaho Cases:
Alpert v. Boise Water Corp., 118 Idaho 136, 795 P.2d 298 (1990).
Bailey v. Ness, 109 Idaho 495, 708 P.2d 900 (1985).
City of Grangeville v. Haskin, 116 Idaho 535, 777 P.2d 1208 (1989).
Miller v. Miller, 113 Idaho 415, 745 P.2d 294 (1987).
4.
Other Cases:
Gord v. Salt Lake City, 434 P.2d 449 (Utah 1967).
DATED this 10th day of August, 1995.
ALAN G. LANCE
Attorney General
Analysis by:
CARL E. OLSSON
Deputy Attorney General
1
The fiscal impact statement associated with House Bill 156 estimates the impact on the General
Fund for fiscal year 1996 to be $40 million. The impact on the General Fund in fiscal years 1997 and
1998 is estimated at $44 million and $47.5 million, respectively. According to the best estimates of the
Tax Commission, however, these figures are understated by at least $200 million per year in additional
lost revenues to local governments if one assumes implementation of Idaho Code § 63-923.
2
As noted above, an across-the-board proportionate reduction is only one possible scenario. The
one percent (1%) limitation does not mandate this outcome. If counties are truly empowered to
“apportion” taxes and bring them down to one percent (1%) of market value, then they are free to cut
taxes in any way they see fit.
3
The mechanism presented here is over-simplified. Even if counties were given all authority to
apportion taxes within the county, a residual problem would exist for all multi-county districts. At best, a
county can be the ultimate tax authority for its own county; it cannot have authority beyond its borders to
set taxes in adjacent counties. The one percent (1%) limitation has no solution to this problem of
apportioning taxes among multi-county taxing districts.
4
The adjustment is by one percent (1%) divided by the total levy. In this case, 0.0100 / 0.0134 =
0.742686.
5
It should take little imagination to visualize the extreme pressures that will be exerted on local
public officials once it becomes known that the budgets they submit will inevitably be scaled down by
unrelated budgeting decisions in other taxing districts. The one percent (1%) limitation would create an
incentive to protect against this anticipated scale-down by submitting inflated budget requests.