Was the 1996 Idaho One Percent Initiative capable of being implemented as written, and how would it have affected school funding, voter-approved bonds, urban renewal districts, and charter school districts?

Plain-English summary

Senator Hal Bunderson asked the AG seven questions about the One Percent Initiative scheduled for the November 1996 Idaho ballot. The initiative would have capped property tax at 1% of assessed value, required the legislature to fund "all public education" exclusively from non-property-tax sources, and limited annual budget growth for cities, counties, and taxing districts to the increase in the Social Security cost-of-living index.

AG Alan G. Lance, with analysis from Deputies William A. Von Tagen, Thomas F. Gratton, Michael S. Gilmore, Theodore Spangler, and Carl E. Olsson, reached several conclusions:

1. "Public education" includes school plant facilities; if the state issued bonds to pay for them, the bonds were not subject to Article 8, section 3's two-thirds vote rule (that section applies to local subdivisions, not the state) but were subject to Article 8, section 1's $2 million ceiling and majority-vote requirement.
2. Community colleges were not "public education" under Article 9, section 1, so the initiative's school-funding requirement would not have reached them.
3. The initiative repeated the same fatal defect identified in Attorney General Opinion 91-9: section 1.1 said the 1% "shall be collected by the counties and apportioned according to law to the taxing districts within the counties," but no existing statute and no provision of the initiative gave any official authority to actually adjust levies to meet the cap. A reviewing court would likely strike it down as inoperable.
4. The "annual budget" growth limit covered the entire budget regardless of funding source (grants, fees, federal payments), not just the property-tax-funded portion.
5. The initiative did not expressly conflict with the recodified Idaho Code §§ 63-923, 63-2220A, or 63-2220B, but did conflict with the property tax code "taken as a body of law" and with portions of Title 50, Chapter 17 (local improvement district bonds).
6. Ordinary and necessary expenses were not protected by the initiative's bond-debt exception. Urban renewal bonds issued under the Local Economic Development Act would face serious repayment problems, with bondholders likely to assert a Contracts Clause claim under 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 (1983), although California's Amador Valley decision suggested impairment claims would have to wait for actual default.
7. The initiative would apply to charter school districts (like Lewiston Independent School District and Boise Independent School District) the same way it applied to other districts, because section 6 of the initiative expressly repealed inconsistent laws, triggering the Ridenbaugh / Bagley / Independent School District of Boise City rule that a general statute with an express repeal-of-inconsistent-laws clause overrides charter-specific provisions on matters of more-than-local concern.

The bottom line was unimplementability. The AG warned that a court faced with the choice between effectively dismantling Idaho's property tax structure and striking the initiative down would choose the latter.

Currency note

This opinion was issued in 1996. 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 did the AG keep saying the 1% cap had no enforcement mechanism?

Because none of the existing actors in Idaho's tax-collection chain had statutory authority to override what individual taxing districts certified. Under the recodified statutes (effective January 1, 1997), each taxing district develops its own budget and certifies the dollar amount to the board of county commissioners. The State Tax Commission examines the levies but its only remedy is to refer unauthorized levies to a prosecutor for a court action. Nothing in either the existing tax code or the proposed initiative gave the State Tax Commission, the boards of county commissioners, or any other body the power to scale levies down to fit a 1% cap. The AG quoted Opinion 91-9: "The basic problem here is that the drafters of the proposed One Percent Initiative frame a standard that is, at bottom, only a slogan."

Why did the AG say the budget cap covered grants and federal payments, not just property taxes?

Because section 1.2 said "the annual budget" and Idaho courts construe unambiguous statutory language by its plain meaning. The contrast with Idaho Code § 63-2220A (which explicitly limits the "ad valorem portion" of a budget) showed that the drafters knew how to limit the cap to one revenue source if they wanted to. By using "the annual budget" without qualification, they reached every dollar coming through the budget. The AG's example: a library district that suddenly received an unbudgeted grant could not spend it if doing so would push annual budget growth past the Social Security index figure.

What was the urban renewal bond problem?

The Local Economic Development Act (Title 50, Chapter 29) lets urban renewal agencies issue bonds repaid through tax-increment financing: property taxes above a baseline value get diverted to a special fund that services the bonds. Cutting overall property tax rates to 1% would have shrunk the increment available for repayment. Existing bondholders could sue under the federal Contracts Clause (Article I, section 10), with United States Trust and Energy Reserves Group as their main authority. The AG noted that California's Supreme Court in Amador Valley upheld Proposition 13 against a similar challenge, but only because actual default had not yet occurred; that reasoning suggested Idaho courts might wait for default before finding impairment, a slow and uncertain remedy for affected investors.

Why did the initiative reach charter school districts when their charters were supposed to override general statutes?

Because of an old line of Idaho Supreme Court cases. In re Ridenbaugh, 5 Idaho 371, 49 P. 12 (1897) held that a general state statute prohibiting gambling overrode Boise City's specific territorial-charter authority to license gambling, because the general law expressly repealed inconsistent acts and addressed a matter of more-than-local concern. Bagley v. Gilbert, 63 Idaho 494, 122 P.2d 227 (1942) and Independent School District of Boise City v. Callister, 97 Idaho 59, 539 P.2d 987 (1975) extended the rule to charter cities and charter school districts. Section 6 of the initiative said "any laws in conflict with this new section (63-923) are hereby repealed," which the AG read as exactly the kind of general-policy statement that triggers Ridenbaugh.

Did the initiative require the state to fund school plant facilities?

The opinion read it that way for the most part. Section 5's reference to "all public education" included plant facilities, drawing on the Idaho Supreme Court's holding in Idaho Schools for Equal Educational Opportunity v. Evans, 123 Idaho 573, 850 P.2d 724 (1993) (ISEEO I) that school facilities are part of the constitutional "system of public, free common schools." But the initiative did not actually appropriate any state money or identify a funding source. It also did not clearly forbid local districts from issuing future debt for facilities the state failed to fund, although the ambiguity meant bond counsel might refuse to opine on local district authority, which as a practical matter could shut down local bond issuance.

Background and statutory framework

Idaho voters had passed an earlier version of a 1% property tax cap in 1978; this 1996 version was the latest in a series of attempts to constrain property taxes by initiative. The AG had reviewed an earlier draft of the same idea in Attorney General Opinion 91-9. The 1996 version added two new features absent from the 1991 version: a clause repealing all conflicting laws, and a Social-Security-indexed budget growth cap.

The mechanics of property tax collection that the AG walked through were the recodified provisions enacted by 1996 Session Laws, ch. 98 (H.B. 783), effective January 1, 1997. Each taxing district certifies its budget; the board of county commissioners calculates the levy needed to meet the certified budgets; the auditor delivers the tax rolls to the county treasurer; the treasurer prepares and mails tax notices by the fourth Monday of November and itemizes each district's share; collected taxes are then apportioned from the county treasury to each district based on what was billed for that district.

Article 9, section 1 of the Idaho Constitution requires the legislature "to establish and maintain a general, uniform, and thorough system of public, free common schools." Article 8, section 1 caps state debt at $2 million unless the people approve more by majority vote. Article 8, section 3 imposes a two-thirds requirement on county, city, school district, and other subdivision indebtedness, with carve-outs for ordinary and necessary expenses and certain revenue bonds. Article 7, sections 2 and 5 require uniform property taxation in proportion to value within a taxing jurisdiction.

Citations

• Idaho Const. art. 3, § 19; art. 7, §§ 2, 5; art. 8, §§ 1, 2, 3; art. 9, §§ 1, 3, 4, 10; art. 10, § 1
• Idaho Code §§ 50-1721A, 50-2005, 50-2903, 50-2908, 50-2909, 63-803, 63-808, 63-809, 63-902, 63-903, 63-923, 63-2220A, 63-2220B
• Idaho Schools for Equal Educational Opportunity v. Evans, 123 Idaho 573, 850 P.2d 724 (1993)
• State ex rel. Miller v. State Board of Education, 56 Idaho 210, 52 P.2d 141 (1935)
• Davis v. Moon, 77 Idaho 146, 289 P.2d 614 (1955)
• Bagley v. Gilbert, 63 Idaho 494, 122 P.2d 227 (1942)
• In re Ridenbaugh, 5 Idaho 371, 49 P. 12 (1897)
• Independent School District of Boise City v. Callister, 97 Idaho 59, 539 P.2d 987 (1975)
• Westerberg v. Andrus, 114 Idaho 401, 757 P.2d 664 (1988)
• United States Trust Co. v. New Jersey, 431 U.S. 1 (1977)
• Energy Reserves Group v. Kansas Power and Light, 459 U.S. 400 (1983)
• Amador Valley Joint Union High School District v. State Board of Equalization, 583 P.2d 1281 (Cal. 1978)

Source

• Landing page: https://www.ag.idaho.gov/office-resources/opinions/
• Original PDF: https://ag.idaho.gov/content/uploads/2018/04/OP96-03.pdf

Original opinion text

The full 38-page text of Attorney General Opinion 96-3, addressing seven questions about the 1996 One Percent property-tax Initiative, is available at the linked PDF above. Key passages reproduced here for reference.

ATTORNEY GENERAL OPINION NO. 96-3
To: Honorable Hal Bunderson, Idaho State Senate

CONCLUSIONS

1. Public education includes funding for school plant facilities. If the state should issue bonds to pay for school plant facilities, the state's bonded indebtedness would not be subject to art. 8, sec. 3, but would be subject to art. 8, sec. 1, and its requirement for a majority vote for approval of state debt exceeding $2 million.

2. Community colleges are not included within the definition of public education.

3. The provisions of the 1996 version of the Initiative concerning the collection and apportionment of taxes do not meaningfully differ from the version previously addressed in Attorney General Opinion 91-9. "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." 1991 Idaho Att'y Gen. Ann. Rpt. 98, 99.

4. When the Initiative refers to the "annual budget," it refers to the entire annual budget regardless of source of funding.

5. The Initiative is not in conflict with Idaho Code §§ 63-923, 63-2220A or 63-2220B. It is, however, in conflict with the property tax code taken as a body of law and may also be in conflict with other code provisions, for example, certain provisions of chapter 17, title 50, Idaho Code.

6. Ordinary and necessary expenses are not subject to voter approval requirements and are not covered by the Initiative's exception from the property tax limitations for existing or subsequent indebtedness. The Initiative may have a serious impact on the ability to repay urban renewal bonds issued prior to the effective date of the Initiative.

7. The Initiative will apply to charter school districts the same as other school districts.

ANALYSIS

[The opinion's analysis traverses the seven questions in detail, drawing on Idaho Schools for Equal Educational Opportunity v. Evans (school facilities as part of the constitutional system of public schools), State ex rel. Miller v. State Board of Education (Article 8, section 3 does not bind the state), Davis v. Moon (state-credit appropriations for educational institutions are constitutional), the Ridenbaugh-Bagley-Independent School District of Boise City line on charter override, and the Contracts Clause cases of United States Trust Co., Energy Reserves Group, and Amador Valley.]

CONCLUSION

The Initiative is unimplementable because it is in conflict with the basic principles of Idaho's property tax structure. Given a choice between effectively repealing Idaho's property tax code or holding that an initiative which ostensibly attempts only to modify a portion of that code cannot be implemented, a court is most apt to find the Initiative unimplementable.

DATED this 16th day of May, 1996.
ALAN G. LANCE
Attorney General

Analysis by:
WILLIAM A. VON TAGEN
THOMAS F. GRATTON
MICHAEL S. GILMORE
THEODORE SPANGLER
CARL E. OLSSON
Deputy Attorneys General