Property taxes fund many of the City of Boise’s services and amenities, including police, fire protection, parks and libraries. Other services, such as the airport, water renewal, and solid waste management, are funded through other means. Over the last decade, residential property values increased dramatically, increasing homeowners’ share of the property tax burden while the share for commercial property owners has fallen. The shifting tax burden is a concern of both policy makers and the public.
The city partnered with the Idaho Policy Institute (IPI) to conduct a third-party analysis to better understand the significance of property taxes as a revenue source for the city and address two research questions:
- What are the drivers of property tax growth in Boise?
- What policy decisions can impact commercial and residential tax burden?
Property taxes are an essential revenue source for the city, especially given the limited tax options for Idaho localities. The property tax burdens borne by Idaho residents remains nationally competitive. Residential properties contributed disproportionately more to property tax growth than commercial, as the former’s values have appreciated at a faster rate and substantially outnumber the latter.
This study finds that the major drivers of property tax growth for an individual property owner is a combination of what proportion of the city’s total taxable value their property represents, budget growth, and the homeowner’s exemption interacting with one another. Among these, the change in a property’s share of total taxable value produces the greatest effect. When a property’s value increases faster than other properties (capturing a higher proportion of the total value within the city), its owner generally pays a larger share of property taxes. In regards to what type of policy decisions can impact commercial and residential tax burden, while many tools are available—such as assessment ratios, exemptions, and so on—outside of the city budget, most alternatives will require policy changes at the state level.
Kim, Cheong; May, Matthew; and Crossgrove Fry, Vanessa, "City of Boise Property Tax Analysis 2020" (2020). Idaho Policy Institute Reports. 28.