Consolidating the two Sun Valley and Ketchum Police and Fire departments into one Police and one Fire department would yield minimal tax savings to Sun Valley residents and property owners. Sun Valley tax payers see their tax costs for city expenses as only one item of 13 line items on the Property Tax Bill they receive from Blaine County. The city of Sun Valley receives only 16% of the Sun Valley property owner’s total County Tax Bill. Schools receive 54%, the County receives 11%, and seven others receive 17%.
The Sun Valley 2009 Budget totals $7,022,000 in expenses and an equal amount in revenues. (All numbers rounded.) Of the total revenues, only 43% ($3,014,000) comes from Property Taxes. The rest of the revenues, 57% ($4,008,000), do not come out of property tax payer’s pockets. Those revenues include: Local Option Tax 20.7% ($1,450,000), State liquor and sales tax 10.4% ($730,000), Business and Franchise taxes and Building permits 5.1% ($359,000), and more than 20 other arcane revenue streams and transfers provide 20.9% ($1,470,000). (City and governmental budget accounting can be mind-boggling.)
Of the $7,022,000 city budget, 17% ($1,192,000) goes to the Police department and 7.4%
($521,000) goes to the Fire department. Assuming a very generous and optimistic 20% reduction in cost of Police and Fire department functions in Sun Valley from consolidations with Ketchum’s like departments, Sun Valley’s Police functions would then be 15.3% ($1,050,000) and Fire safety functions would be 6.3% ($417,000) of the city’s budget. (Fire engines, police cars, and other equipment costs would be the same whether consolidated or not.) The new reduced city budget would be $6,655,000, 94.8% of the original budget, or a 5.2% reduction of the original budget.
Assume all the 20%, $367,000, cost savings of the consolidated Police and Fire department functions went to reduce the property tax requirements. The new Sun Valley property tax share would be $2,647,000, a reduction of 12.2%. (The Sun Valley tax share of the total Blaine County Property Tax Bill is 16%.)
Based on all assumptions and the 12.2% reduction of the Sun Valley share of taxes (the savings from Police and Fire department consolidations), Sun Valley property tax payers would save 1.94% of their present County Property Tax Bill; $39 if the Tax Bill is $2,000 ($360,000 house), $78 if $4,000, $117 if $6,000, $156 if $8,000, $194 if $10,000 ($1,800,000 house). If only the Police departments of Sun Valley and Ketchum were consolidated, the Tax Bill savings would be 1.39%, and the comparable savings would be $28, $56, $83, $112, $139.
As trade-off for losing their desires and feelings for their own Police and Fire Departments, median consolidation cost savings for the Sun Valley property owner would offset just once yearly the cost of dinner and wine for two at Christy’s.
Savings and efficiencies of consolidation of both Sun Valley and Ketchum into one new city, under one government, are just mind-boggling to even begin to qualify and quantify.
Guest Opinion submitted by: Wendy Jaquet, Donna Pence, and Clint Stennett
On Friday, August 25 we will be attending a special session of the Idaho Legislature. The special session has been called by the Governor to consider his tax shift legislation on property taxes. The Governor’s tax shift legislation shifts school maintenance and operation budgets for all property tax payers to the sales tax. His legislation raises sales tax 20% (1 cent) to cover this shift.
In response the to the Governor’s proposal, Democrats have proposed legislation which exempts homeowners that qualify for the Homeowners Exemption from the school maintenance and operations levy on their property tax. Our plan targets relief to homeowners who have been shouldering the heaviest burden for property taxes because of rising values in residential property. Since our plan targets relief to homeowners it does not require a sales tax increase. The Democrats’ homeowner property tax cut does not provide unneeded tax cuts to real estate speculators or to special interest properties like agriculture, timber, mining or commercial properties. These special interest properties have not seen significant property tax increases (agricultural and utility properties have actually seen a decrease in property taxes over the last five years). Our legislation is targeted, doesn’t raise taxes and is fiscally responsible.
Although our plan is a more conservative approach than the Governor’s tax shift plan, he refuses to let it have a hearing, either before a legislative committee or the full House and Senate. We pledge to try everything possible to get our plan heard by the legislature, but we know that the Governor’s bill was guaranteed victory even before he announced the details of it.
We wanted to take this opportunity to explain why the Governor’s tax shift harms most taxpayers in our district, especially Blaine County. Gooding, Camas and Lincoln counties have not experienced the value increases found in Blaine County over the last ten years. Just in the last two years Blaine has had average increases of 18% and 20% in values. Gooding, Camas and Lincoln receive close to 80% of funding for their school budgets from the state. Property taxes are a smaller part of their budgets. Blaine is the reverse. Blaine receives about 20% of its budget from the state legislature while the rest comes from local property taxes.
Whereas the Democrats’ homeowner tax cut replaces school maintenance and operations budgets 1:1 or one dollar for each one dollar paid in property taxes, the Governor’s bill runs the state funding through the state equalization formula. Blaine will receive $37.80 for each $100,000 in valuation. On a $500,000 home, there will be approximately $189 in relief. If your income is between $30,000 and $39,000 you will pay $105.93 more in sales tax (remember, food is taxed). Your gain will be $83.00. If you itemize your deductions on your income tax, you should expect to lose about 25% of the estimated relief. This is hardly the relief that Blaine property tax payers need or have been asking for.
In the meantime, your sales taxes will be covering the loss of property taxes from business, agriculture, mining, vacation homeowners and real estate speculators.
At one point, we suggested that the Governor and the Legislature allow both plans to compete side-by-side on the November ballot, allowing voters to choose which one they liked best. You must ask yourselves why the Governor and the Legislative leadership decided not to allow voters this choice.
Finally, we carefully considered supporting the Governor’s tax shift plan, since it is the only solution he will allow us to consider. After looking at the numbers, we cannot support this proposal. We pledge to you that we will continue to explore more meaningful and fair property tax relief in the upcoming 2007 session.
Mark Twain said that “the law can be an ass if it is amoral, not fair to all and creates an end result that is negative”. I think the law on property taxes as applied to the Wood River Valley, generally and Sun Valley/Ketchum specifically, meets all three criteria.
1. The current law has robbed us of almost all demographic diversity. Yes, roses are magnificent, but if that’s all we had, pretty soon we would only see and feel the thorns. If you visited downtown Ketchum after 5:30 PM, the streets are deserted as almost everyone has fled South. No wonder, restaurants and other businesses that depend on local trade are closing. The government that created this situation, is trying to fix it with a “band aid” i.e. subsidized housing, which at best will create a dual diversity…….visitors and locals that can afford the taxes and those that service them. We will have the wise elderly and the diverse middle class missing.
2. Unfair to the point of amoral, those that moved here many years ago, paid taxes so that their children attended school and in their golden years had to move out because they could not afford the taxes. The diverse skiers and their families who owned a piece of paradise, had to leave because the taxes were too much to continue.
3. Yes, the seniors have a circuit breaker program and the exemption has gone up from 50,000 to 75,000. To use the first, you have to be at the poverty level and the second is a joke if your assessment has gone up from 1 million to 2 millions in one year.
4. The appeal process is catch 22. Selling prices in Idaho are secret, so there is really no way to objectively debate the assessor’s value. It is your word against his. The assessors are generally fair but appear overworked making decisions about the homeowner’s evaluation that will affect the homeowner’s life. Furthermore, for this monumental decision, the discussion time allowed is 5 minutes each with a 3 minute rebuttal in front of a Commission that appears to be motivated to get more money.
5. Finally, raising taxes should be based on due process, logic with checks and balances. In the case of property taxes, it appears that when more money is needed, re-assess the properties. There is no debate, no logic as to the cost of living increase or any other checks and balances.
Solutions:
1. If we fixed the assessment at purchase price plus inflation, it will create long term residents with stability. The residents would pay current taxes when they have young children and when they get old and stay put, their taxes will be relatively low and fair since they no longer have young children that use the school system. New people moving in, young or old, will pay at the current purchase price and therefore, higher taxes knowingly. In other words, a long term resident will no longer be blind sighted or forced to move. Stable residents and diversity will mitigate the need for subsidized housing, which at best is unfair, a debate for another time.
2 A radical solution under the current law: Give the homeowners 30 days after a new assessment, to sell the house to the County at the assessed value or give the County 30 days to purchase the property at the homeowners assessed value. I bet you, if we did that, both sides will be much more diligent about evaluating the house.
