Bill Analyses and Ratings

Bill Summary

House Bill 842 makes several targeted changes to Idaho’s property tax budget limitation law (Section 63-802). Most significantly, it raises the maximum allowable annual budget increase from 8% to 15% for cities with fewer than 30,000 residents and for fire protection and ambulance service districts serving those cities. It also doubles the annual recovery rate for forgone budget increases used for maintenance and operations from 1% to 2%, and cuts off the ability of nonschool districts to accumulate forgone increases after property tax year 2025.

The bill adds an entirely new mechanism — subsection (7) — allowing city and county voters to reduce their local government’s base property tax budget through the citizen initiative process. For cities, a 60% voter threshold applies; for counties, the same supermajority required for budget increases (66⅔%) applies. Once approved, the reduced base budget becomes the starting point for all future allowable budget calculations.

The bill also makes a technical correction to Section 31-1423, fixing a code cross-reference for consolidated fire protection districts recovering forgone increases, and applies retroactively to January 1, 2026.

Overall Assessment

This bill’s most consequential change is a two-edged one for Idaho taxpayers: it allows small cities and their associated emergency service districts to raise property taxes by up to 15% annually — nearly double the previous 8% cap — while simultaneously creating a new voter initiative pathway for citizens to force reductions in city and county base budgets. Residents of Idaho’s smaller communities face the greatest exposure to higher property tax bills if local governments use the expanded cap, but also gain a new direct-democracy tool to push back. The bill also quietly ends the accumulation of forgone budget increases after 2025, limiting a mechanism that allowed governments to bank and later deploy years of unused taxing authority.