Local Government
Services & Revenue
Sources
Seth Grigg
Executive Director
Association of Idaho Cities
This Presentation Will Cover
• Services Provided by Counties, Cities and Special
Districts.
• Major Revenue Sources for Idaho Local
Governments.
• Local Government Service Delivery and Funding
Challenges.
Counties ― The Basics
• County officers and organization set forth in
Idaho Constitution.
• Constitutional grant of police power.
• County boundaries, powers and responsibilities
set in Idaho law.
• Counties provide a mix of state mandated and
discretionary services.
Public Safety Services Provided by Counties
• Law Enforcement
• Jails
• Emergency Dispatch
• Juvenile Detention & Probation
• Adult Misdemeanor & Felony Probation
• Ambulance Service
Judicial & Legal Services Provided by Counties
• Facilities & Staffing for District & Magistrate
Courts
• Prosecution of:
• Felony Offenses (committed inside or outside of city
limits),
• Misdemeanors (committed outside city limits),
• State Traffic Infractions (committed outside city
limits), and
• County Ordinance Violations
• Public Defense for Indigent Criminal Defendants
Public Works & Growth Management
Services Provided by Counties
• Landfills & Solid Waste Collection
• Roads & Bridges
• Planning & Zoning
• Building Code Enforcement & Permitting
• Parks
• Airports
Other Services Provided by Counties
• Indigent Medical Care
• Property Tax Assessment &
Administration
• Elections
• Recording
• Marriage Licenses
• Motor Vehicle Registration
• Fairgrounds
• Extension Offices
Cities ― The Basics
• Form, creation, powers and
responsibilities defined by
Idaho law.
• Constitutional grant of police
power.
• Formed by their inhabitants
to provide services for urban
community.
Public Safety Services Provided by Cities
• Law Enforcement
• Fire Protection
• Ambulance Service
• Animal Control
Public Works Services Provided by Cities
• Domestic Water
• Wastewater Treatment
• Solid Waste Collection
• Power Generation & Distribution
• Streets & Bridges
• Airports
• Irrigation Water
• Cemeteries
• Parks
Other Services Provided by Cities
• Planning & Zoning
• Building Code Enforcement &
Permitting
• Cemeteries
• Libraries
• Public Transportation
• Prosecution of State Traffic Infractions,
State Misdemeanors, and City
Ordinance Violations Committed in
Cities
Special Districts ― The Basics
• Form, creation, powers and
responsibilities defined by Idaho law.
• Don’t have lawmaking power
(exception for ACHD).
• Services provided include:
Schools
Water & Sewer
Highways
Fire Protection
Cemeteries
Libraries
Major Local
Government
Revenue Sources
The Budget as a Policy Document
• The budget is the most important local government policy document.
• The budget heavily influences the strategic goals and objectives of local
governments, as well as their ability to carry out state and federal
mandates.
• Local government budgets have a profound impact on:
• Public health and safety,
• Community development,
• Economic development, and
• Children, the elderly, and society’s most vulnerable.
Catch-22 of Local Government Budgeting
• Local governments regularly find themselves caught between conflicting
state and federal policies/priorities:
• On one hand, federal and state mandates require local governments to
deliver certain services.
• On the other hand, the state restricts local governments’ authority to
raise the revenues necessary to pay for these services.
• Two examples:
• Stormwater management, and
• Trial level indigent public defense.
Property Tax ― The Basics
• Most significant revenue source
for most local governments.
• Has funded local governments
since territorial days.
• Local governments have operated
under various budget freezes and
property tax caps since the
passage of the 1% Initiative in
1978.
Understanding the 3% Cap
• Applies to cities, counties and non-school special districts.
• Increases in total property tax budgets are limited to 3% over the highest
levy of the past 3 years, plus growth factors for new construction and
annexation.
• Can recover property tax increases foregone in previous years.
• 3% Cap doesn’t apply to voter approved bond or override levies.
• 3% Cap works alongside levy limits for particular funds—e.g. city general
fund levy limit is .009.
Idaho’s Property Tax System
Compares Favorably to Other States
• Idaho’s property tax burden measured by personal income
is 24% below the U.S. average, which ranks Idaho at 38th in
the nation.
• Idaho has the lowest property tax burden measured by
personal income of our neighboring states.
• Source: Idaho Tax Commission Study for FY 2011
http://tax.idaho.gov/reports/EPB00074_10-23-2013.pdf
Property Tax Issues
• Most counties are at the levy limits for Justice, Current Expense, and
District Court funds.
• School Districts are increasingly relying on supplemental levies.
• Considerable change has occurred over the more than 30 years that tax
levy restrictions have been in place.
• The City of Hayden had a population of 2,500 in 1980 and now has a population of
13,500.
• The city is locked into a very low levy rate and now faces serious challenges
funding law enforcement, street maintenance, and other services expected for a
growing community.
The Budget & Creditworthiness
District
ADA & CANYON COUNTIES JOINT SCHOOL DISTRICT 2 (MERIDIAN), ID
ADA & CANYON COUNTIES JOINT SCHOOL DISTRICT 3 (KUNA), ID
BANNOCK & CARIBOU COUNTIES JOINT SCHOOL DISTRICT 21 (MARSH VALLEY), ID
BINGHAM & BONNEVILLE COUNTIES JOINT SCHOOL DISTRICT 60 (SHELLEY), ID
BINGHAM COUNTY SCHOOL DISTRICT 55 (BLACKFOOT), ID
BINGHAM COUNTY SCHOOL DISTRICT 58 (ABERDEEN), ID
BOISE COUNTY SCHOOL DISTRICT 73 (HORSESHOE BEND), ID
BONNEVILLE & BINGHAM COUNTIES JOINT SCHOOL DISTRICT 93, ID
BONNEVILLE COUNTY SCHOOL DISTRICT 91 (IDAHO FALLS), ID
CANYON & ADA COUNTIES JOINT SCHOOL DISTRICT 136 (MELBA), ID
CANYON COUNTY SCHOOL DISTRICT 131 (NAMPA), ID
CANYON COUNTY SCHOOL DISTRICT 132 (CALDWELL), ID
CANYON COUNTY SCHOOL DISTRICT 134 (MIDDLETON), ID
CANYON COUNTY SCHOOL DISTRICT 137 (PARMA), ID
CANYON COUNTY SCHOOL DISTRICT 139 (VALLIVUE), ID
CASSIA & POWER COUNTIES JOINT SCHOOL DISTRICT 381 (AMERICAN FALLS), ID
CASSIA, TWIN FALLS & ONEIDA COUNTIES JOINT SCHOOL DISTRICT 151, ID
ELMORE & OYWHEE COUNTIES JOINT SCHOOL DISTRICT 192, ID
FREMONT & MADISON COUNTIES JOINT SCHOOL DISTRICT 215 (ST. ANTHONY), ID
GOODING & LINCOLN COUNTIES JOINT SCHOOL DISTRICT 231 (GOODING), ID
GOODING COUNTY SCHOOL DISTRICT 232 (WENDELL), ID
INDEPENDENT SCHOOL DISTRICT OF BOISE CITY, ID
JEROME, LINCOLN & GOODING COUNTIES JOINT SCHOOL DISTRICT 261, ID
KOOTENAI COUNTY SCHOOL DISTRICT 271 (COEUR D'ALENE), ID
KOOTENAI COUNTY SCHOOL DISTRICT 272 (LAKELAND), ID
KOOTENAI COUNTY SCHOOL DISTRICT 273 (POST FALLS), ID
LATAH COUNTY SCHOOL DISTRICT 281, ID
MADISON & FREMONT COUNTIES JOINT SCHOOL DISTRICT 322, ID
MINIDOKA, CASSIA, JEROME & LINCOLN COUNTIES JOINT SCHOOL DISTRICT 331, ID
OWYHEE & CANYON COUNTIES JOINT SCHOOL DISTRICT 363 (MARSING), ID
TETON COUNTY SCHOOL DISTRICT 401, ID
TWIN FALLS & GOODING COUNTIES JOINT SCHOOL DISTRICT 412 (BUHL), ID
TWIN FALLS COUNTY SCHOOL DISTRICT 411, ID
VALLEY & ADAMS COUNTIES JOINT SCHOOL DISTRICT 421, ID
Previous
Rating
Aa1
Aa3
A1
A1
A1
A3
A3
Aa3
Aa3
A3
A3
Aa3
A1
A3
Aa3
A2
A1
A2
A1
A2
A3
Aa1
A1
Aa2
Aa3
Aa3
A1
A3
A1
A2
A1
A1
Aa3
Aa2
Current
Rating
Aa2
A1
A1
A1
A1
Baa1
Ba1
Aa3
Aa3
A3
Baa3
A1
A2
A3
Aa3
A2
A1
A2
A1
A2
Baa1
Aa1
A1
Aa2
A1
A1
A1
A3
A1
A2
A1
A1
A1
Aa2
Rating
Action
• Fund balance as a percent of revenue
and taxable valuation trends are two
important credit rating metrics.
• Recent negative trends in these areas
have caused Moody’s Investors
Service to perform a “deep dive” on
all Idaho school district bond ratings.
• Several Idaho school districts have
recently experienced downgrades in
their underlying bond ratings.
Fees
• Commonly charged for:
Water service,
Sewer service,
Trash service,
Power service,
Building permits, and
Development permits.
Restrictions on Fees
• Fees must be reasonably
related to the cost of providing
the service.
• Local governments are
required to publish notice and
hold a hearing prior to
establishing new fees or
increasing fees more than 5%.
Challenges Related to Wastewater Utilities & Fees
• Costs for cities and sewer districts of complying with federal
water quality mandates continue to skyrocket with no end in
sight.
• Hundreds of millions of dollars of improvements are required to
comply with stringent new discharge permits.
• Although the state is transitioning into primacy over the NPDES
program, we still have to comply with federal mandates. State
primacy will help at the margins, in implementation.
Revenue Sharing
• Local governments receive $150 million annually from the state revenue sharing
program, which allocates 11.5% of sales tax revenue to cities, counties and nonschool special districts.
• Two formulas have developed over the years:
The County Distribution was established to dedicate revenue from the newly enacted sales
tax to replace the lost revenues to local governments following repeal of the property tax on
business inventories in the 1960s.
The State Distribution was established in the late 1980s to assist cities and counties that faced
budget freezes in the wake of the 1% Initiative and to help offset the loss of federal general
revenue sharing funds.
Issues with Revenue Sharing
• Just as the state faced declining sales tax revenue
during the Great Recession, local governments saw
revenue sharing dollars decline from the high point
in FY 2007.
• Revenues have now returned to the pre-recession
level.
Highway Distribution Account
• Distributes revenues from state fuel taxes, vehicle registration fees, and
miscellaneous transportation-related fees, fines and forfeitures.
• Provides over $300 million in revenue annually.
• Allocated:
• 57% to Idaho Transportation Department
• 38% to Local Highway Jurisdictions (Cities, Counties, Hwy. Districts)
• 5% to Idaho State Police
Highway Distribution Account
• The local share of HDA revenue is allocated:
30% to cities (apportioned on the basis of population),
and
70% to counties and highway districts (apportioned on
the basis of vehicle registration revenue and improved
road miles).
Issues with Road & Bridge Funding
• Idaho’s fuel tax is levied on a per gallon basis. The last increase in fuel
taxes and vehicle registration fees was in 1996.
• More fuel efficient cars and consumers’ reluctance to pay high fuel prices
have constrained fuel demand.
• HDA revenues have been stagnant for over a decade. On an inflationadjusted basis, HDA revenues have declined 30% since 1999.
• Local Highway Jurisdictions are increasingly relying on property taxes to fill
this gap.
State Liquor Account
• Allocates $60 million annually in proceeds from Idaho Liquor Division.
• Revenues split equally between the state and local governments.
• Local share is split 60% to cities, 40% to counties. Amounts
apportioned on a point of sale basis, or population basis for cities that
don’t have liquor stores.
• Hold harmless provision guarantees local governments will receive at
least the apportionment they received in FY 1981.
Issues with State Liquor Account
• Counties are required to spend 50% of liquor fund revenues on outof-district tuition for county residents enrolled in one of Idaho’s
three community colleges.
• An increasing number of counties are spending 100% of liquor fund
revenues on out-of-district community college tuition
reimbursement.
• If liquor fund revenues cannot cover out-of-district tuition
reimbursement requests, counties must levy property taxes to pay
for any outstanding balances.
Federal Land Payments
• Federal and state lands are exempt from property taxation.
• Federal government established PILT (Payment in Lieu of Taxes) program to
compensate counties for federal tax exempt lands. Only counties receive PILT.
• PILT can be used for any general government purpose.
• Federal Government established SRS (Secure Rural Schools) program to provide
compensation to counties, highway districts, and schools with tax exempt
national forest lands.
• Counties and highway districts can only use SRS funds for road and bridge
maintenance and operations.
• Schools can use SRS for general maintenance and operations.
Issues with Federal Land Payments
• Federal land payment programs are subject Congressional reauthorization and
Congress has been unwilling to identify or commit to long-term funding
sources.
• SRS payments are declining an average of 10% a year.
• Full funding of PILT expired on September 30, 2014. If Congress fails to take
action, payments may be reduced by up to 50%.
• Payments under the SRS program expired on September 30, 2014. If SRS
payments are not reauthorized the program goes away, and counties and
schools receive a 25% payment in its place. This amounts to 95% less than the
comparable SRS payment, meaning less money for roads and schools.
Final Thoughts
• Local governments in Idaho play a key role in developing local
communities and the economy of the State of Idaho.
• The quality of Idaho’s educational system matters in training Idaho’s
workforce of the future.
• The capacity and quality of local government infrastructure matters in
meeting the needs of existing Idaho businesses and in recruiting new
businesses to Idaho.
• Failure to address deficiencies in Idaho’s educational and public works
infrastructure systems will impact Idaho’s economy of the future.
• Let’s work together to help grow Idaho.
Contact Information
Seth Grigg
Executive Director
Association of Idaho Cities
(208) 344-8594
[email protected]
www.idahocities.org
Download

File - Associated Taxpayers of Idaho