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H0771aa.............................................by REVENUE AND TAXATION
PROPERTY TAX - FOREST LANDS - Amends existing law to provide that from
January 1, 1999, until January 1, 2001, the capitalization rate for forest
lands taxation shall be the interest rate for the farm credit bank district
serving Idaho, plus .85%, plus a component for the local tax rate.
02/25 House intro - 1st rdg - to printing
02/26 Rpt prt - to 2nd rdg
02/27 2nd rdg - to 3rd rdg
03/02 Rpt out - to Gen Ord
03/04 Rpt out amen - to engros
03/05 Rpt engros - 1st rdg - to 2nd rdg as amen
03/06 2nd rdg - to 3rd rdg as amen
03/09 3rd rdg as amen - PASSED - 64-0-6
AYES -- Alltus, Barraclough, Barrett, Bieter, Bivens, Black(15),
Black(23), Boe, Bruneel, Campbell, Chase, Clark, Cuddy, Deal, Denney,
Ellsworth, Field(20), Gagner, Geddes, Gould, Hadley, Hansen, Henbest,
Hornbeck, Jaquet, Jones(9), Jones(22), Judd, Kellogg, Kempton,
Kendell, Kjellander, Kunz, Lake, Linford, Loertscher, Mader, Marley,
McKague, Meyer, Miller, Mortensen, Newcomb, Pischner, Pomeroy,
Reynolds, Richman, Ridinger, Robison, Sali, Schaefer, Stevenson,
Stoicheff, Stone, Stubbs, Taylor, Tilman, Tippets, Trail, Watson,
Wheeler, Wood, Zimmermann, Mr Speaker
NAYS -- None
Absent and excused -- Bell, Callister, Crane, Crow, Field(13),
Jones(20),
Floor Sponsor - Cuddy
Title apvd - to Senate
03/10 Senate intro - 1st rdg as amen - to Loc Gov
03/12 Rpt out - rec d/p - to 2nd rdg as amen
03/13 2nd rdg - to 3rd rdg as amen
03/18 3rd rdg as amen - PASSED - 34-0-1
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Deide, Dunklin, Frasure, Geddes,
Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Noh, Parry,
Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stennett,
Sweeney, Thorne, Twiggs, Wheeler, Whitworth
NAYS--None
Absent and excused--Hansen
Floor Sponsor - Wheeler
Title apvd - to House
03/19 To enrol - rpt enrol - Sp signed
Pres signed - to Governor
03/20 Governor signed
Session Law Chapter 198
Effective: 01/01/99
H0771|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 771, As Amended BY REVENUE AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO FOREST LANDS TAXATION; AMENDING SECTION 63-1705, IDAHO CODE, TO 3 ESTABLISH A NEW LONG-TERM CAPITALIZATION RATE FOR USE IN THE FORMULA TO 4 COMPUTE FOREST LANDS PROPERTY TAXES BY THE STATE TAX COMMISSION WHICH 5 SHALL BE IN EFFECT FOR TWO TAX YEARS; AND PROVIDING AN EFFECTIVE DATE. 6 Be It Enacted by the Legislature of the State of Idaho: 7 SECTION 1. That Section 63-1705, Idaho Code, be, and the same is hereby 8 amended to read as follows: 9 63-1705. TAXATION OF LARGE-SIZE FOREST TRACTS. (1) In order to encourage 10 private forest landowners to retain and improve their holdings of forest lands 11 and to promote better forest management, large-sized forest tracts shall be 12 appraised, assessed and taxed as real property under the provisions of this 13 section. 14 (2) The inventory of timber and other forest products growing on large- 15 sized forest tracts shall not be included as a part of the total forest asset. 16 The forest value shall be determined by an income approach which capitalizes 17 the value of the average annual net wood production over a reasonable rotation 18 period plus other agricultural-related income, if any, less annualized 19 expenses including, but not limited to, the establishment, protection, mainte- 20 nance, improvement and management of the crop over the rotation period. 21 (3) The market value for assessment purposes shall be determined by the 22 county assessor under rules prescribed by the state tax commission. In pre- 23 scribing such rules, the tax commission shall: 24 (a) Divide the state into appropriate forest valuation zones, with each 25 zone designated so as to recognize the uniqueness of marketing areas, tim- 26 ber types, growth rates, access, operability, and other pertinent factors 27 of that zone; and 28 (b) Establish a uniform system of forest land classification which con- 29 siders the productive capacity of the soil to grow forest products and 30 furnish other associated agricultural uses. 31 (4) The state tax commission shall by March 1 of each year, furnish the 32 county assessor for each value zone the capitalization rate, stumpage value, 33 agricultural-related income, if any, and expense component to be used in 34 determining the forest value. From January 1, 1999, until January 1, 35 2001, the capitalization rate shall be the interest rate for the farm credit 36 bank district serving Idaho, as set forth in the most current revenue ruling 37 made pursuant to section 2032A(e)(7)(A) of the Internal Revenue Code and 26 38 CFR 20.2032A-4(e), plus eighty-five one hundredths percent (.85%), plus a com- 39 ponent for the local tax rate.The capitalization rate shall be40determined in accordance with the procedures prescribed for the determining of41the capitalization rate for agricultural lands by section 63-602K, Idaho Code.42Stumpage values shall be based upon the preceding five (5) year rolling 2 1 average value of timber harvested within the forest value zone from state tim- 2 ber sales and/or the best available data for the same five (5) year period. 3 Average agricultural-related income and the average expense component for each 4 forest value zone shall be determined for the same time period as the period 5 used to determine average stumpage values. 6 (5) Forest lands upon which, at any time after January 1, 1982, the trees 7 are destroyed by fire, disease, insect infestation or other natural disaster 8 such that the lands affected will not meet minimum stocking requirements under 9 rules adopted pursuant to chapter 13, title 38, Idaho Code, shall be eligible 10 for a reduction in value for the first ten (10) property tax years following 11 the loss. The amount of reduction shall be determined by dividing the average 12 age of the trees destroyed by the rotation age for the specific forest value 13 zone in which the property is located. In no instance shall the annual reduc- 14 tion exceed eighty percent (80%) of the original forest value per year. In 15 order to obtain a reduction, the landowner shall on or before January 1 fol- 16 lowing the destruction, make written application to the assessor indicating 17 the legal description of the lands in question and stating all pertinent 18 facts. The assessor may investigate the facts and may request assistance from 19 the state tax commission in performing such investigations. If the require- 20 ments are met, such forest lands shall be assessed and taxed on the reduced 21 basis herein provided. 22 (6) Buildings and other improvements, other than roads, located on forest 23 lands shall be appraised, assessed and taxed as provided by applicable laws 24 and rules. 25 SECTION 2. This act shall be in full force and effect on and after Janu- 26 ary 1, 1999.
STATEMENT OF PURPOSE
RS 08146
This legislation removes an obsolete provision in the Idaho
Code that establishes the capitalization rate component in the
statutory formula used to establish the value of forest lands for
property tax purposes. The legislation establishes as the new
capitalization rate to be used in the existing formula the five
year rolling average rate set annually pursuant to Internal
Revenue Code section 2032A plus a small premium and component for
the local tax rate.
FISCAL NOTE
This legislation has no impact on state revenues. Compared
with the procedure now in use, this legislation reduces the rate
of growth in the property tax paid by owners of timber tracts. It
will result in a small loss of tax revenue for some school
districts together with a minimal property tax shift to other
taxpayers in some areas beginning in 1999.
CONTACT: Rep Donna Jones
Rep Chuck Cuddy
Phone 332-1000
Bill No. H 771