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H0513aaS............................................by REVENUE AND TAXATION
PROPERTY TAX - FOREST TRACTS - Amends existing law to provide an
alternative method of determining market values for assessment purposes for
large-sized forest tracts for the period January 1, 2000, through January
1, 2006; to create within the State Tax Commission the Committee on Forest
Land Taxation Methodologies; to provide membership of the committee; to
provide duties; and to provide for a report to legislative committees.
02/04 House intro - 1st rdg - to printing
02/07 Rpt prt - to Rev/Tax
02/11 Rpt out - rec d/p - to 2nd rdg
02/14 2nd rdg - to 3rd rdg
02/16 3rd rdg - PASSED - 53-11-6
AYES -- Alltus, Barraclough, Barrett, Bell, Black, Boe, Bruneel,
Callister, Campbell, Cheirrett, Clark, Crow, Deal, Denney, Ellsworth,
Gagner, Geddes, Gould, Hadley, Hammond, Hansen(23), Hansen(29),
Henbest, Jones, Kempton, Kendell, Kunz, Lake, Linford, Mader,
McKague, Meyer, Montgomery, Mortensen, Moss, Moyle, Pearce, Pischner,
Pomeroy, Reynolds, Ridinger, Sali, Schaefer, Smith, Smylie,
Stevenson, Stone, Taylor, Tilman, Trail(Miller), Wheeler, Wood,
Zimmermann
NAYS -- Bieter, Chase, Cuddy, Jaquet, Judd, Kellogg, Marley, Ringo,
Robison, Shepherd, Stoicheff
Absent and excused -- Field(13), Field(20), Hornbeck, Loertscher,
Sellman, Mr Speaker
Floor Sponsor - Gagner
Title apvd - to Senate
02/17 Senate intro - 1st rdg - to Loc Gov
02/24 Rpt out - to 14th Ord
03/01 Rpt out amen - to 1st rdg as amen
03/02 1st rdg - to 2nd rdg as amen
03/03 2nd rdg - to 3rd rdg as amen
03/21 3rd rdg as amen - PASSED - 26-5-4
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Hawkins,
Ingram, Ipsen, King-Barrutia, Parry, Richardson, Risch, Sorensen,
Stegner, Stennett, Thorne, Wheeler, Williams
NAYS--Keough, McLaughlin, Riggs, Schroeder, Whitworth
Absent and excused--Geddes, Lee, Noh, Sandy
Floor Sponsor - Thorne
Title apvd - to House
03/22 House concurred in Senate amens - to engros
03/23 Rpt engros - 1st rdg - to 2nd rdg as amen
03/24 2nd rdg - to 3rd rdg as amen
Rules susp - PASSED - 59-4-7
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Black, Boe,
Bruneel, Callister, Cheirrett, Clark, Crow, Cuddy, Deal, Denney,
Ellsworth, Field(13), Field(20), Gagner, Geddes, Gould, Hadley,
Hammond, Hansen(23), Henbest, Hornbeck, Jaquet, Jones, Judd, Kellogg,
Kempton, Kendell, Kunz, Linford, Loertscher, Mader, Marley, McKague,
Meyer, Montgomery, Moss, Moyle, Pearce, Pomeroy, Ridinger, Sali,
Schaefer, Sellman, Smith, Smylie, Stevenson, Stone, Taylor, Tilman,
Trail, Wheeler, Wood, Zimmermann, Mr Speaker
NAYS -- Ringo, Robison, Shepherd, Stoicheff
Absent and excused -- Campbell, Chase, Hansen(29), Lake, Mortensen,
Pischner, Reynolds
Floor Sponsor - Gagner
Title apvd - to enrol
03/27 Rpt enrol - Sp signed
03/28 Pres signed
03/29 To Governor
04/03 Governor signed
Session Law Chapter 156
Effective: 01/01/00
H0513
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 513, As Amended in the Senate
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO TAXATION OF LARGE-SIZE FOREST TRACTS; PROVIDING LEGISLATIVE
3 INTENT; AMENDING SECTION 63-1705, IDAHO CODE, TO PROVIDE AN ALTERNATIVE
4 METHOD OF DETERMINING MARKET VALUES FOR ASSESSMENT PURPOSES FOR LARGE-SIZE
5 FOREST TRACTS FOR THE PERIOD JANUARY 1, 2000, THROUGH JANUARY 1, 2006, TO
6 CREATE WITHIN THE STATE TAX COMMISSION THE COMMITTEE ON FOREST LAND TAXA-
7 TION METHODOLOGIES, TO PROVIDE MEMBERSHIP, TO PROVIDE DUTIES, TO PROVIDE
8 FOR A REPORT TO LEGISLATIVE COMMITTEES AND TO MAKE TECHNICAL CORRECTIONS;
9 DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE APPLICATION.
10 Be It Enacted by the Legislature of the State of Idaho:
11 SECTION 1. LEGISLATIVE INTENT. The Legislature of the State of Idaho
12 declares that the purposes of this act are to: (1) establish market values for
13 large-size forest tracts for the period January 1, 2000, until January 1,
14 2006; (2) establish a Forest Lands Taxation Methodologies Committee within the
15 Idaho State Tax Commission; (3) require that the committee analyze and evalu-
16 ate the income approach methodology currently contained in Section 63-1705,
17 Idaho Code; (4) require the committee to analyze and evaluate alternative
18 income approach methodologies and soil expectation value methodologies; (5)
19 require the committee recommend to the First Regular Session of the Fifty-
20 eighth Idaho Legislature whether the income approach methodology contained in
21 Section 63-1705, Idaho Code, be retained or be replaced with another income
22 methodology or with a soil expectation value methodology; (6) require the com-
23 mittee to commence its analysis and evaluation based upon the written testi-
24 mony by the Idaho State Tax Commission, the Idaho Association of Counties and
25 the Intermountain Forest Association provided to the House of Representatives
26 Revenue and Taxation Committee during its consideration of this act.
27 SECTION 2. That Section 63-1705, Idaho Code, be, and the same is hereby
28 amended to read as follows:
29 63-1705. TAXATION OF LARGE-SIZE FOREST TRACTS. (1) In order to encourage
30 private forest landowners to retain and improve their holdings of forest lands
31 and to promote better forest management, large-sized forest tracts shall be
32 appraised, assessed and taxed as real property under the provisions of this
33 section.
34 (2) The inventory of timber and other forest products growing on large-
35 sized forest tracts shall not be included as a part of the total forest asset.
36 The forest value shall be determined by an income approach which capitalizes
37 the value of the average annual net wood production over a reasonable rotation
38 period plus other agricultural-related income, if any, less annualized
39 expenses including, but not limited to, the establishment, protection, mainte-
40 nance, improvement and management of the crop over the rotation period.
41 (3) Effective January 1, 2000, through January 1, 2006, tThe market value
42 for assessment purposes shall be determined by the county assessor either
2
1 under rules prescribed by the state tax commission or the market values con-
2 tained in subsection (5) of this section, whichever is less. In prescribing
3 such rules, the tax commission shall:
4 (a) Divide the state into appropriate forest valuation zones, with each
5 zone designated so as to recognize the uniqueness of marketing areas, tim-
6 ber types, growth rates, access, operability, and other pertinent factors
7 of that zone; and
8 (b) Establish a uniform system of forest land classification which con-
9 siders the productive capacity of the soil to grow forest products and
10 furnish other associated agricultural uses.
11 (4) The state tax commission shall by March 1 of each year, furnish the
12 county assessor for each value zone the capitalization rate, stumpage value,
13 agricultural-related income, if any, and expense component to be used in
14 determining the forest value. From January 1, 1999, until January 1, 20016,
15 the capitalization rate shall be the interest rate for the farm credit bank
16 district serving Idaho, as set forth in the most current revenue ruling made
17 pursuant to section 2032A(e)(7)(A) of the Internal Revenue Code and 26 CFR
18 20.2032A-4(e), plus eighty-five one hundredths percent (.85%), plus a compo-
19 nent for the local tax rate. Stumpage values shall be based upon the preceding
20 five (5) year rolling average value of timber harvested within the forest
21 value zone from state timber sales and/or the best available data for the same
22 five (5) year period. Average agricultural-related income and the average
23 expense component for each forest value zone shall be determined for the same
24 time period as the period used to determine average stumpage values.
25 (5) The following are the alternative market values for assessment pur-
26 poses for the period January 1, 2000, until January 1, 2006. The rules pre-
27 scribed by the state tax commission in effect on January 1, 2000, are applica-
28 ble to these alternative market values.
29 Alternative Forest Land Values
30 ($/Acre)
31 2000 Productivity Class 2003 Productivity Class
32 Zone Good Medium Poor Zone Good Medium Poor
33 I 733 470 207 I 564 361 159
34 II 700 449 198 II 539 346 152
35 III 553 368 172 III 426 283 132
36 IV 379 252 117 IV 291 194 90
37 2001 Productivity Class 2004 Productivity Class
38 Zone Good Medium Poor Zone Good Medium Poor
39 I 676 434 191 I 507 325 143
40 II 646 415 183 II 485 311 137
41 III 511 339 159 III 383 255 119
42 IV 350 232 108 IV 262 174 81
43 2002 Productivity Class 2005 Productivity Class
44 Zone Good Medium Poor Zone Good Medium Poor
45 I 620 398 175 I 451 289 127
46 II 592 380 167 II 431 277 122
47 III 468 311 145 III 341 226 106
48 IV 321 213 99 IV 233 155 72
49 (6) Forest lands upon which, at any time after January 1, 1982, the trees
50 are destroyed by fire, disease, insect infestation or other natural disaster
51 such that the lands affected will not meet minimum stocking requirements under
3
1 rules adopted pursuant to chapter 13, title 38, Idaho Code, shall be eligible
2 for a reduction in value for the first ten (10) property tax years following
3 the loss. The amount of reduction shall be determined by dividing the average
4 age of the trees destroyed by the rotation age for the specific forest value
5 zone in which the property is located. In no instance shall the annual reduc-
6 tion exceed eighty percent (80%) of the original forest value per year. In
7 order to obtain a reduction, the landowner shall, on or before January 1, fol-
8 lowing the destruction, make written application to the assessor indicating
9 the legal description of the lands in question and stating all pertinent
10 facts. The assessor may investigate the facts and may request assistance from
11 the state tax commission in performing such investigations. If the require-
12 ments are met, such forest lands shall be assessed and taxed on the reduced
13 basis herein provided.
14 (67) Buildings and other improvements, other than roads, located on for-
15 est lands shall be appraised, assessed and taxed as provided by applicable
16 laws and rules.
17 (8) Effective January 1, 2004, there is created within the Idaho state
18 tax commission the committee on forest land taxation methodologies. The mem-
19 bership of the committee shall be:
20 (a) A nonvoting chairman who shall be the member of the Idaho state tax
21 commission assigned to property tax matters;
22 (b) Four (4) members selected from the membership of the intermountain
23 forest association;
24 (c) One (1) member selected from the membership of the Idaho forest
25 owners' association;
26 (d) Five (5) members selected from the membership of the Idaho associa-
27 tion of counties; and
28 (e) The state superintendent of public instruction or his/her designee,
29 in a nonvoting capacity.
30 The committee shall retain a forest economist selected by a majority of its
31 members to advise the committee.
32 The costs of each committee member shall be borne by the respective mem-
33 ber. The fees and costs of the forest economist shall be borne as determined
34 by the committee.
35 The committee shall review forest land valuation in Idaho and consider
36 replacement of the current income methodology found in this section by review-
37 ing all income and soil expectation methodologies to determine forest land
38 values.
39 The committee shall report to the house of representatives revenue and
40 taxation and senate local government and taxation committees its findings and
41 recommendations for legislation by no later than January 15, 2005.
42 During the first regular session of the fifty-eighth Idaho legislature the
43 house of representatives revenue and taxation and senate local government and
44 taxation committees, shall review the values and formula used to compute for-
45 est land values to determine if modification to this section is appropriate
46 and necessary.
47 SECTION 3. An emergency existing therefor, which emergency is hereby
48 declared to exist, this act shall be in full force and effect on and after its
49 passage and approval, and retroactively to January 1, 2000.
AH0513
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
Moved by Thorne
Seconded by
IN THE SENATE
SENATE AMENDMENT TO H.B. NO. 513
1 AMENDMENT TO SECTION 2
2 On page 2 of the printed bill, in line 14, delete "2001" and insert:
3 "20016".
STATEMENT OF PURPOSE
RS 09792C1
Property taxes on Idaho forest lands have tripled over the past seven
years. In response to this enormous increase in taxes, an agreement was
reached earlier this year between Idaho forest land owners and the Idaho
Association of Counties to provide tax relief to forest land owners. The
agreement was a recognition by both forest land owners and Idaho counties
that such tax increases have had disproportionately large impacts on
forest land owners.
This legislation phases in up to a 40% reduction in forest land taxes
over the next six years. The phase-in substantially reduces the tax shift
impacts over this same period. There is a disagreement between forest
land owners and the various counties of the state as to the appropriate
method to value forest lands for tax purposes. Accordingly, this
legislation also establishes a Forest Land Taxation Methodologies
Committee within the Idaho State Tax Commission that will analyze and
evaluate the income approach methodology currently contained in Idaho
Code section 63-1705, as well as analyze and evaluate alternative income
approach methodologies and soil expectation value methodologies. The
Committee will recommend to the First Regular Session of the Fifty-Eighth
Legislature whether the income approach methodology contained in Idaho
Code section 63-1705 be retained, be replaced with another income
methodology, or be replaced with a soil expectation value methodology.
The Committee will commence its analysis and evaluation based upon the
written testimony by the Idaho State Tax Commission, the Idaho
Association of Counties and the Intermountain Forest Association provided
to the House Revenue and Taxation Committee during its consideration of
this legislation.
CONTACT: Rep. Dolores Crow, Chair, House Revenue & Taxation (332-1125)
Sen. Jerry Thorne, Chair, Senate Local Government & Tax (332-1323)
H 513
FISCAL NOTE
RS RS09792C1
The fiscal impact of this legislation is as follows:
Year
Loss of School property
tax revenue
Loss of School property tax
replacement revenue from the
state general fund
Loss of property tax to
county governments
Gain of revenue to
state general fund
2000
0
0
0
0
2001
0
0
0
0
2002
0
0
$400
0
2003
$29,000
$10,000
$6,700
$10,000
2004
$186,000
$62,000
$10,700
$62,000
2005
$292,000
$97,000
$14,500
$97,000
2006
$397,000
$132,000
not computed
$132,000
*non-county and non-county school taxing districts are not included in the above table.
Summary of Tax Shift to Non-Timberland Property Resulting from Timber Value
Change Effect of Taxes on Property with $100,000 Taxable Value
County
2/01/2000
Current
Tax in
1999
1st Year
Tax in
2000*
Difference
Current
System
2005
Difference
from 1999
Proposed
Tax in
2005
Difference
from 1999
Difference
5th Year
Current
Law from
Proposed
Law
Adams
$742.90
$748.00
$5.10
$761.66
$18.76
$769.82
$26.92
$8.16
Benewah
$687.60
$706.03
$18.43
$739.73
$52.13
$759.37
$71.77
$19.64
Boise
$784.70
$788.45
$3.75
$798.31
$13.61
$804.22
$19.52
$5.91
Bonner
$546.90
$549.30
$2.40
$553.73
$6.83
$555.75
$8.85
$2.02
Boundary
$719.60
$726.11
$6.51
$737.95
$18.35
$743.45
$23.85
$5.50
Clearwate
r
$590.90
$620.88
$29.98
$680.88
$89.98
$718.58
$127.68
$37.70
Elmore
$999.00
$999.01
$0.01
$999.08
$0.08
$999.11
$0.11
$0.03
Gem
$733.90
$733.92
$0.02
$733.94
$0.04
$733.96
$0.06
$0.02
Idaho
$474.60
$475.60
$1.00
$477.04
$2.44
$477.82
$3.22
$0.78
Kootenai
$946.40
$948.38
$1.98
$951.98
$5.58
$953.61
$7.21
$1.63
Latah
$1,248.70
$1,260.21
$11.51
$1,280.28
$31.58
$1,291.42
$42.72
$11.14
Lewis
$851.80
$857.19
$5.39
$866.35
$14.55
$871.36
$19.56
$5.02
Nez Perce
$868.10
$868.41
$0.31
$868.95
$0.85
$869.24
$1.14
$0.29
Shoshone
$1,116.00
$1,147.34
$31.34
$1,206.23
$90.23
$1,240.56
$124.56
$34.32
Valley
$435.10
$436.12
$1.02
$438.73
$3.63
$440.29
$5.19
$1.55
* Current or Proposed Law
1. Based upon typical rural property tax rates exclusive of school M & O.
2. Assumes no growth in property tax portion of taxing district budgets.
3. Assumes no change in taxable of non-timber property. H 513