Amends existing law to revise provisions regarding certain limitations of budget requests by taxing district and to provide certain exceptions to such limits.

LEGISLATURE OF THE STATE OF IDAHO
Sixty-eighth Legislature Second Regular Session - 2026
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 842
BY REVENUE AND TAXATION COMMITTEE
AN ACT	1
RELATING TO BUDGET LIMITS; AMENDING SECTION 63-802, IDAHO CODE, TO REVISE	2
PROVISIONS REGARDING LIMITATIONS ON BUDGET REQUESTS AND EXCEPTIONS;	3
AMENDING SECTION 31-1423, IDAHO CODE, TO PROVIDE A CORRECT CODE REFER-	4
ENCE; PROVIDING SEVERABILITY; AND DECLARING AN EMERGENCY AND PROVIDING	5
RETROACTIVE APPLICATION.	6
Be It Enacted by the Legislature of the State of Idaho:	7
SECTION 1. That Section 63-802, Idaho Code, be, and the same is hereby	8
amended to read as follows:	9
63-802. LIMITATION ON BUDGET REQUESTS -- LIMITATION ON TAX CHARGES --	10
EXCEPTIONS. (1) Except as otherwise provided in this section, no taxing dis-	11
trict shall certify a budget request for an amount of property tax revenues	12
to finance an annual budget that exceeds the maximum sum permitted under this	13
section:	14
(a)(i) The highest dollar amount of property taxes certified for	15
its annual budget for any one (1) of the three (3) tax years preced-	16
ing the current tax year, which amount may be increased by a growth	17
factor of not to exceed three percent (3%) plus the amount of rev-	18
enue calculated as described in this subsection. The taxing dis-	19
trict shall determine what portion of the three percent (3%) in-	20
crease permitted under this subparagraph that it requires and then	21
calculate a preliminary levy rate based on the percent chosen. In	22
calculating the preliminary levy rate, the most current taxable	23
market value shall be used, except that for taxable market values	24
of centrally assessed operating property, the prior year's val-	25
uation may be used instead of the current year's taxable market	26
values. The preliminary previous year's levy rate shall be multi-	27
plied by the value shown on the new construction roll compiled pur-	28
suant to section 63-301A, Idaho Code, and by ninety percent (90%)	29
of the value of annexation during the previous calendar year, as	30
certified by the state tax commission for taxable market values of	31
operating property of public utilities and by the county assessor;	32
except for a fire protection district annexing property prior to	33
July 1, 2021, pursuant to section 31-1429, Idaho Code, the new levy	34
rate shall be multiplied by one hundred percent (100%) of the value	35
of any such property annexed prior to July 1, 2021.	36
(ii) The Except as provided in this subparagraph, the total budget	37
increase calculated under this paragraph must not exceed eight	38
percent (8%), except. For cities with a population of fewer than	39
thirty thousand (30,000) people as shown in the most recent annual	40
population estimate reported by the United States census bureau,	41
and any fire protection district or ambulance service district	42

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providing service to such a city, the total budget increase calcu-	1
lated under this paragraph must not exceed fifteen percent (15%).	2
Provided, however, that any increase in the amount of property tax	3
revenue to finance an annual budget added as a result of the termi-	4
nation, deannexation, plan modification of, or the withdrawal of	5
certain taxing districts from, a revenue allocation area of an ur-	6
ban renewal district pursuant to section 63-301A(3)(f), (i), (j),	7
or (k), Idaho Code, or section 50-2908(1)(g), Idaho Code, shall	8
not be subject to such limitation.	9
(iii) Following the first year in which a fire protection district	10
has annexed city property pursuant to section 31-1429, Idaho Code,	11
the city shall subtract an amount equal to the moneys spent on fire	12
protection services during the last full year the city provided	13
fire protection services to its residents from its budget limita-	14
tion under this section.	15
(b) If the taxing district has not imposed a levy for three (3) or more	16
years, the highest dollar amount of property taxes certified for its an-	17
nual budget for the purpose of paragraph (a)(i) of this subsection shall	18
be the dollar amount of property taxes certified for its annual budget	19
during the last year in which a levy was made.	20
(c) The dollar amount of the actual budget request may be substituted	21
for the amount in paragraph (a) of this subsection if the taxing dis-	22
trict is newly created, except as may be provided in paragraph (i) of	23
this subsection.	24
(d) This section does not apply to school district levies imposed in	25
section 33-802, Idaho Code.	26
(e)(i) In the case of a nonschool district for which less than the	27
maximum allowable increase in the dollar amount of property taxes	28
is certified for annual budget purposes in any one (1) year prior	29
to property tax year 2026, such a district may, in any following	30
year, recover the forgone increase by certifying, in addition to	31
any increase otherwise allowed, any or all of the increase origi-	32
nally forgone. Provided however, that prior to budgeting any for-	33
gone increase, the district must provide notice of its intent to do	34
so, hold a public hearing that may be in conjunction with its an-	35
nual budget hearing, and certify by resolution the amount of for-	36
gone increase to be budgeted and the specific purpose for which the	37
forgone increase is being budgeted. Upon adoption of the resolu-	38
tion, the clerk of the district shall file a copy of the resolu-	39
tion with the county clerk and the state tax commission. Said ad-	40
ditional amount shall be included in future calculations for in-	41
creases as allowed, except as provided in subparagraph (iii) of	42
this paragraph.	43
(ii) If the forgone increase is budgeted for the purpose of main-	44
tenance and operations, the rate of recovering the reserved for-	45
gone moneys may increase the taxing district's budget by no more	46
than one percent (1%) two percent (2%) per year.	47
(iii) If the forgone increase is budgeted for a capital project or	48
projects, the rate of recovering the reserved forgone moneys may	49
not exceed three percent (3%) of the taxing district's budget for	50

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the year in which the forgone increase is budgeted. Forgone moneys	1
budgeted for a capital project must be deducted from the taxing	2
district's forgone balance in the year in which it is budgeted.	3
Upon completion of such a capital project, the taxing district	4
shall certify such completion to the state tax commission and	5
county clerk. If, upon certification, the state tax commission	6
finds that the taxing district included forgone moneys for a capi-	7
tal project in calculating the increase permitted under paragraph	8
(a) of this subsection, the state tax commission shall direct the	9
taxing district to reduce its property tax budget for any year	10
in which the forgone moneys were used to calculate a budget in-	11
crease, in an amount equal to the forgone moneys budgeted plus any	12
increases attributed to the forgone moneys improperly included in	13
the taxing district's property tax budget. For the purpose of this	14
paragraph, a capital project includes:	15
1. The construction, expansion, renovation, or replacement	16
of public facilities, including the acquisition of land and	17
other site improvements;	18
2. The construction, expansion, or reconstruction of public	19
works improvements, including roads, bridges, water sys-	20
tems, sewer systems, and broadband systems; and	21
3. The purchase of equipment with a useful life of ten (10)	22
years or more.	23
(f) If a taxing district elects to budget less than the maximum allow-	24
able increase in the dollar amount of property taxes for any property	25
tax year prior to 2026, the taxing district may reserve the right to re-	26
cover all or any portion of that year's forgone increase in a subsequent	27
year by adoption of a resolution specifying the dollar amount of prop-	28
erty taxes being reserved. Otherwise, that year's forgone increase may	29
not be recovered under paragraph (e) of this subsection. The district	30
must provide notice of its intent to do so and hold a public hearing that	31
may be in conjunction with its annual budget hearing, if applicable.	32
The resolution to reserve the right to recover the forgone increase for	33
that year shall be adopted at the annual budget hearing of the taxing	34
district if the district has a budget hearing requirement.	35
(g) In the case of cities, if the immediately preceding year's levy sub-	36
ject to the limitation provided by this section is less than 0.004, the	37
city may increase its budget by an amount not to exceed the difference	38
between 0.004 and the actual prior year's levy multiplied by the prior	39
year's market value for assessment purposes. The additional amount	40
must be approved by sixty percent (60%) of the voters voting on the ques-	41
tion at an election called for that purpose and held on the date in May or	42
November provided by law and may be included in the annual budget of the	43
city for purposes of this section.	44
(h) A taxing district may submit to the electors within the district	45
the question of whether the budget from property tax revenues may be	46
increased beyond the amount authorized in this section, but not beyond	47
the levy authorized by statute. The additional amount must be approved	48
by sixty-six and two-thirds percent (66 2/3%) or more of the voters	49
voting on the question at an election called for that purpose and held	50

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on the May or November dates provided by section 34-106, Idaho Code.	1
If approved by the required minimum sixty-six and two-thirds percent	2
(66 2/3%) of the voters voting at the election, the new budget amount	3
shall be the base budget for the purposes of this section.	4
(i) When a nonschool district consolidates with another nonschool	5
district or dissolves and a new district performing similar governmen-	6
tal functions as the dissolved district forms with the same boundaries	7
within three (3) years, the maximum amount of a budget of the district	8
from property tax revenues shall not be greater than the sum of the	9
amounts that would have been authorized by this section for the district	10
itself or for the districts that were consolidated or dissolved and in-	11
corporated into a new district.	12
(j) This section does not apply to cooperative service agency levies	13
imposed in sections 33-317 and 33-317A, Idaho Code.	14
(k) The amount of money received in the twelve (12) months immediately	15
preceding June 30 of the current tax year as a result of distributions of	16
the tax provided in section 63-3502B(2), Idaho Code.	17
(2) In the case of fire districts, during the year immediately follow-	18
ing the election of a public utility or public utilities to consent to be pro-	19
vided fire protection pursuant to section 31-1425, Idaho Code, the maximum	20
amount of property tax revenues permitted in subsection (1) of this section	21
may be increased by an amount equal to the current year's taxable value of the	22
consenting public utility or public utilities multiplied by that portion of	23
the prior year's levy subject to the limitation provided by subsection (1) of	24
this section.	25
(3) No board of county commissioners shall set a levy, nor shall the	26
state tax commission approve a levy for annual budget purposes, which ex-	27
ceeds the limitation imposed in subsection (1) of this section unless au-	28
thority to exceed such limitation has been approved by a majority of the tax-	29
ing district's electors voting on the question at an election called for that	30
purpose and held pursuant to section 34-106, Idaho Code, provided however,	31
that such voter approval shall be for a period of not to exceed two (2) years.	32
(4) The amount of property tax revenues to finance an annual budget does	33
not include revenues from nonproperty tax sources and does not include rev-	34
enue from levies for the payment of judicially confirmed obligations pur-	35
suant to sections 63-1315 and 63-1316, Idaho Code, and revenue from levies	36
that are voter-approved for bonds, override levies or supplemental levies,	37
plant facilities reserve fund levies, school emergency fund levies, or for	38
levies applicable to newly annexed property or for levies applicable to new	39
construction as evidenced by the value of property subject to the occupancy	40
tax pursuant to section 63-317, Idaho Code, for the preceding tax year. The	41
amount of property tax revenues to finance an annual budget does not include	42
any property taxes that were collected and refunded on property that is ex-	43
empt from taxation, pursuant to section 63-1305C, Idaho Code.	44
(5) The amount of property tax revenues to finance an annual budget	45
shall include moneys received as recovery of property tax for a revoked pro-	46
visional property tax exemption under section 63-1305C, Idaho Code.	47
(6) For tax year 2023, before calculating the amount required in sub-	48
section (1)(a)(i) of this section, the board of county commissioners shall	49
reduce the approved property tax levy portion of its budget for the immedi-	50

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ate prior three (3) years in an amount equal to the amount levied for indigent	1
public defense. The reduced budget amount shall be the base budget for the	2
purpose of subsection (1)(a)(i) of this section.	3
(7)(a) Notwithstanding any other provision of this section, the elec-	4
tors of cities may, if approved by the same percentage vote required for	5
passage of a budget increase pursuant to subsection (1)(g) of this sec-	6
tion, approve a reduction in the base budget of such city through the	7
initiative process set forth in section 34-1801B, Idaho Code.	8
(b) Notwithstanding any other provision of this section, the electors	9
of counties may, if approved by the same percentage vote required for	10
passage of a budget increase pursuant to subsection (1)(h) of this sec-	11
tion, approve a reduction in the base budget of such county through the	12
initiative process set forth in section 34-1801C, Idaho Code.	13
(c) An initiative measure approved pursuant to this subsection shall	14
specify the dollar amount or percentage by which the base budget shall	15
be reduced. The reduced base budget shall apply to the next city or	16
county budget required to be certified pursuant to section 63-803,	17
Idaho Code, following the voter approval of the initiative and shall	18
thereafter constitute the base budget for purposes of calculating al-	19
lowable increases under this section. For purposes of this subsection,	20
"base budget" means the highest dollar amount of property taxes from	21
which a city or county begins calculating its allowable annual budget	22
pursuant to subsection (1) of this section, prior to applying the growth	23
factor or any other additions in such subsection.	24
SECTION 2. That Section 31-1423, Idaho Code, be, and the same is hereby	25
amended to read as follows:	26
31-1423. LEVY -- RECOMMENDED LEVY -- ELECTION. (1) Each year, immedi-	27
ately prior to the annual county levy of taxes, the board of commissioners	28
of each fire protection district, organized and existing under this chapter,	29
may levy a tax upon all the taxable property within the boundaries of such	30
district sufficient to defray the cost of equipping and maintaining the dis-	31
trict of twenty-four hundredths percent (.24%) of market value for assess-	32
ment purposes, to be used for the purposes of this chapter and for no other	33
purpose. The levy shall be made by resolution entered upon the minutes of the	34
board of commissioners of the fire protection district, and it shall be the	35
duty of the secretary of the district, immediately after entry of the resolu-	36
tion in the minutes, to transmit to the county auditor and the county asses-	37
sor certified copies of the resolution providing for such levy. Said taxes	38
shall be collected as provided by section 63-812, Idaho Code.	39
(2) If two (2) or more fire protection districts consolidate into one	40
(1) district, the provisions of section 63-802, Idaho Code, shall apply to	41
the consolidated district's budget request. In addition, the consolidated	42
district shall receive the benefit of foregone increases accumulated by the	43
former districts under section 63-802(1)(a) 63-802, Idaho Code.	44
SECTION 3. SEVERABILITY. The provisions of this act are hereby declared	45
to be severable and if any provision of this act or the application of such	46
provision to any person or circumstance is declared invalid for any reason,	47

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such declaration shall not affect the validity of the remaining portions of	1
this act.	2
SECTION 4. An emergency existing therefor, which emergency is hereby	3
declared to exist, this act shall be in full force and effect on and after its	4
passage and approval, and retroactively to January 1, 2026.	5

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