Boise budget proposal takes full 3% property tax increase, uses limited new‑construction capture; rebate program continues
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Summary
City staff recommend taking the 3% base property tax increase, recapturing 1% foregone growth and recognizing new construction revenue limited by House Bill 389; the proposed budget continues a property tax rebate program for qualifying circuit‑breaker participants but drops an in‑home childcare rebate provision.
City staff told the council that the FY26 proposed budget includes the full 3% allowable base property tax increase and additional options for recapturing prior foregone amounts and capturing new construction value, subject to state limits.
Eric (city staff member) said the package includes a 3% base increase, which translates to roughly $5.7 million ongoing for the General Fund, plus taking a 1% foregone amount tied to prior lower increases that would add about $2.0 million ongoing. Staff also forecasted capturing roughly $6.4 million attributable to new construction and related items, noting that House Bill 389 reduces the taxable share of new construction to 90% in most cases.
Why it matters: property tax is the city’s largest General Fund revenue (staff estimated it at about 60% of General Fund receipts). Small percentage changes translate into millions of dollars for city services, capital transfers and program funding. Staff said the combined property tax actions in the proposal primarily augment the capital transfer and fund police technology, Valley Regional Transit commitments and other priorities.
Specifics and impacts - Base 3% increase: staff estimate $5.7 million ongoing for the General Fund. - Foregone recapture (1%): roughly $2.0 million ongoing; staff stated it would be used for urgent needs and to augment capital transfers. - New construction: staff estimated $6.4 million, of which $1.8 million is related to new construction and annexation and about $4.6 million comes from the sunset of the River Myrtle Old Boise Urban Renewal District (the staff presentation noted HB389 limits the capture to 90% for new construction and 80% in some URDs created after specified dates). - Property Tax Rebate Program: FY26 continuing funding was included for rebates for qualifying homeowners participating in the state’s Circuit Breaker property tax reduction program; a prior provision that provided rebates to licensed in‑home childcare providers is not included in the FY26 proposal.
Discussion and council questions Council members asked how new construction is calculated (staff said taxable value on the prior calendar year tax rolls is used, with a one‑year lookback) and whether the household income threshold for the state circuit‑breaker program had changed (staff said they would research and return with specifics). Staff also said the per‑property effect of the HB389 impacts was small — "pennies" per home in their calculation.
Ending: staff said they will bring an ordinance in the fall to lay out the rebate program parameters for council approval. No formal action was taken in the workshop.
