Conference committee delays final action on HB1176 amid disagreement over homestead credit and school gap funding

The conference committee on House Bill 1176 recessed until 3:30 p.m. after legislators failed to reach agreement on whether to expand the homestead property tax credit eligibility, set the credit at $16.50, and where to place roughly $30 million in school gap funding.

The dispute centered on two approaches: the House proposal that would increase the credit amount to $16.50 (which supporters say would zero out most remaining property tax obligations for many seniors) and the Senate approach to expand eligibility categories, which the Senate says is funded through the tax commissioner’s budget rather than by moving large additional sums into HB1176. "The budget for the expansion of the homestead tax credit is in 01/00/2006 currently," said Sherry Anderson, chief fiscal officer, Office of the State Tax Commissioner.

Why it matters: the package ties together the homestead credit, allocations from the legacy earnings fund to a newly created legacy property tax relief fund, and gap funding intended to keep school districts whole for two years. Lawmakers said the intent is short-term relief while they return in two years with more data and longer-term reforms.

Shelley Myers, state supervisor of assessments, provided county-level context for how the $16.50 credit would affect taxpayers. "It averages about half of all applicants in those counties received the full homestead credit and half received partial," Myers said of 2024 applicants in Burley and Cass counties. She added that "the average left on the tax obligation was about $7,700 in Cass County. So a $16.50 would 0 most of those out."

Committee members described a funding gap between the chambers. Representatives said the House would add about $40 million from the general fund to the homestead credit line, while senators described using an appropriation in the tax commissioner’s budget to cover expansion of eligibility categories. "I think that's the difference," one senator said, explaining that the choice is between moving more general fund into HB1176 to pay for a $16.50 credit or shifting more money into the tax commissioner's line to broaden eligibility.

Education funding was discussed as part of the package. Legislators repeatedly referenced a roughly $30 million figure as a starting point for gap funding to keep school districts whole for two years; committee members debated whether that money should be reflected in the Department of Public Instruction (DPI) budget or remain in HB1176 and the legacy property tax relief fund. One member said DPI currently has "a significant carryover" and offered to talk to DPI and report back that afternoon.

Other technical matters raised included language in section 5 reallocating legacy earnings to the legacy property tax relief fund, interactions with section 2012 related to the Department of Transportation (DOT) budget, and a property tax limitation provision referenced as section 22. Committee members identified sections 10, 11 and 29 as containing appropriation and deficiency-payment language to address shortfalls if the chosen approach underfunds the credit.

Committee directions and next steps included: staff and agency officials running additional valuation and fiscal-impact numbers for the $16.50 credit and expanded eligibility; the chair directing a follow-up conversation with DPI about where gap funding should be placed; and reconvening at 3:30 p.m. to continue negotiations. The committee did not vote on any substantive provision before adjourning.

The committee chair closed the session by saying members were drawing down available legacy earnings and warned against spending principal from the legacy fund. "We're using all the earnings that we could scrape up to try to fund this package," the chair said, and then recessed the committee until 3:30 p.m.