by Logan Finney, Idaho Reports

The Senate Local Government and Taxation Committee approved a bill Wednesday that would reform and modernize how the state of Idaho collects taxes from power utility companies.

As reported by Valley Lookout, taxing districts across the state are estimated to owe $13 million following recent court judgments that Idaho Power and Avista Utilities were overcharged on property tax bills from 2020 to 2022 in all but one Idaho county.

Both power utilities and railroads are classified as “operating property,” and so state courts have ruled that the Idaho constitution requires any property taxes on them to be uniform.

Unlike most property – which is assessed for market value by locally elected county assessors – operating property is assessed centrally by the Idaho State Tax Commission.

Legislators have been working on an alternative to charging property taxes on power utilities’ operating property publicly since 2023, when the courts ruled in the utilities’ favor.

“I know this has been a process that’s taken a couple of years,” said tax committee chair Sen. Doug Ricks, R-Rexburg. “We appreciate the work that’s come forth. I understand this is an agreed-upon compromise, I guess, with our power companies and other stakeholders here to come up with this.”

Sponsor Rep. Jeff Ehlers, R-Meridian, presented House Bill 329 to the Senate panel.

“It’s basically a replacement tax,” Ehlers said. “Instead of property tax for the centrally assessed properties for these utilities, it’s a usage tax.”

Although the revenue will no longer be collected as property taxes, the new utility usage tax revenue would be distributed to local taxing districts to use as if it was property tax money.

Valley Lookout reported commissioners approved 2025 tax credits to Idaho Power to settle the $86,000 in extra property taxes Valley County collected during the three-year period.

“That’s so frustrating to me—the fact that our taxpayers are going to pay this back, plus interest, on a state issue,” commission chair Sherry Maupin said at the time.

If signed into law, the bill would tax power companies by kilowatt-hour of electricity, and gas companies by therm of heat.

“These usages can be easily verified through data submitted to the Public Utilities Commission,” Ehlers said. “Right now, we’re talking about $23 million total statewide spread throughout the taxing districts.”

The bill now moves to the Senate floor, its final step before the governor’s desk.

“The fact of the matter is, the tax commission or the state lost a court ruling,” Ricks said. “There is some liability that the counties are having to absorb in this. Whether we move to this new assessment or stick to what it was before, there is some loss of revenue to the counties regardless. We’re just moving forward, changing it to a different method that we feel is a little more appropriate moving forward.”

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