PONDERAY — The little city with the big future will be getting the short end of the stick if a pair of House bills make it through the Legislature, according to Mayor Steve Geiger.

Ponderay is flush with more than 265 businesses, but has a low population of 1,500 residents, which means the city already takes a hit in tax revenue from the state.

Geiger is concerned that the tax situation will only worsen if House bills 408 and 409 pass.

House Bill 409 would freeze city, county and other non-school taxing districts’ property tax budgets for the upcoming fiscal year at the dollar amount each entity received for the current fiscal year. The lost revenue would not accrue to a taxing district’s forgone levying authority.

It would restrict Ponderay’s 3-percent gain, which means it would not be able to give the city’s employees their 3-percent bump in pay or possibly eliminate a position and see a reduction in safety services, said Geiger, who calls the $28,000 gain “extremely important.”

Of the city’s 11 employees, seven work in the police department and four work in City Hall.

“We operate on a budget unimaginable to other cities, having to cover what we cover,” Geiger said in an appeal to lawmakers urging them to vote against House Bill 409.

Geiger said the city has a $2 million budget. It receives approximately $950,000 annually and has a payroll of approximately $650,000.

Geiger is not alone in opposition to House Bill 409. The Association of Idaho Cities is also calling on lawmakers to oppose the legislation.

“House Bill 409 is premised on the flawed assumption that freezing property taxes will help homeowners in areas with rapidly escalating values,” the association said in a post to its blog.

The association cited testimony to the House Revenue & Taxation Committee in which Ada County Clerk Phil McGrane said that if a one-year property tax freeze had been in place in 2019, 82 percent of residential properties in Ada County would still have seen a tax increase because taxes are shifting from commercial property onto homeowners.

“Without the one-year freeze, 91 percent of residential properties would have seen an increase,” the association said.

The revenue problem would be compounded by House Bill 408, which would change the revenue-sharing formula, said Geiger.

That bill’s statement of purpose indicates that the current system creates inequities because it relies on property values, creating a situation where some cities receive 10 times the amount of other cities and counties when compared to how much they would receive if calculated based solely on population.

House Bill 408 would establish a new base amount using the previous year’s distribution to each city.

If sales tax collections increase, the first 1 percent of the increase is divided amongst all of the cities. If the state collects more than a 1-percent revenue increase than the previous year, the excess funds are only distributed to cities that receive less than their respective counterparts based on per capita calculation.

Geiger said the city generates more than $18 million in sales tax revenue, which works out to be approximately $50,000 per day. However, it receives only about $130,00 in revenue, an arrangement Geiger calls “appalling.”

Geiger said the new formula will taken even more money away from the city.

“There’s definitely going to be some big losers and big winners,” Geiger said over the phone on Monday.

The Association of Idaho Cities is neutral on the bill to change the revenue-sharing formula.

Keith Kinnaird can be reached by email at kkinnaird@bonnercountydailybee.com and follow him on Twitter @KeithDailyBee.