In a surprising end-of-session plot twist, Gov. Brad Little has vetoed a property tax relief bill that passed the Legislature only last week.

The Senate’s response came quickly. It took barely four hours for senators to pass a rewritten bill that seeks to address Little’s concerns.

The veto and the Senate vote came as the 2023 Legislature returned for its 12th and possibly final week in session. The simmering property tax debate has far-reaching implications for schools — affecting how the state covers the cost of facilities, and when school districts can go to local voters to ask for money.

What Little did — and why

The complicated House Bill 292 presented a tradeoff for schools. It would have directed $100 million to schools to use for property tax relief — such as paying down bonds and levies.

However, HB 292 also would have eliminated the standalone March school elections, and the date school districts most often use to run bond issues and levies. Less than two weeks ago, schools across Idaho sought $1 billion in ballot measures, although most big-ticket requests failed.

The language on the March election factored heavily into the governor’s decision.

“House Bill 292 removes the very election most used by school districts that rely on supplemental levies to keep up with record growth and maintain schools for Idaho families, thereby removing local control,” Little said in a veto message, delivered Monday. “I do not find it reasonable to permanently eliminate an election date that has become important to so many families and local schools.”

The March school election wasn’t the only reason for the governor’s veto. State officials say HB 292 would have put $400 million in transportation projects on hold, since the state would no longer be able to use sales tax monies as a bonding tool.

In his veto message, Little urged lawmakers to start over: “Let’s get property tax done right this session,” he wrote. But the veto immediately set the stage for a potential political showdown.

HB 292 passed both houses with bipartisan support — 63-7 in the House, and 32-3 in the Senate, well above the two-thirds threshold needed to override a veto.

What the Senate did

Little announced his veto at about 12:30 p.m., and senators quickly took steps to bypass a veto override vote.

On Monday afternoon, the Senate rewrote a House-passed tax bill to include most components of the vetoed HB 292, while addressing Little’s concerns.

The reworked version of House Bill 198 set aside at least $80 million of sales tax money that the state could use to bond for transportation projects. It left the March school election date intact. It carved out 3% of sales tax collections for a newly created “school district facilities fund” to help schools pay off bonds and levies, or finish or finance future building projects. In HB 292, the carveout for schools totaled 2.25%.

“It’s basically a very clean bill … that deals only with property tax relief,” said Senate President Pro Tem Chuck Winder, R-Boise, explaining the amendments to senators.

The amendment process is a messy one, however. Because all tax bills have to originate in the House, the Senate cannot write a tax bill on its own. But the Senate can do what it did Monday afternoon, completely rewriting one of the House’s tax bills. In Statehouse slang, this approach is called “radiator capping” — rebuilding a House bill like a car, leaving only the radiator cap intact.

Soon after, the Senate voted on the radiator-capped and new-look property tax bill, with several lawmakers complaining that they felt rushed.

“This is kind of a frustrating process,” said Sen. Cindy Carlson, R-Riggins, who voted for the bill.

“I kind of feel like I’m voting in the dark a little bit on this,” said Sen. Dan Foreman, R-Moscow, who opposed it.

The Senate passed the bill on a 32-3, with Republicans Chris Trakel of Caldwell and Glenneda Zuiderfeld of Twin Falls joining Foreman in opposition.

What the House could do

All of Monday’s legislative action took place in the Senate — because, on Friday, House members went into a three-day recess.

The scene will shift to the House on Tuesday, where lawmakers could take a different tack. House Speaker Mike Moyle said he expects House Republicans to caucus, and then make a run at overriding Little’s veto.

“I’m pretty sure they’ll want to,” Moyle, a co-sponsor of HB 292, told Idaho Education News Monday afternoon.

The House will also have a chance to weigh in on the Senate’s amendments to HB 198. They can pass the amended bill, or reject the Senate’s amendments outright.

Regardless of what unfolds next, the property tax issue could easily delay the adjournment of the 2023 legislative session. And potentially, the politics could affect other unresolved issues. None of the K-12 budget bills have passed the Legislature. And the House still has to take up a bill to implement one of Little’s top legislative priorities — “Idaho Launch,” a proposal to provide incentives for high school graduates looking to attend community college or pursue workforce training.

It’s not immediately clear how the veto — and any late-session negotiations on property tax relief — would affect the fate of any other bills still sitting on the Legislature’s docket.

“I think all of them get impacted now,” said Moyle, R-Star. “I think that you will have a bunch of people that are upset that worked hard on (HB 292).”

A property tax debate — but also an election debate

The March school election date was a talking point in the House and Senate debates over HB 292.

And that continued Monday.

Education groups were unanimous in their response to the veto. They urged lawmakers to find a way to pass property tax relief — but they applauded Little’s veto, and specifically his move to preserve the March election date.

“Public school districts rely on supplemental levies to maintain their operations and losing this March date creates issues with budgeting for the next school year,” Idaho Association of School Administrators Executive Director Andrew Grover said. “Removal of the March date in this legislation was not a necessary component of property tax relief in HB 292.”

“We urge the House and Senate to sustain the veto and work together quickly to bring a bill back that keeps the March election date intact and eases the other concerns related to transportation funding,” the Idaho School Boards Association said in a statement.

“Providing property tax relief and maintaining — or even expanding — school district funding tools are not mutually exclusive concepts,” Idaho Education Association President Layne McInelly said. “IEA members encourage the Idaho Legislature to pass property tax relief that does not undermine the ability of local communities to support their public schools.”

“School districts across Idaho rely on this date to pass supplemental levies that provide crucial operating funds to make up for the funding they don’t receive from the Legislature,” Idaho Business for Education President Rod Gramer said.

But on Monday, Moyle said removing the March election was an important component of HB 292.

“How can school districts honestly look at their patrons and ask for running a supplemental (levy) in March when they don’t even know what the Legislature’s going to give them?” he said. “That’s not even honest. … It’s gaming the system.”

Audio: House Speaker Mike Moyle reacts to Monday’s veto.