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Expert: Repealing personal property tax for schools would mean automatic tax shift to real property taxpayers

The Senate Education Committee heard a presentation this afternoon from Alan Dornfest, property tax policy supervisor for the Idaho State Tax Commission, on the impact of a possible repeal of the personal property tax on business equipment on Idaho school districts. The upshot: With only a couple of exceptions involving two charter school districts in Lewiston and Boise with rate-based levies and for certain capped emergency levies, there would be an automatic tax shift to real property to make up the $38.6 million a year that’s now going to schools from the personal property tax on business equipment. That’s unless lawmakers opted to provide replacement funds from the state.

“Generally, the default is tax shifting,” Dornfest explained to the committee. That means while businesses got a break from the removal of the tax on equipment, everyone else in the district would make up the difference in their regular property tax bills, except for those few rate-based and capped levies. In those cases, the schools would get less money.

Senate Education Chairman John Goedde, R-Coeur d’Alene, told Dornfest, “If I’m hearing you right, in the case of school districts, if the personal property tax base was eliminated, the taxes collected would just be collected on a reduced base, so the rate would go up and it would be basically the real property?” Dornfest responded, “In a nutshell, yes.”


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Betsy Z. Russell covers Idaho news from The Spokesman-Review's bureau in Boise.

Named best state-based political blog in Idaho for 2013 by The Fix

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