Idaho Gov. Butch Otter today signed HB 463, the $200 million-plus income tax cut bill, into law, praising lawmakers for passing the bill and indicating he’s also looking favorably toward a follow-up bill to add another $25 million in cuts by expanding a child tax credit.
“I’m very proud to sign this bill,” Otter said.
“Much of the groundwork for what we’re witnessing today, especially in the strength and the depth and the width of our economy and our economic activities in Idaho and our unemployment rate and the growth of the state, all really happened because of the discipline that we demonstrated during those tough years between ’08 and ’10,” Otter said. “I think folks recognize that.”
House Majority Leader Mike Moyle, R-Star, called the bill “the largest income tax cut in Idaho history,” and said, “It’s a start in the right direction. We’ve got a ways to go, but thanks to all that were involved.”
Senate President Pro-Tem Brent Hill, R-Rexburg, said, “This is exciting. We’ve gone five years without any significant tax relief, and yet we’ve seen some significant increases in revenue for the state. … In the meantime, we have been able to increase greatly our funding for public education, which was a top priority for the governor and many of us in the Legislature. We’ve been able to replenish our reserve funds, which is also important to prepare for the next downturn. But in the meantime … we’ve got some money we need to return to the taxpayers.”
Asked about the fact that HB 463, as-is, would actually mean a state income tax increase for large Idaho families, Otter turned to Hill. “This was our biggest concern,” Hill said. “We’re looking at over $100 million in tax cuts, but they’re not uniform across the board, and there is that small segment there that might actually have seen a tax increase the way it is. That’s what we felt like we had as far as money to spend on tax relief at the time.” But he said lawmakers hoped they could come back with further relief, in the form of a larger child tax credit, the following year.
Then, he said, “We are thrilled as our revenues keep coming in … it looked like we don’t have to wait ‘til next year. ”
While the bill cuts personal and corporate income taxes by $201.9 million, it also conforms Idaho’s state income tax code to the changes contained in the federal tax-cut bill that passed this year – including the doubling of the standard deduction and the elimination of the dependent exemption – which has the effect of raising Idaho income tax collections by $97.4 million. The net impact is that the state would collect $104.5 million less in tax revenue next year.
The follow-up bill to increase the new child tax credit, HB 675, would add another $25 million in cuts.