Kellogg Gets Review Of Tax Revenue Split Post Falls Representative Says North Idaho Gets Shortchanged

Post Falls Rep. Hilde Kellogg’s long crusade to reexamine how Idaho divides its tax money - and why North Idaho doesn’t get back what it pays in - is finally paying off.

Kellogg has won approval from legislative leadership for an interim committee to look into the issue and develop legislation to be considered next year.

“The Sales Tax Act is 33 years old,” Kellogg said. “It was passed with the idea that it would be reviewed in five years - so it’s overdue.”

The issue has been a sore point in North Idaho for decades.

One section of the Sales Tax Act requires a portion of sales tax proceeds to be divvied up on the basis of an area’s business inventories in 1965. That favors areas that have seen little growth or change in the past 30 years and hurts fast-growing retail meccas like Post Falls.

“We contribute more to the revenue stream and, quite frankly, don’t feel that we get back our proportional share,” Kellogg said.

Though Kellogg’s long-sought committee was approved, a proposal to study Idaho’s school building problem was passed over.

House Speaker Mike Simpson said he’s not convinced a majority of legislators think the state should be involved in helping school districts pay for buildings. That job is now up to local property taxpayers, who must approve school construction bonds by a two-thirds supermajority vote.

Simpson, R-Blackfoot, said he thinks he’s part of a minority of lawmakers who want some state money added. Idaho is the only state that both provides no state money and requires a two-thirds supermajority vote for school bonds, which makes Idaho the toughest state in which to build a school.

Providing state funding for a portion of the cost of school buildings would cost millions every year. Gov. Phil Batt hasn’t made that a priority in the budgets he’s proposed to the Legislature over the past four years.

Kellogg’s interim tax committee, which will include legislators from both houses, will have hearings and study the issues over the summer and fall before presenting legislation to next year’s Legislature.

Kellogg said the whole sales tax system is on the table - including the politically sensitive issue of exemptions.

“We pass laws and then the first thing we do is exempt somebody,” she said. “We need to set a policy and decide who is exempt, then stick to it.”

The group also will look at how other state tax proceeds, like liquor taxes, are divided up, Kellogg said. And it will examine laws that require a portion of sales tax money to come off the top for certain purposes, before any of the dividing is done.

“It’s going to be really interesting to put it all together to see how this happens,” she said.

, DataTimes MEMO: This sidebar appeared with the story: LAWS IN THE WORKS Six policies will be studied by lawmakers this year with an eye toward legislation to be considered in the next session. They are: Property taxes for nonprofit organizations and charities. Liquor laws. Sales tax revenue distribution. Property rights. A new Department of Environmental Quality. Electrical deregulation.