Lawmakers plan to retire extra-penny sales tax

BOISE – For the past 18 months, Idaho residents and visitors have paid an extra penny in sales tax to help balance the state budget.

Although many taxpayers have barely noticed they are paying six cents instead of five on every dollar they spend on merchandise, legislative leaders are determined to retire the penny increase as scheduled on June 30, 2005.

“Allowing the 1-cent sales tax to sunset is a matter of honor as far as the Legislature is concerned,” House Speaker Bruce Newcomb said Wednesday.

“If we don’t, the people of Idaho will never trust the Legislature again.”

The Burley Republican made his remarks to a lunchtime gathering of hundreds of state and local politicians, lobbyists and business leaders attending the 58th Annual Associated Taxpayers of Idaho Conference.

Lawmakers tend to overemphasize how harshly ordinary people view the temporary tax hike, said Boise State University political scientist Jim Weatherby, who also attended the conference.

According to the university’s Idaho public policy poll last year, 64 percent of respondents said they thought the amount of sales tax they pay was “about right.”

Lumi Lezha, a 52-year-old Albanian immigrant who cleans office buildings in downtown Boise, said she doesn’t object to keeping the sales tax at six cents as long as the revenue is dedicated for programs like Medicaid, the government health plan for the poor.

“Six cents is not very much. It’s no big deal, and people need their health,” Lezha said.

Health and welfare programs, and Medicaid in particular, are the state budget’s fastest growing expenses. Medicaid is funded with state and federal tax dollars.

Medicaid claims 14.4 percent of the state budget, up from 3.9 percent in 1987, and is taking about $288 million, said Jeff Youtz, director of the legislative budget office.

But Youtz said the statewide economy has rebounded to produce revenue projections healthy enough to balance the 2006 budget without the $177 million that would be raised if the temporary one-cent sales tax was extended or made permanent.

Senate President Pro Tem Robert Geddes of Soda Springs agreed with Newcomb that the sales tax would return to a nickel, but he focused his remarks more on tax incentives for businesses to relocate or expand in Idaho.

In recent months, there have been hundreds of layoffs in Geddes’ southeastern district of Caribou County.

“There are areas that are seeing a real need for economic development,” Geddes said.

“We need to make sure there are no barriers to new businesses to come and existing ones to grow.”

As lawmakers head into their short organizational session this week, House and Senate caucuses will elect leaders for the next two years.

For the Republicans, Boise Rep. Julie Ellsworth was being challenged by Rich Wills of Glenns Ferry for her position as GOP caucus chair.

No challenges were expected in the Senate.

Pocatello Democrats Elmer Martinez and Elaine Smith were facing off for chair of their caucus, a job being vacated by Margaret Henbest of Boise. George Sayler of Coeur d’Alene was running unopposed for assistant Democratic floor leader. Donna Boe of Pocatello chose not to run again.