Kempthorne vetoes tax loophole bill

BOISE – In a letter to House leadership, Gov. Dirk Kempthorne said he “cannot, in good conscience” sign into law a bill that would have partially closed a property tax loophole.

Kempthorne conceded the legislation is an improvement over the 2002 law intended to help farmers with property taxes on agricultural land. It turned out the tax break also applied to developers and people looking for a place to build or retire – including retirement property Kempthorne owns in Valley County.

The new legislation – approved on the final day of this year’s session – would have closed the loophole over 14 years, with developers subjected to increasingly higher taxes based on market value.

The problem was the deadline – April 15, or Friday – for small landowners to file for an extension of the tax break. A Senate amendment extended the tax break until December 2007 for landowners who own less than three lots. Kempthorne, who owns more than 14 acres near Cascade, falls into that category.

But to get the extension, those landowners had to file by Friday, the day Kempthorne vetoed the bill. The governor said the measure “creates an unfair and unrealistic time frame for compliance by owners of rural property.”

“Implementing a law that has financial implications on citizens, and expecting those citizens to respond within hours, is not good policy,” Kempthorne wrote in a letter to House Speaker Bruce Newcomb, R-Burley.

Rep. Dell Raybould, R-Rexburg, a supporter of the bill, blamed the Senate for taking too long to get it to Kempthorne’s desk.

“We worked so hard to get the (law) straightened around, and now it’s back to where it was before we started the legislative session,” Raybould said Friday.

But others, including Senate Assistant Majority Leader Joe Stegner, R-Lewiston, were pleased to have another year to work on it.

“Now we’ll have a level playing field and we’ll fix this thing right,” said Senate Majority Caucus Chairman Brad Little of Emmett, who worked with Stegner.