Lawmakers stall over business tax break

BOISE – The fate of a tax break for businesses brought Idaho’s over-long legislative session to a standstill Tuesday, with the House refusing to go along with the Senate’s unanimous remake of a giant tax break into a much smaller exemption.

The result is that Idaho lawmakers will be in session today, when they had hoped to adjourn nearly two weeks ago. “I had planned to go home tomorrow but obviously that plan has changed,” state Rep. Frank Henderson, R-Post Falls, said late Tuesday as he left the House chamber.

The Senate had rewritten legislation to phase in a $120 million-a-year tax break for businesses to transform it into a $15.5 million annual break. By exempting just the first $75,000 in value from the property tax on business equipment – rather than repealing the tax entirely – the Senate version frees 86 percent of Idaho businesses from paying the tax at all, and costs the state just $15.5 million a year.

State Rep. Jim Clark, R-Hayden Lake, the sponsor of the original tax break bill, House Bill 599, said $75,000 is “just an arbitrary number. Why isn’t it $1 million?” he asked the House. “Why isn’t it $2 million?”

Clark led the House debate against concurring with the Senate amendments, and his motion carried, 43-25. The House and Senate then each appointed three members to a conference committee to attempt to work out differences over the bill; the conference committee, on which Clark will serve, will meet at 8 a.m. today.

“I think they are as willing as we are to find us a better bill,” Clark said.

But some senators were disappointed. “I frankly think the amendments were good,” said state Sen. Mike Jorgenson, R-Hayden Lake. “I don’t think we can afford to do what the House proposed, $120 million.”

Said state Sen. Shawn Keough, R-Sandpoint: “I thought the Senate had a good compromise that moved us toward elimination of the tax, but recognized that the state couldn’t afford to shift that tax in the manner that was proposed in the original bill.”

The Senate amendments to the bill had passed that chamber unanimously, with strong support from both parties.

Senate Tax Chairman Brent Hill, R-Rexburg, told the House Revenue and Taxation Committee on Tuesday that senators chose the $75,000 figure to offer businesses relief comparable to the homeowner’s exemption from property tax. The homeowner’s exemption is $89,325 now, but it’s pegged to an index of Idaho housing prices, so it’s likely to drop in the future, Hill said.

“I guess we did not want to give the impression to the public as a whole that we liked business $12,000 more than we liked individuals,” Hill told House members. But he said if the House wanted to raise the exemption to $100,000, the Senate might not object.

The committee voted 10-6 to recommend that the full House not go along with the Senate amendments. The panel’s five Democrats, including House Assistant Minority Leader George Sayler, D-Coeur d’Alene, joined GOP Rep. JoAn Wood, of Rigby, in opposing that recommendation, but it carried.

Backers of the Senate version of the bill said making more changes now could kill the bill, meaning Idaho businesses won’t get any tax break.

Alex LaBeau, president of the Idaho Association of Commerce and Industry, a business lobbying group that proposed the original bill, told the House committee that his group opposes the Senate amendments. He said IACI would accept the $75,000 cap only if other changes were made too, including applying the new exemption to utility property like power lines and declaring all newly acquired business equipment to be exempt from the tax.

Rep. Shirley Ringo, D-Moscow, said she’s “uneasy about how ‘creative’ this conference committee might decide to get. It would have been much better to have concurred in the amendments.”

Lawmakers hope to end their 2008 legislative session today. The conference committee’s deliberations “likely will take place in an hour or two in the morning at the most,” House GOP Caucus Chairman Ken Roberts, R-Donnelly, told a somewhat skeptical House. “We should have this under control by afternoon and be able to go home tomorrow.”