July 10, 2010 in Idaho

State challenges tax deal lawsuit

Motion claims lawmaker suffered no losses
By The Spokesman-Review
 

BOISE – Idaho’s initial response to Moscow Rep. Shirley Ringo’s lawsuit over secret tax deals: She can’t do that.

The state has filed a motion to dismiss the case, saying Ringo lacks standing to sue as a lawmaker, something she and her lawyer dispute.

Meanwhile, Ringo filed an amended complaint saying the secret deals that allegedly allow some wealthy and politically connected taxpayers to get millions in tax breaks violate constitutional guarantees of equal protection under the laws. Ringo’s also asking for an injunction to stop all secret tax compromises until Idaho institutes a new system.

“If we don’t do something like that, it’ll just be business as usual,” Ringo said, “and sometimes these things take quite a long time to work their way through the system. … It puts a little bit more urgency on it.”

Bob Cooper, spokesman for the Idaho attorney general’s office, declined to comment on the pending case, saying, “We will make any response to the court.”

Fourth District Judge Cheri Copsey has scheduled a Sept. 9 hearing on the state’s motion to dismiss the case. If she grants it, the lawsuit would end there; if not, Ringo is seeking a November hearing on the proposed injunction.

The state’s motion to dismiss says Ringo can’t sue because she has suffered no specific injury – that’s the standard for a citizen or taxpayer to have standing to sue – and because “this case does not involve nullification of votes or usurpation of power.”

There’s no case law in Idaho about when a legislator is allowed to sue, but the state cites two New York cases that mentioned that standard, plus a U.S. Supreme Court case that said legislators historically had standing to sue “to protect their interests in holding the office to which they were elected, and alternatively, to see that their votes were properly counted.”

As far as the constitutionality of Idaho’s tax system, the state argued, “No member of the Legislature has a personal interest in that issue, which does not implicate a legislator’s salary or the proper counting of the legislator’s vote.”

Ringo noted that her oath of office requires her to support the state constitution, which mandates uniform taxation.

Ringo’s lawsuit relies on startling charges from retired senior state tax auditor Stan Howland, who says wealthy and politically connected taxpayers have gotten millions in tax breaks through the secret deals, at the expense of everyone else in the state.

Howland alleged improprieties in the deals in 2008, when he submitted a 17-page whistle-blower report to the governor, state Legislature and others. Two state investigations concluded no laws had been broken, but recommended reforms to the process through which single tax commissioners grant confidential settlements to certain taxpayers.

In 2009, the Legislature unanimously passed reform legislation, but Howland opposed it, saying it didn’t fix the problem. Ringo said she voted for the bill, because “I felt at the time it was probably the best we were going to get, but as it played out, my doubts seem to have been justified, because I don’t think it stopped the types of actions that we’re concerned about.”

The chairmen of the House and Senate tax committees, in a joint statement, criticized the lawsuit as “hysteria,” calling it “an attempt to stir up the same old allegations that were thoroughly investigated two years ago.”

Howland said in an affidavit in the case that three-quarters of Idaho’s tax protests are now settled through secret deals rather than published decisions.

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