November 9, 2010 in Idaho

Teachers union says secret deals erode schools

Groups seek to join tax lawsuit
By The Spokesman-Review
 

On the Web: Read previous coverage at spokesman.com/tags/ secret-tax-deals, where you can also download new filings in the case.

BOISE – Three education groups are seeking to join Rep. Shirley Ringo, D-Moscow, in her lawsuit over secret tax deals by the state Tax Commission, saying the alleged deals are causing education funding in the state to suffer.

“We take the allegations very seriously,” said John Rumel, general counsel for the Idaho Education Association, one of the three groups. “The representative’s allegations indicate that because of some sweetheart deals and corrupt practices, a substantial amount of funds that should be going into the coffers of the state are not getting there.”

In addition to the IEA, the Idaho Federation of Teachers and the American Federation of Teachers local from the University of Idaho all have filed motions to intervene in the case as plaintiffs. The UI group represents 65 professors and staff at the university; the IEA is the state’s largest teachers union, with 13,000 members.

The state has filed a motion to dismiss the case, arguing that Ringo, as a state lawmaker, lacks the legal ability to sue.

If the state wins that argument, Rumel said, the lawsuit “might not ever get a hearing.”

The IEA’s mission includes advocating for funding for schools.

Ringo’s lawsuit says the state Tax Commission has let some influential taxpayers off the hook for millions in secret deals and asks for an injunction to stop all such tax compromises until Idaho adopts a new system. In September, she filed documents charging that the state stands to lose more than $75 million just from currently pending tax compromises.

Ringo said numerous Tax Commission employees have contacted her since she filed the case – eight have signed affidavits, while others sent her anonymous letters – complaining about unfair secret deals. She offered to drop her lawsuit if the state attorney general would launch an investigation and grant job protections to the whistle-blowers, but the offer hasn’t been accepted.

“This appears to be the only path we can take to try to get something done,” Ringo said of her lawsuit.

Fourth District Judge Cheri Copsey has scheduled a hearing for Nov. 18 on the state’s motion to dismiss the lawsuit for lack of legal standing. Ringo said she and her attorney, former state Supreme Court Justice Robert Huntley, feel strongly that a state legislator has the appropriate standing to sue over the issue, but Ringo said the education groups also have a clear interest in the matter.

“If we have potential revenue out there that simply isn’t being collected … these groups have a definite interest in that,” Ringo said. Idaho lawmakers have made deep cuts in funding for higher education in recent years, and this year they cut an unprecedented $128.5 million from K-12 public schools.

Longtime senior state tax auditor Stan Howland sent lawmakers, the governor and the attorney general a 17-page whistle-blower report in 2008, charging that state tax commissioners routinely excuse taxes owed by large, multistate corporations, and that confidentiality laws prevent anyone from finding out about it. He said the deals have become so frequent that corporations routinely protest their state taxes to get their “Idaho tax break.”

Since then, two state investigations have concluded no laws were broken, but seven more longtime Tax Commission employees have come forward with sworn statements about the tax deals, including three current commission employees who came forward this fall. All said reform legislation enacted in 2009 after Howland’s revelations didn’t fix the problem, and may even have made it worse.

Bob Cooper, spokesman for the Idaho Attorney General’s office, had no comment on the new groups stepping forward. “Any comment we’d have we would address to the court,” he said.

The three education groups, in their court filing, said, “Idaho governmental leaders tell us that much of the recent funding holdbacks to education are due to reduced tax revenue, yet the Idaho State Tax Commission fails to raise revenue according to state laws and policies.” They decried “practices of unfair and unequal taxation, resulting in less than full collection of revenues due to the state of Idaho needed for proper funding of public K-12 and higher education.”


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