Bill To Alter Tax Formula Dies Kootenai’s Effort To Tie Sales Tax Revenue To Counties’ Population Voted Down

Lawmakers shot down a proposal Tuesday that would have allowed Kootenai County to receive a larger share of sales tax revenue.

But Kootenai County Clerk Tom Taggart, who had drafted the bill, said the proposal will be back next year. The state’s current distribution formula, he told a state House of Representatives committee, is grossly unfair.

As the state tax commission sees it, business in Idaho froze in the late 1960s. That’s when the Legislature set a formula for distributing sales tax revenue based on how much merchandise, livestock and timber was located in each county.

Because many cities have grown rapidly since then, Taggart said, the formula has been thrown far offbalance. For example, Boundary, Washington and Clearwater counties all have nearly identical populations - just more than 9,000 people.

Boundary County gets $283,000 in sales tax annually. Washington gets $525,000. And Clearwater gets $812,000.

Other counties show even larger disparities. With only 814 residents, tiny Clark County’s $183,000 works out to be $225 per person. Madison County’s 23,000 residents, on the other hand, share $334,000 - or only $14 per person. Kootenai County, with a population of 87,000, gets $1.3 million, or $15.50 per person.

Taggart’s bill, sponsored by Rep. Hilde Kellogg, R-Post Falls, gradually would have tied sales tax to population.

“I think there’s some dramatic unfairness in some of these situations,” Taggart said.

“Most people I’ve talked to are convinced it’s not right.”

But despite a clause that no county would get less than it gets now, most of the committee balked.

“Maybe it’s not fair, I don’t know,” said Republican Rep. Lenore Barrett, whose constituents include Clark County.

“But it’s fair from my viewpoint.”

Areas like Clark County “don’t have money to spare,” she said.

“And we’re not hoarding any dollars.”

Rep. Charles Cuddy, D-Orofino, said the change would penalize counties with lots of public land and few residents.

Recreational use of the land puts strains on county government that the sales tax helps pay for, he said.

Rep. Jim Kempton, R-Albion, said he wants Taggart’s proposal reviewed by city and county associations.

“To send this out on the (House) floor like this would wreak havoc,” he said.

A few members of the House’s Revenue and Taxation Committee expressed sympathy for Taggart’s effort to change the formula.

Rep. Allan Larsen was serving as a state representative when the House passed the funding formula in the late 1960s.

At the time, Larsen said, legislators expected the formula to only last about four years before changes made it obsolete.

“The changes have come,” Larsen said.