Our View: Time to go slowly
After years of sitting on their hands, most Idaho lawmakers were willing to gamble this week on a wholesale change in the way their state funds education.
They were bold. They were creative. They were un-Idaholike.
In approaching property tax reform, Idaho legislators usually camp out on the no button until grass-roots activists force a statewide initiative on them. Now, in the closing days of the 2006 Legislature, some lawmakers proposed to defuse such a movement by shifting $250 million in property tax levies onto the state sales tax, which now stands at 5 cents on the dollar, and by increasing the homeowner exemption from $50,000 to $75,000. After passing the House on a 44-26 vote, however, House Bill 876 failed in the Senate on a 20-15 vote on Thursday. That the dramatic change moved so far so fast so late in the session was amazing.
As much as Idaho needs property tax relief, the narrow loss in the Senate did two important things: It showed that most legislators are willing to embrace reform, and it slowed the process down. This session, the Legislature has tentatively approved bills that raised the homeowner exemption and the circuit breaker tax break. With final approval from the House, the two pending bills should buy the Legislature time to study the tax overhaul further.
The next interim committee on property tax reform should set as its top priority a review of HB 876.
Co-sponsored by state Rep. Jim Clark, R-Hayden, the defeated bill offered much to appreciate. By removing school funding from the property tax, it would have provided instant property tax relief statewide in exchange for a small 1.25 percent hike at the cash register. Kootenai County taxpayers handled a sales tax of 6.5 cents per dollar in stride during the period when the state’s temporary one-cent sales tax overlapped with a county half-cent sales tax to fund jailhouse expansion. The local-option tax, like the proposed legislation, provided property tax relief while forcing visitors and tourists to shoulder the tax load, too.
However, there is a downside to the tax shift that should be investigated thoroughly.
Educators opposed the legislation because they were afraid that Idaho schools would be underfunded during economic downturns. Democratic legislators generally opposed it because they believe the sales tax hurts the poor most. Realtors and the Idaho Association of Commerce and Industry opposed it, too. They didn’t want to see the sales tax rise above 6 percent or a heavier property tax burden shifted to landlords, businesses and farmers.
The good appears to outweigh the bad under this measure. But some questions about it still need to be answered.