Our View: Tackling taxes
Gov. Jim Risch is optimistic that his proposed property tax relief will be passed by a special session of the Idaho Legislature on Friday.
Conventional wisdom says the governor wouldn’t have called the session if he didn’t have the votes to succeed. During a meeting with The Spokesman-Review on Monday, Risch; his wife, Vicki; and aides clicked off names of legislators who support his plan. They include senators who were lukewarm to a similar bill in the spring to shift the cost of public school maintenance and operations from the property tax to the sales tax.
Risch’s plan calls for increasing the state sales tax by one penny to 6 cents per dollar and tapping some of the current revenue surplus of $203 million to make up the rest of the lost funding of $260 million and to establish a stabilization fund of $100 million to protect school funding. Democratic gubernatorial candidate Jerry Brady pushed a property tax relief proposal in Coeur d’Alene on Monday, too. The Democrats claim they can provide relief for Idahoans with homeowners’ exemptions without raising the sales tax, by using the current surplus and ongoing revenue growth. They have gotten traction with their proposal.
An Idaho Statesman online survey Monday showed that 53 percent of the respondents didn’t like Risch’s plan. A Democratic poll this month reached the debatable conclusion that Republican Idaho supported the Democratic plan 60.5 percent to 10.5 percent. However, the Democratic plan will be a nonstarter Friday as the supermajority Republican Legislature convenes. Only Risch’s proposal will be discussed. Not only should North Idaho legislators support Risch’s tax shift, but they also should push ahead to reduce the sting of the increased sales tax by removing it from groceries or by increasing the grocery tax credit.
Risch’s proposal completes the work that then-Gov. Phil Batt began in the mid-1990s when he pushed successfully to remove a portion of the basic school cost from the property tax. At the time, Batt was being pressured by the late anti-tax activist Ron Rankin for property tax relief in the form of a threatened revival of the One Percent Initiative. The move has saved Idaho property taxpayers hundreds of millions of dollars since then.
No one, including Gov. Risch, can say for sure how the tax shift will affect individual Idaho households, because family spending patterns vary widely. Some claim that Risch’s proposal will actually raise overall taxes a little. That businesses and out-of-state homeowners will benefit most. In the long run, Idaho property owners in boom areas should realize some savings because they won’t pay ever-increasing amounts of property tax for public school costs.
Critics make a good point when they note that renters receive no direct benefit from Risch’s tax shift. That a sales tax increase is regressive and hits struggling families and renters hardest. That’s why it’s crucial to pass Risch’s legislation now and to begin a serious discussion about a follow-up bill next session that would eliminate the sales tax on food or significantly increase the grocery credit for state income tax purposes.
Win or lose Friday, Risch deserves credit for forcing legislators to quit ignoring significant property tax relief.