Panel kills most tax reform bills

BOISE – House tax writers passed one property tax reform bill Wednesday but killed 14 others, including a much-watched local-option sales tax bill sponsored by five Kootenai County lawmakers.

One of the two North Idaho members of the House Revenue and Taxation Committee – Rep. Jim Clark, R-Hayden Lake – joined with 13 other committee members to kill the local sales tax bill on a 14-5 vote. Kootenai County is the first that pushed for local-option sales taxes and has successfully used them to finance a jail expansion.

Clark said he has always opposed local-option taxes and called House Bill 502, drafted by Coeur d’Alene Sen. John Goedde, “just a bad bill.” Asked what would constitute a good local-option bill, Clark said, “I haven’t seen one yet.”

The only bill that cleared the committee Wednesday was HB 422, a proposal from a legislative interim committee to expand the “circuit breaker” property tax break for the low-income elderly and disabled.

‘We don’t have the tools’

Kootenai County officials who were in Boise for a meeting of counties said they were disappointed by the local-option vote.

“We can’t address our local needs if we don’t have the tools,” county Assessor Mike McDowell said. “They just took one of the tools out of our toolbox.”

County Clerk Dan English said state officials frequently complain about the federal government tying their hands, and he questioned why they don’t recognize the same problem when they tie the hands of local officials.

“I think the best choices are the choices that people get to make at the local level,” English said. Local officials work with citizens every day and have to balance their budgets, he added. “It’s very tough when your choices get limited.”

Rep. George Sayler, D-Coeur d’Alene, a co-sponsor of the bill, voted for it and made the motion to approve it. But he was joined only by the committee’s three other Democrats and Rep. Leon Smith, R-Twin Falls.

HB 502 would have expanded the current local-option sales tax law to allow voters to impose a local sales tax to finance any type of capital facility – not just jails – and to provide property tax relief. The bill also required a two-thirds vote to approve the tax, in addition to 40 percent voter turnout.

“It’s very stringent,” Smith said.

The current law will expire in a few years.

Sayler, who served on the interim legislative committee on property taxes, said when the panel held hearings across the state, “One of the things we heard over and over again was that we need some tools to deal with this at the local level.”

He added, “Local option worked for us – it’s helped provide property tax relief.”

Rep. Nicole LeFavour called it “hypocritical” for lawmakers to claim rising property taxes are a local issue, and then not give local officials ways to address the issue. She was immediately reprimanded by committee Chairwoman Dolores Crow, R-Nampa, who said, “Representative, watch your language. It isn’t hypocritical.”

Crow has repeatedly called property taxes a local issue, and she applauded Gov. Dirk Kempthorne’s similar statements to lawmakers in his State of the State address this year. But she has also acknowledged that the Legislature sets the parameters for the property tax system.

After a week and a half of hearings on more than 30 property tax reform bills, Crow’s committee voted to kill 14 of the 33. A half-dozen were reluctantly withdrawn by their sponsors, who acknowledged that they weren’t going to pass or they duplicated other bills.

Others were defeated. They included two proposals to limit increases in assessed value: HB 503, by Rep. George Eskridge, R-Dover, and HB 455, by Rep. Bill Deal, R-Nampa. Eskridge’s bill, which had seven co-sponsors, would have capped increases in annual tax values for homeowners at 3 percent. Deal’s bill, which had six co-sponsors including Eskridge and House Speaker Bruce Newcomb, would have capped increases in values for all types of property at 5 percent a year.

House Majority Leader Lawerence Denney, R-Midvale, said of Deal’s bill, “While it’s a good idea, I don’t think it’s quite the right idea.”

House Assistant Majority Leader Mike Moyle, R-Star, called Eskridge’s bill “a good concept” but said if it doesn’t also limit local government spending, he wouldn’t support it.

Tax break for developers

At the start of the meeting, Crow called an impromptu public hearing on HB 569, which had been introduced a day earlier without discussion and creates a new tax break for subdivision developers. Both the sponsor, Scott Turlington of Tamarack Resort, and a backer from Valley County said they didn’t expect to testify, but they did anyway. They were the only ones.

Several committee members had sharp questions about the idea, which would provide a big new property tax break to subdivision developers in the state’s fastest-growing counties, including Kootenai County.

“I guess I’m missing something here,” LeFavour said. “I’m just wondering, is land development in Idaho an industry that is really struggling now, one that needs to be given a special exemption?”

“No, I don’t think so,” responded Phil Davis, a Valley County commissioner. He said he just wanted to be sure that if the Legislature chose to give developers a new tax break, it would be a fair one. He called Turlington’s exemption fair; it would tax unsold subdivision lots at just a third of their value.

The committee took no action on that bill or on a long list of the most controversial property tax proposals this year, including increasing the homeowner’s exemption and shifting school funding off the property tax. They’ll continue moving through the list this morning.