Sales tax bill takes ‘smaller bite’

BOISE – A House tax committee regrouped Monday and proposed increasing the sales tax by a half-cent, which would allow the state to reduce by $125 million the amount of property taxes used to fund schools.

Combined, the two bills would allow the extra sales tax to make up the property tax loss for schools – money that goes to pay maintenance and operation costs. Schools still would get about half of the $244 million in property taxes they currently receive.

The state sales tax would rise to 5.5 percent to pick up the difference.

The bills come after last week’s failed vote by the House Revenue and Taxation Committee to increase the sales tax by one penny, which would have allowed the state to eliminate the entire $244 million in school property taxes.

“It takes a much smaller bite,” said Rep. Ken Roberts, R-McCall.

Some committee members, including Rep. Jim Clark, R-Hayden Lake, said they liked the concept of the two bills but that it needs more study and public comment.

The sales tax and school funding bills were just two of five new bills the committee rewrote and introduced – all combinations of previous proposals that the committee has debated for the last five weeks.

The committee voted to print the bills but requested a few more days of study before sending the measures to the full House.

Committee Chairwoman Rep. Deloris Crow, R-Nampa, said none of the concepts is new and the committee needs to speed up the process. She reminded members that none of these bills as currently written will likely become law.

The committee also voted to fast-track two other bills to the House, one that would close a tax loophole and another that would allow schools to charge impact fees.

Introduced was a repeal of a tax loophole that developers and other landowners in rural Idaho have used since 2002 to cut annual payments to just pennies.

Last week, a similar bill, pushed by Tamarack Resort in Donnelly, died after lawmakers objected to provisions that added a new tax break for developers. The latest measure, sponsored by Rep. Dennis Lake, R-Blackfoot, repeals the exemption that now benefits landowners including Gov. Dirk Kempthorne – in 2004, he paid less than $6 in taxes on 14 acres he owns in Valley County – while keeping it intact for farmers and their families.

The other proposal would allow schools to charge impact fees on new homes to help pay for growth. The money would first have to be used to fix unsafe schools and pay off existing school bonds, before it could be applied to new-school construction.

The committee also agreed to print a rewrite of the governor’s plan for a revolving state fund to loan seniors and people with disabilities money to pay their property taxes. The new version would give banks and mortgage companies first priority in getting paid when the property is sold. The state fund would be next in line to recoup funds.

Clark’s bill to impose a one-year freeze on all property tax budgets, including those of both local governments and schools, was held by the committee. It is seen by some lawmakers as a last resort if no other property tax relief measures are passed.