Property tax reform bills going to vote

BOISE – The House is ready to vote on the first round of property tax bills, after a tax committee churned out two measures to reduce the amount of the tax going to Idaho schools and replace the difference with a half-penny sales tax increase.

Since Monday, the House has postponed a vote on expanding a tax break for low-income senior citizens and increasing the homeowner’s exemption.

Legislators were waiting for the school funding and sales tax bills to get out of the Revenue and Taxation Committee. That happened Wednesday, and the House vote on the tax breaks will likely occur Friday.

Rep. George Sayler, D-Coeur d’Alene, said the House wants to consider all the bills together.

Tax committee members voted 16-3 to reduce by $125 million the amount of property tax that goes to fund school operation and maintenance costs.

Under House Bill 678, schools would still get about half of the $244 million in property taxes that they now receive. But the bill would cap the growth of that money at 3 percent, from no limits now.

The state would replace the majority of the money – all but about $20 million – by increasing the sales tax by a half-percent, which is part of a companion measure, HB 679. The tax committee took the rare step of sending the bill to the full House without recommending its passage.

Some Republicans said they have never voted for a tax increase and aren’t comfortable doing so now but feel the bill deserves to be debated. Other lawmakers, including Rep. Jim Clark, R-Hayden Lake, believe there is a big enough budget surplus to make up the $125 million difference, so property tax reductions can occur without shifting the burden to the sales tax.

Regardless of what happens in the House, the Senate will likely make changes or kill some of the bills.

Sayler is considering withdrawing his support for the school funding bill unless the sales tax component passes. He said any property tax reform means a compromise and that is the reality of raising the sales tax.

Sayler said this is a better option for schools than a property tax-limiting initiative that some North Idaho residents are pushing.

Rep. Nicole LeFavour, D-Boise, said she was “extremely alarmed” the Legislature decided to remove $125 million in school funding without guaranteeing a replacement. She pointed out that the two bills are linked only in intent and that lawmakers could actually use the sales tax increase for some other purpose.

“It’s incredibly irresponsible,” she said.

Rep. Dell Raybould, R-Rexburg, said that Idahoans feel overburdened by property tax but that they never offer any suggestions on how to cut services to pay for relief. He said that if cuts to schools aren’t made, then the state has to find a way to make up the difference.

“Sales tax is probably the most equitable way,” he said, adding that it also forces tourists to pay part of the price tag.