Surplus near $200 million

BOISE – Idaho now has a budget surplus of nearly $200 million, Gov. Jim Risch announced Wednesday, and that makes it even more likely that he’ll call lawmakers to Boise for a special session next month to reduce property taxes.

“In my humble opinion, the state should not sit on this surplus and count the money,” Risch said. “There are serious problems with property taxes in several areas of this state, and I call on our legislators to use this money in a constructive manner to resolve this issue.”

However, Risch said he and lawmakers haven’t yet reached a deal on a property tax relief package, and he won’t call a special session unless there’s a plan that has the votes to pass in both houses.

Idaho tax revenues had come in about $174 million ahead of expectations as of a month ago. June, the final month of the fiscal year, brought in another big boost, according to preliminary data. That gave the state a surplus at the end of the fiscal year of $199.9 million, Risch said.

Since he took office just over a month ago, Risch has been calling for repealing the property tax levy that funds basic school operations – a $250 million item – and replacing it with state funds. That would cut property taxes for homeowners, businesses, utilities and others by about 20 percent, though the amount would vary around the state.

The surplus alone can’t replace the tax, Risch said Wednesday, but it could help, along with a sales tax increase. Surplus funds also could bolster a state savings account for education, designed to ease future budget shortfalls, he said.

“If Idahoans are going to get permanent and substantive property tax relief, we need an ongoing source for that,” Risch said, adding that “there is general agreement that you’re going to have to go to the sales tax.” How much the sales tax should be increased, he said, is “still in the works.”

Risch is trying to muster at least 18 votes necessary to pass such a plan in the 35-member Senate, after the chamber voted 20-15 against a similar, House-passed measure April 6. He thinks rising tax assessments, sent out recently by counties, have angered Idaho residents enough to prompt a change of heart in legislative opponents.

Assessed property value in Bonner County rose nearly 69 percent from 2005 to 2006. Values also jumped 40 percent in Kootenai County, with other resort areas such as Sun Valley, McCall and Teton County seeing large increases, too.

Unlike relief measures passed in the 2006 session that boosted tax breaks for homeowners, Risch’s plan would cut taxes broadly, giving residential homeowners a $109 million break, vacation homeowners $58 million, business and industry $64.6 million, agriculture $10.5 million, and utilities about $9.2 million, according to state figures.

Business groups favor the plan.

“I have a variety of clients for whom (property taxes for schools are) a lot of money,” said Russell Westerberg, a Boise-based lobbyist for businesses including utility Pacificorp and Hagadone Corp.

Schools and advocates for low- and middle-income residents are fighting it. Advocacy groups say low-income residents without homes would see no benefits, but still pay the higher sales tax. Education advocates say future school funding could be endangered.

Senate Democrats who opposed the shift in April say the special session is an “insider deal” being crafted behind closed doors, via e-mail and phone calls.

“The fix is already in,” said Senate Minority Leader Clint Stennett, D-Ketchum, adding he’d rather wait until the 2007 Legislature in January.

“The public will be involved, our party will be involved – rather than a two-day session when we have a greased pig that slides through.”

Risch said he hopes to make the call for a special session as much as a month in advance, to give citizens across the state a chance to weigh in by contacting their legislators about the plan. He noted that the Legislature already has held extensive hearings on various property tax proposals.

“There is absolutely nothing that we are talking about that hasn’t been discussed for about a year and a half,” he said.

Risch said if he calls a special session, “I think this should be done in a day. … My goal is to get this done cleanly and neatly and expeditiously.”