Otter sends major message with veto of minor bill

BOISE – When Gov. Butch Otter vetoed his first bill last week, few lawmakers were familiar with the low-profile proposal from the state Tax Commission, and even fewer were fired up about it.

“It was a noncontroversial bill,” said Rep. David Langhorst, D-Boise, the bill’s Senate floor sponsor. The measure cleared both houses of the Legislature on nearly unanimous votes.

Lawmakers and political observers say Otter was flexing his political muscle to send a message that may have had little to do with the bill: He won’t hesitate to take a stand.

“He has found the veto stamp in the governor’s office and knows how to use it,” said Jim Weatherby, Boise State University political scientist emeritus.

The bill, HB 8, would have changed a state law that requires the Tax Commission to send certified letters notifying taxpayers whose property – bank accounts, paychecks or other assets – it is planning to seize for past-due taxes. Because half those certified letters are refused or returned, the Tax Commission wants to switch to first-class mail. That would have saved taxpayers $25,000 a year in postal charges and stopped wasting money on letters that weren’t getting delivered.

“We just brought it up as a cost-saving measure,” said Dan John, tax policy manager for the commission.

House Speaker Lawerence Denney said he wasn’t surprised that Otter found a bill to veto. “I think he’s been looking for one, and this was an agency bill so probably pretty safe to veto, (with) nobody with any real pride of authorship in it,” Denney said.

Otter cited private property rights in his veto message, and wrote, “Notice in these situations is critical for property owners to defend any rights or interests in their property, and using certified mail provides greater assurance that notice is actually received.”

Asked Monday about the veto, the governor said, “I think the most important thing on that bill was that if we’re going to sell somebody’s property, which may be the biggest investment they ever make, I think we need to go to the extra effort to make sure they realize they’re in deficiency, and that we know that they know.”

The section of law the bill amended deals only with the seizure of “personal property,” such as “stocks, securities, bank accounts” and the like, and not with real estate. It’s in the part of Idaho’s laws that deals with collection of delinquent income taxes, but could also apply to collecting delinquent sales taxes, John said.

“It occurs when softer collection doesn’t work,” he said.

The current law allows the state to give the notice in person or by leaving it at the taxpayer’s home or office as alternatives to certified mail to the person’s last known address.

Langhorst said the bill made sense in part because certified letters can’t be forwarded – they’re just returned if the taxpayer has moved. First-class letters can be forwarded to a new address, so they’re more likely to reach the taxpayer, he said.

Weatherby said, “Typically you don’t see a governor vetoing an agency bill. This comes on the heels of two defeats in the House Revenue and Taxation Committee on two of his major proposals.”

That committee, the same one that introduced HB 8 at the request of the Tax Commission, earlier rejected Otter’s plan to lower the supermajority vote to form a new community college district and his targeted grocery tax credit bill for low-income Idahoans.

Rep. John Ruchti, D-Pocatello, House floor sponsor of the bill, initially thought the veto was a prank. HB 8 was the first bill he carried in the House, and it also happened to be the first one up this year sponsored by a freshman lawmaker. In keeping with House tradition, members all voted against the bill initially to startle the new representative, and then all but two changed their “no” votes to “yes.”

“Then I found out the governor vetoed it and I thought that was another initiation, but apparently it’s not – apparently he just doesn’t like the bill,” Ruchti said. “I don’t think there was really anything objectionable in the bill, when you look at it.”

Ruchti said people who get such notices already have been contacted repeatedly by tax officials. “There’s no surprise there,” he said.

“When you make it certified mail, a lot of people refuse (the notice),” Ruchti said. “They can then go in and argue that they didn’t technically get it.”

Denney said he doesn’t expect any override attempt on the veto.

Langhorst said, “No one over here is upset about it.”

The veto showed lawmakers that Otter is decisive, Langhorst said.

“Anybody who’s managed an enterprise knows that you have to make some decisions, and sometimes you’re going to make wrong decisions,” he said. “But yet, it’s still a good quality to be able to make decisions.”