Senate alters grocery tax credit bill

BOISE – The Idaho Senate has amended the grocery tax credit bill to give a smaller, across-the-board increase in the credit, despite warnings that Gov. Butch Otter likely will veto that.

Otter told the Idaho Press Club, just an hour after the Senate vote, “I think I sent a pretty strong signal.” He said he favors a means-tested credit that costs the state about $22 million a year – not an across-the-board credit like the Senate-approved plan, which has an annual price of $32.6 million.

House Bill 81, which earlier passed the House, originally would have increased the current $20 annual per-person credit to $50. The credit for seniors would have risen from $35 a year to $70. Under the amendments, the credits instead would rise to $40 and $60.

Otter had proposed a different plan – giving a credit of up to $90 a person to the lowest-income Idahoans, then phasing that out as incomes rise, with middle- and upper-income families losing the credit entirely.

Senate Democrats, with some GOP support, proposed an amendment to remake HB 81 into something more like Otter’s plan, but keep the $20 credit for everyone who doesn’t get the income-based credit. “It holds them harmless, while helping people who need the aid the most,” Senate Minority Leader Clint Stennett, D-Ketchum, told the Senate.

Stennett said that was an appropriate step, but his overall goal remained to eliminate the sales tax on food entirely. Idaho is one of just a few states that fully taxes food purchases; lawmakers have become particularly concerned about that since they raised the sales tax from 5 percent to 6 percent in August.

But Senate Tax Chairman Brent Hill, R-Rexburg, who backed the successful amendment, said, “Exempting food is not means-tested, folks.”

The successful amendment has a fiscal impact of $32.6 million, lower than the $47.5 million of the original bill but well above the $22 million of the governor’s original, targeted proposal.

The Democratic proposal had a price tag of $38 million a year.

Sen. David Langhorst, D-Boise, argued that the governor likely will veto the version that senators approved, and only the means-tested version would win his support. “I will tell you that’s the message we were told … just four or five days ago,” he warned.

Otter told the Idaho Press Club on Tuesday, “We’ve got a limited amount of money, and that limited amount of money is around $22 million.” He added, “I do believe it needs to be means-tested.”

More than 20 of the 35 senators rose in support of the successful amendment; since it passed, the alternate plan for a means-tested, targeted credit didn’t get a vote.

“Some of us wanted to do a little more, but we also recognize that there are constraints in the budget,” said Sen. Russ Fulcher, R-Meridian, who sponsored the successful amendment.

Fulcher called the plan a compromise, and said talks with House members have shown some support.

The amended bill still needs final passage in the Senate; then it will go back to the House for possible concurrence in the Senate amendments before it can go to the governor.

The governor said, “I will not look favorably on that. … They could send it back to the amending order again, maybe.”