BOISE – A $115 million unemployment insurance tax rate cut for Idaho employers fell victim to late-session battles between the Idaho House and Senate on Wednesday, as lawmakers ended a stormy legislative session and adjourned for the year.
In one of the final votes, the Senate rejected the unemployment tax bill on a 29-5 vote, even though they earlier passed it 34-1. But that was before the House tacked on an amendment to cut Idaho’s personal and corporate income tax rates by one-tenth of 1 percent next year, at a cost to the state budget of $28 million a year. Cutting state income tax rates has long been a top priority for House Majority Leader Mike Moyle, R-Star, who contends Idaho’s current rates dissuade businesses from moving to the state.
Sen. Steve Vick, R-Dalton Gardens, told the Senate, “This is unfortunate. Our employers are going to end up paying more unemployment tax than they should because of the games that were played with this bill. This senator votes no.”
The House had no opportunity to react to the Senate’s vote – it had already adjourned sine die, which means “without a day,” and signifies the annual session is over.
The unemployment insurance tax cut bill was proposed by Gov. Butch Otter, who promoted it in his State of the State address at the start of the session. It would cut payments for most Idaho employers by 30 percent, saving them $46 million next year and $115 million over three years, by heading off what otherwise would be an automatic increase. The state’s unemployment trust fund is flush, and the administration said it still would grow to nearly $900 million over the next three years even after the cut.
The House, at Moyle’s urging, had passed a $52 million income tax cut bill early in the session, but the bill languished in a Senate committee for much of the session, frustrating House members.
Then, the Senate Tax Committee sent the bill to the full Senate for amendments, and senators unexpectedly transformed the proposal into a different kind of tax cut – removal of Idaho’s 6 percent sales tax on groceries.
That proposal, with a cost to the state general fund estimated at $79 million a year, then cleared the House and went to the governor’s desk, but Otter has hinted he may veto it.
Rep. Eric Redman, R-Athol, said the session had “some challenges.”
The House repeatedly ground to a halt over procedural challenges and protests from a small group of far-right members led by Reps. Heather Scott, R-Blanchard, and Ron Nate, R-Rexburg. Early in the session, Scott was temporarily stripped of all her committee assignments after she contended female House members only advance into leadership posts if they “spread their legs.” She got her committee assignments back after she retracted the comment and apologized.
On the state’s health coverage gap, one of the top challenges facing Idaho, nothing passed. About 78,000 Idahoans make too much to qualify for the state’s limited Medicaid program and not enough to qualify for subsidized health insurance through the state’s successful insurance exchange.
“I was disappointed nothing happened,” Redman said.
He’s holding out hope for the grocery tax repeal, however. “I would love for it to pass.”
Redman said he thought the greatest accomplishment of the session was “that we’re still somewhat united.”
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