Grocery tax repeal: Gov. Otter won’t say whether he’ll veto bill

Citing at least $30 million in new winter-related road damage, Gov. Butch Otter Monday made clear he opposed the grocery sales tax repeal that lawmakers approved this year because of the loss of state revenues, but would not say whether he would veto it.

Otter earlier expressed opposition to lifting the 6 percent sales tax on store-bought food, which carries a roughly $75 million effect on state tax collections. He has until April 12 to take action.

“We right now have 32 counties under a disaster declaration in the state,” Otter told reporters in a post-session briefing Monday afternoon. He added that the state’s request for federal disaster assistance, based on widespread flooding around the state, had been turned down. The state is appealing the decision.

“If this weather turns warm, which it’s likely to do, if we have additional rain, which we are likely to have...then that flooding could get much worse,” Otter said. “I’m going to be very mindful of that in the next few days when we’re considering other legislation that I have yet to sign.”

He added: “If you’re going to ask questions about how I’m going to sign certain bills, I’m going to tell you you’ll find out when I sign them or when I don’t sign them.”

He also declined to say what kind of lobbying his office was getting from repeal supporters.

The Legislature approved the repeal March 27 in the final days of the 2017 session. Nationwide, 37 states do not tax groceries.

To offset the sales tax on food, Idaho issues an annual grocery tax credit. The bill does away with both the credit and the tax, with a staggered implementation that delays the full financial impact until July 2018 .

Advocates argued that repealing the tax on food sales would lift a burden from the poor and would stop people in border communities from crossing state lines to do their shopping in sales tax-free states, meaning higher sales and more jobs.

In a March 16 letter to legislative leaders, Otter said removing the food tax “destabilizes the revenue stream.”

“I see no reason to change our current system and I oppose efforts to do so,” the governor wrote.

Otter overall gave the session an “A” grade, with some important areas “incomplete.” Most notably, Otter criticized the Legislature for failing to pass a reduction in the unemployment tax employers pay. A bill that would have done so got caught up in the back-and-forth over other tax cuts and eventually died.

The governor called the action a “no-brainer” and said a clean bill “would have sailed through (the Legislature) like you can’t believe.”

Just after the governor’s briefing. Lt. Gov. Brad Little, who is running to succeed Otter in 2018, issued a statement in support of the grocery tax repeal, saying it would “quickly make Idaho’s tax code more competitive.” Another candidate for governor, Russ Fulcher, also has endorsed the repeal.

This story was originally published April 3, 2017 at 2:22 PM with the headline "Grocery tax repeal: Gov. Otter won’t say whether he’ll veto bill."