Idaho state tax revenues fell below forecasts in October for the first time this fiscal year, coming in $8 million short – and a quarter of the shortfall was because of an unexpectedly big one-time payment of $2.7 million to the developer of the giant Village at Meridian retail center.
The payment resulted from a law Idaho enacted 10 years ago. Lawmakers passed STAR legislation, short for State Tax Anticipation Revenue, in 2007 to allow big outdoors retailer Cabela’s to front the money for a new $40 million interchange on I-90 at Post Falls. The state agreed to pay the money back over the years through refunds of 60 percent of the sales tax revenues generated.
That law was amended in 2009 at the urging of House Majority Leader Mike Moyle, R-Star, so it could be applied to The Village at Meridian, which at the time was called the Meridian Town Center. The Delaware-based developer agreed to front the money for $25 million in transportation improvements to busy Eagle Road, including extending a third lane in each direction from Franklin Road to north of Fairview Avenue.
The state is still paying reimbursement payments to the developers on both projects. No others have qualified.
Premium content for only $0.99
For the most comprehensive local coverage, subscribe today.
However, the state Tax Commission, which is in charge of making the payments, mistakenly thought it had paid off the Meridian project in June. It stopped setting aside the money in a fund for that project.
“Recently, the Tax Commission was made aware that there were more claims coming to be paid out on the Ada County project and had to catch up,” said commission spokeswoman Renee Eyman. “This resulted in the one-time large deposit in October.”
When Idaho’s monthly General Fund Revenue Report came out last week, it noted that state tax revenues were 2.8 percent below forecasts for the month, down $8 million. All major areas of tax receipts — corporate and individual income taxes and sales taxes — contributed to the shortfall. Sales taxes would have hit the forecast for October but for the $2.7 million payment.
“The gist of it is, this was a true-up,” said Jani Revier, Otter’s budget director. “Year to date, the state’s doing really well in sales tax, and … we would have been at the forecast had it not been for that.”
Because the legislation creating the STAR program specified that “all sales and use tax information remitted by retailers shall be deemed a trade secret,” and not disclosed by the state Tax Commission, the commission declined to identify who got the $2.7 million payment, saying only that it went to a project in Ada County.
But the Village entered into a partnership with the Idaho Transportation Department and the Ada County Highway District to qualify for the STAR program, as required by the legislation. ITD provides engineering oversight for STAR projects. The agency announced the second STAR project in 2011 and reported, “It allows government and business partnerships for large infrastructure projects.”
(This story has been abridged. Click here for the complete original at The Spokesman-Review.)