Capitol & State

Tax panel wraps up work; no consensus on short-term initiatives

An ad hoc legislative panel concluded its six-month review of Idaho tax policy Tuesday with no consensus on short-term tax proposals and a sense of disappointment among some members that more concrete long-term policy goals were not addressed.

“I was hoping that we would be able to articulate a vision for our tax policy in Idaho and where we wanted to go,” said Sen. Lori Den Hartog, R-Meridian, as the panel wrapped up its last session. The group had scheduled an entire morning for public testimony, but only a handful of people spoke and the entire day’s agenda concluded before noon.

The working group was established over the summer to create a more orderly framework for future tax discussions. It was not directly tasked to develop legislation or policy recommendations. Tax proposals in recent years have tended to emerge in the Legislature late in the session. Typically, they get derailed in the legislative “train wreck” that marks the end-of-session rush to adjournment.

Panel members from both the House and Senate met eight times since convening in June. They have received a broad overview of tax policy from legislative staff and recommendations from state administrators. Most notably, outgoing Commerce Director Jeffery Sayer recommended to the panel in October that Idaho should shelve proposals to cut taxes in favor of making greater investment in developing a better-skilled work force.

Ultimately, though, panel members made cutting taxes their short-term priority. Four draft options emerged, none of them new, and none of them winning rousing support from the panel. One proposed to reduce the state’s top income tax rate one-tenth of a point to 7.3 percent; another would eliminate the sales tax on groceries; and two others dealt with reducing business taxes on equipment purchases.

Collectively, the proposals, if enacted, would reduce state revenue by more than $85 million.

“I think the proposals that we have before us each have their own individual merits,” Den Hartog said. “I don’t see how they fit into an articulated plan for our tax policy.”

Other members shared that view, along with a desire that the panel be officially constituted as an interim legislative committee to continue its work.

Sen. Grant Burgoyne, D-Boise, and others noted that a substantial majority of Idahoans in a recent poll said their taxes were fair for the services they received. Citing the need for local control to spur economic development, Burgoyne said he planned to introduce legislation to allow localities to create local taxing districts by simple majority vote of residents.

Sen. Steve Vick, R-Dalton Gardens, and others noted the need for direction on tax policy from Gov. Butch Otter. The governor is expected to outline his tax and spending priorities in his state of the state address, which will open the legislative session on Jan. 11.

“Most major tax policy changes start at the top with the governor, and if the governor is not interested it makes it really difficult to make any significant changes,” Vick said.

Rep. Gary Collins, R-Nampa, co-chair of the panel and chairman of the House Revenue and Taxation committee, said panel members “weren’t really given an overall goal that we were supposed to meet” but that the group’s efforts had “real benefit as far as I’m concerned.”

Collins said panel members would huddle with legislative leadership and their respective caucuses to review options.