State Politics

Otter vetoes grocery tax repeal, saying costs ‘too high’; allows road bill to become law

Idaho Gov. Butch Otter on Tuesday rejected the signature achievement of the 2017 legislative session, the repeal of the state sales tax on grocery food, but allowed the other major effort, a $320 million funding package for repairing Idaho’s roads and bridges, to take effect without his signature.

Otter’s veto of the tax repeal was announced at 6:30 p.m. Tuesday, not long after he told a radio host that his decision would be coming Wednesday — his deadline for acting on it.

“The costs of this particular proposal are too high and the potential for imminent financial need too great for the small amount of tax relief it would provide,” the governor wrote in his veto message.

His rejection had been widely expected. The governor strongly hinted at it during the session based on its impact on state revenues. In his veto message, he cited an $80 million drop in revenue once the repeal took full effect next year.

The measure won approval, with broad support among lawmakers, on the Legislature’s last day. Speaking to reporters after the Legislature adjourned, Otter declined to say whether he would veto the repeal but said the state faced additional financial pressure with at least $30 million in weather-related infrastructure damage from winter storms.

“The income derived from a tax on groceries helps to even out the more dramatic ups and downs in our state revenue stream so that government avoids disruptive and dysfunctional shortfalls and funding holdbacks needed to balance the budget,” Otter wrote. The repeal, he added, “has captured the popular imagination. It purports to provide tax relief for the working poor — a worthy ambition but one already accomplished through the grocery tax credit. The truth is this bill’s benefits are largely imaginary while the downsides are many and very real.”


In a letter outlining his action on the roads bill, Otter said that he objected to “significant portions” but that the “imminent and ongoing risk to our citizens and the negative impact on our key corridors of commerce are too great” for him to veto it.

He said that “prospects for meaningful action” on roads and bridges next year, an election year, were “too remote to let this opportunity pass.”

The governor has long advocated finding more money for road and bridge maintenance through user fees such as fuel taxes and vehicle registration fees. The roads bill flouts that approach: $300 million will be borrowed against future federal road payments, the biggest share going to rebuilding the congested, accident-plagued stretch of Interstate 84 through Canyon County.

The remainder will come out of the state general fund, including 1 percent of sales tax revenue.

Otter said that “pressing safety issues on I-84 compel my grudging approval.”

“Immediate needs require immediate action, and with all its flaws Senate Bill 1206 provides at least a short-term response,” Otter wrote.

He urged lawmakers to “look beyond quick fixes” and find fiscally responsible options that are “not dependent on year-to-year financial windfalls.”

Bill Dentzer: 208-377-6438, @DentzerNews