How should Idaho use $1.4 billion surplus? Here are three ways to provide real tax relief
Idaho Gov. Brad Little announced Friday that the state finished the fiscal year with a $1.4 billion surplus.
Little said Idahoans can “expect more tax cuts and additional investments,” without giving many details other than “education investments will continue to top the list of his legislative and budget priorities moving forward.”
Last year, the Idaho Legislature cut personal and corporate income taxes and issued tax rebates, totaling $600 million.
Most of that money went to the wealthiest. Granted, that’s because they paid more in income taxes. Still, it’s not the best way to return tax money to those who need it most.
So here are three better ways we can use that $1.4 billion surplus:
Eliminate the grocery tax. Idaho’s grocery tax credit is not nearly big enough, and Idaho legislators passed a paltry increase in the credit that is too little, too late, literally. It’s still not enough to offset a typical grocery bill and won’t take effect until next year.
The argument for not eliminating it is that it would take too much of a bite out of the budget. It’s peak hypocrisy coming from a body that wants to constrain city and county budgets, while at the same time is unwilling to cut a tax because it says it will constrain its budget.
Pay off school construction debt. Idaho school districts are carrying hundreds of millions, if not billions, of dollars in debt issued to build new schools. All of that debt is on property tax bills.
Using some of the surplus to pay school debt addresses a couple of issues at the same time.
Increased residential property values have meant increased residential property taxes, one of the top concerns among many Idahoans. Paying off a chunk of the debt would immediately reduce property taxes.
Some may not realize how big of a chunk school building construction debt is on their property tax bill. About one-quarter of the property tax bill in Eagle goes to the West Ada School District, much of which goes to paying off the bonds used to build all the new schools in that booming district. (Another gentle reminder that Idaho doesn’t allow impact fees to be used for school districts.)
Second, because it’s still not certain that Idaho’s budget surplus isn’t being propped up still by federal coronavirus relief money, it’s wise not to use all of the surplus money for ongoing expenses, but instead on one-time expenses. Paying off some school construction bonds checks that box.
Little already understands the importance of paying off debt. He did it last year by using surplus money to pay off state building debt. That reduces the principal and saves on interest payments for years to come. We should do the same for school buildings.
Increase public education funding. This also offers property tax relief because dozens of Idaho school districts are operating on more than $200 million in supplemental levies, which are paid for by property taxes. If the state can increase public education funding to a level that can wean some of these districts off supplemental levies, property tax payers benefit. That’s not to mention the benefits of having a stronger public education system.
When Little shares his ideas for “investments” and “tax relief,” I hope he takes these ideas into consideration. If not, then it’s up to Idaho legislators to provide truly meaningful tax relief.
