How Idaho tax cuts have shaped public education and road funding | Opinion
Don’t tax you, don’t tax me, tax the man behind that tree. That’s a cartoon I remember from years ago. It seems to be coming true these days.
In the 1990s, the highest state income tax rate was 8.2%. When the dot com boom came, the state accumulated enough money to refurbish the Capitol building and add the daylight basement wings that provide much better space for legislative offices and committee meeting rooms.
In 2006, people were complaining about property tax increases. Property values were increasing. The public school funding formula called for school districts to charge a 0.3% property tax toward the district’s operating expenses. That summer, the governor called a special session of the legislature to set up a system where the state general fund would cover school district operating expenses. They repealed the 0.3% property tax for schools and increased the sales tax from 5% to 6% to replace the property taxes that went for public schools.
About the same time, there were movements to reduce the state income tax. Since 2000, the highest state income tax rate has been reduced by about a third, from 8.1% to 5.3%.
There has been cheering in some circles about the great state income tax cuts. Between 2007 and 2016, income taxes were cut by about $1 billion. During the same period, school supplemental levies were passed, totaling $1.4 billion. Total supplemental levies since 2007 are nearly $3.4 billion. That does not include the amounts spent on school bonds and plant facilities levies.
There was talk a few years ago about how to provide enough funding for highways, streets and roads. An interim committee met and decided that we cannot increase gas taxes. Now, highway expenses come out of the general fund as well as the gas tax.
When the general fund is stifled by income tax cuts, services cannot keep up with needs. That may be why some street and road projects don’t get completed as quickly as we would like.
Elinor Chehey is co-director of voter services for the League of Women Voters of Idaho.