Printed on: November 27, 2012

Lawmakers, officials weigh tax repeal

By Clark Corbin

One of the biggest issues facing lawmakers in the upcoming legislative session was unveiled Monday in Idaho Falls.

For about 90 minutes, officials from Bonneville, Jefferson, Clark, Butte and Fremont counties talked with lawmakers about the idea of repealing Idaho's personal property tax.

Proponents of repealing the tax -- including the Idaho Association of Commerce and Industry and a group of chambers of commerce -- say such a move would offer support to businesses by removing an unpopular tax. But county officials say taking the tax off the books would cut funding for mandated programs, such as jails and courts, and could hurt local governments.

In Bonneville County, personal property taxes accounted for about 7.5 percent of revenues. Cutting it would represent a hit of $1.6 million if the tax is directly repealed, County Commissioner Roger Christensen said.

Christensen said it's OK if lawmakers want to end the tax, but they just shouldn't leave local governments out to dry.

"It's not a perfect tax, but if you eliminate it or repeal it, we need to come up with a mechanism (for compensating) because our budgets are tight," Christensen told lawmakers.

In Idaho, personal property tax is a tax paid on all nonexempt equipment, furniture, machinery or fixtures used in a business or to generate income.

For years, officials have discussed repealing the tax, but the movement has gained momentum leading up to the 2013 session. Senate Majority Leader Bart Davis, R-Idaho Falls, said there appears to be enough political will in the Legislature to repeal or phase out the tax.

"Our businesses are telling us this is hard, this is stifling," Davis said. "These are great concerns we are trying to wrestle with."

County officials asked lawmakers to consider either replacing the money that would be lost or easing up on the number of programs and services counties are required to offer. Otherwise, they said, repealing the tax on businesses could shift the tax burden to homeowners to make up for the lost funding.

Christensen and Sheriff Paul Wilde said about $800,000 of the money Bonneville County collects in personal property taxes is tied to the justice fund. The justice fund provides money for public defenders, prosecutors, the Bonneville County Jail, law enforcement and some court clerks.

Even if county officials spread the cuts across every program under the justice fund, some services would be cut, Wilde said.

"We are running as lean as we can possibly run in the jail right now."

Tony Poinelli, deputy director of the Idaho Association of Counties, estimated repealing the tax could cut $37 million from money shared by Idaho's 44 counties. School districts, city governments and other taxing districts also would be affected by repealing the tax.