The leader of the GOP supermajority in the Idaho Senate and his second lieutenant say rebuilding support of education is a higher priority than adding to tax relief granted in recent years.
“You’re not going to see as many tax cuts — as much tax relief — as we’ve had in the last few years,” predicted Senate President Pro Tem Brent Hill, a Rexburg Republican, certified public accountant and former chairman of the Senate tax committee.
Hill said the public supports restoring education funding to pre-recession levels, which still won’t be achieved with the 5.1 percent increase for the 2014-15 school year approved last week by the Joint Finance-Appropriations Committee.
“I think this gives us a really good start,” Hill said of the new spending plan.
“There really has been a shift,” said Hill, citing a recent meeting with a group of loggers. “They actually came out and said, ‘If we gotta choose between more tax relief or funding for public education up in northern Idaho, we’re voting for education.’ And it just shocked me — of all the groups.”
The Senate’s No. 3 Republican, Assistant Majority Leader Chuck Winder of Boise, echoed Hill, saying recent tax cuts have rejiggered public attitudes.
“We’ve done a lot of things in the last few years,” Winder said. “Right now, I think everybody kind of feels like we made a promise to education and we have some money and should get it back to education.”
Winder said feedback he gets from town halls and coffees with constituents shows support for education over tax cuts. “If you ask people, ‘Would you rather have $20 in tax relief or would you rather see some more money into education?’ 70 (percent to) 80 percent of the people say, ‘Education.’”
One of nine members of the Senate Local Government & Taxation Committee, Hill cited three recent tax policy changes as contributing to a shift in opinion: a gradual increase in the grocery tax credit to $100 annually for most taxpayers and $120 for the poor and elderly that began in 2008; a 2012 cut in personal and corporate income tax rates; and a 2013 exemption of the first $100,000 in assessed value from the personal property tax on businesses.
Idaho’s personal income tax rates are now lower than they have been since 1934, Hill told a Republican Party meeting in Boise Friday. Winder spoke to the same group.
Hill also said that as the Legislature implements K-12 reforms advocated by a 2013 task force appointed by Gov. Butch Otter, public support for schools has risen among lawmakers.
“Over the next few years I think there’s a good outlook for public education because the Legislature historically has been much more generous with education if they see that there are some reforms and things that will help improve our education system,” Hill said.
Though Hill and Winder have considerable influence, that doesn’t mean supporters of tax cuts have given up on striking a deal as lawmakers press to adjourn by March 21.
House Republicans want further income tax cuts, Senate Republicans are warmer to additional cuts in the personal property tax.
House Bill 548, which would cut personal and corporate income taxes by $126 million over six years by reducing rates from 7.4 percent to 6.8 percent, passed the House 54-13 last week. The measure is backed by House Speaker Scott Bedke, R-Oakley, and House Majority Leader Mike Moyle, R-Star.
But Senate Local Government & Taxation Committee Chairman Jeff Siddoway, R-Terreton, opposes the bill, saying he aims to eliminate the personal property tax, excepting that paid by regulated utilities, railroads and pipelines.
Last week, Moyle and Bedke offered what was intended as an olive branch to Siddoway, but by Monday it wound up being a stick in the eye.
On Thursday, Siddoway agreed to a bill raising the exemption on personal property to $250,000, adding a definition that would be used by all 44 county assessors to distinguish personal from real property. The negotiators included the House, Senate and governor’s office. Siddoway agreed to present the bill Monday morning to the House Revenue & Taxation Committee.
But on Saturday, Bedke called Siddoway to say the bill had been redrafted to apply a percentage to assess personal property rather than the definition Siddoway sought.
“That’s why I didn’t present,” Siddoway said. “The governor’s office is pretty tight with IACI (Idaho Association of Commerce and Industry) and they want a percentage in there. I want definitions.” Instead of Siddoway — whose name appeared on the committee agenda as the bill’s sponsor — Moyle presented the bill on behalf of himself and Bedke.
Moyle said the new bill is the second step to eliminate the property tax on furniture, fixtures and equipment paid by businesses. The $100,000 exemption spares about 85 percent of businesses from paying the tax, at a cost of about $19 million annually to the state general fund. A $250,000 exemption would cost another $9 million for the state to replace revenue lost by local governments.
Another income tax measure, House Bill 546, passed the House last week, 63-5. It provides a rebate pegged to adding news jobs and is sponsored by Moyle and Otter’s Commerce Department Director Jeff Sayer. The fiscal note says that by adding jobs, the measure will increase revenue. Sponsors estimate that with rebates of up to 30 percent on $10 million in new revenue, the state would net $7 million in fiscal 2015.