The public, business interests and local governments weighed in for almost three hours Tuesday on two competing bills to repeal or scale back personal property taxes on business equipment in Idaho.
House Bill 272 would exempt the first $100,000 of personal property from taxation for all businesses, at an annual cost of $19 million. House Bill 276 would phase out repeal by 2020, at an estimated annual cost of $120 million.
State general fund dollars would replace lost revenue under both bills, though HB 276 assumes that growth will absorb about $20 million in current dollars not subject to replacement.
Testimony from local governments favored HB 272, which is sponsored by the Idaho Association of Counties. The Idaho Association of Commerce and Industry, which represents Idaho’s biggest companies, is sponsor of HB 276.
House Revenue and Taxation Committee Chairman Gary Collins, R-Nampa, had the committee work overtime, making the group a half-hour late for Tuesday’s floor session. Collins said he will allow limited testimony Wednesday at 8:30 a.m. On Thursday, sponsors of the two bills will have a last chance to speak to the committee, followed by votes on the bills, Collins said.
The outcome will surely be colored by the face-to-face lobbying of the sort I witnessed on the House floor Monday during the lunch break.
Rep. Pete Nielsen, R-Mountain Home, was the object of the keen attention of two powerful lawmakers who back all-out repeal, Majority Leader Mike Moyle, R-Star, and Rep. Lawerence Denney, R-Midvale, who was speaker of the House the last six years and now chairs the House Resources and Conservation Committee.
Nielsen said he is concerned that the major beneficiaries of repeal are large companies, including agribusiness, that do much of their business out of state.
“We’re in a sense saying we don’t want that money anymore,” Nielsen said. “It’s all going to be shifted to the local taxpayer.”
Nielsen said business will have three options: lowering prices, converting savings into profit or a combination of the two.
“Any one of the three does not bring that foreign revenue into Idaho,” Nielsen protested.
Moyle countered that Idaho industry needs a break because other states don’t charge the tax, citing as examples fertilizer-maker Monsanto and cheese-maker Sorrento Lactalis. “Monsanto has to compete with somebody in Canada or Sorrento with people in New Mexico that don’t pay the tax,” Moyle said. “We have business going to other states because it’s cheaper to do business.”
But Nielsen cited the massive expansion of the Idaho dairy industry in recent years, despite the personal property tax. “They’ve already got that figured in,” Nielsen said. “And Micron, I don’t think they’re going to leave for the same reason.”
When the 10-minute press ended, I asked Nielsen if he’d been convinced. “Not totally,” he replied.