Cramped session 

Idaho Gov. C.L. “Butch” Otter probably will talk tax relief, transportation funding and water issues in his State of the State Address and budget message to the 2008 Idaho Legislature, to get under way Jan. 7.

Otter said in an Associated Taxpayers of Idaho conference speech last month and in media reports that he plans to propose freezing homeowners’ assessed values at the purchase price until the home is sold, increasing the grocery tax credit for low-income residents, finding a reliable means to fund increasing transportation needs, and seeking solutions for water supply shortages.
Several large chambers of commerce and transportation groups support expanding voter-approved, local-option taxing authority to fund transportation needs.
The Idaho Association of Commerce & Industry and the National Federation of Independent Business Idaho chapter support eliminating local personal property taxes on business.  
IACI President Alex LaBeau said the group looks forward to hearing more details about Otter’s plans on tax policy and transportation, and other business issues such as health care.
As in the 2007 legislative session, IACI plans to introduce a bill to repeal local personal property tax on business, LaBeau said.
“We will be moving forward with our proposal this year, and hopefully he will support that,” he said.
Tax-exempt personal property includes personal and household items, personal vehicles, business inventory, livestock, agricultural equipment and hospital medical equipment. Nonexempt personal property includes items used by business such as furniture, machinery, tools, equipment, desks, chairs, file cabinets and computers.
NFIB Idaho State Director Suzanne Budge said she’s interested in hearing more from the governor on personal property tax.
“We’d like to see him continue to be a proponent of that effort, and break the logjam in the legislature,” she said.
Idaho Senate Assistant Majority Leader Joe Stegner, R-Lewiston, said a majority on the Senate tax committee remains committed to handling all personal property tax in one year. A phased approach leaves too many unanswered questions about how it is financed and whether the state can afford it, he said.
The state would have to provide replacement funds to local governments.
“The Senate tax committee insists that we have a funding mechanism to pay for personal property taxes,” Stegner said. “We don’t think that we can just simply make that up out of the General Fund without significant impacts on other state needs.”
How the personal property tax issue fares this year depends on whether the Idaho House of Representatives passes a bill and what the bill contains when it moves to the Senate, he said.
“I don’t think the Senate is interested in simply relieving businesses of personal property taxes and having general taxpayer revenues make up the difference,” Stegner said.
As for local-option taxing authority, NFIB Idaho opposes expanding it, Budge said. Historically, NFIB Idaho member polling shows small businesses and retailers oppose providing new taxing authority to local governments.
“I suspect we will differ with the governor on that,” she said.
Otter in 2007 advocated streamlining state government. He directed leaders of state agencies to seek efficiency gains.
NFIB Idaho members want Otter to stick to his less-government policy, Budge said. For small businesses, this means keeping regulations strong enough to protect public health and safety, but reasonable enough to enable businesses to stay in compliance, she said. Regulators must be easily accessible, she added.
Transportation funding probably will be the biggest issue of the 2008 Legislature, Budge said.
Stegner said the potential solutions involve money and taxes, “and a significant amount of that will be borne by businesses.”
Current transportation taxes and vehicle registration fees don’t generate enough money to support anticipated transportation needs, he said.
The Idaho Legislature in each of the last two sessions approved issues of grant-anticipation revenue vehicle (Garvee) bonds against anticipated federal highway funds. Stegner said Garvee is fast becoming a secondary concern, behind making sure funding is available for existing transportation needs around the state.
On Otter’s proposal to freeze residential property taxes at the purchase price until the home is sold will spark debate. Members of key legislative committees have voiced concerns about fairness and constitutionality, Stegner said. Support has been strongest in areas with high value gains, he said.
The Legislature again will spend considerable time talking about ground water and surface water supply issues, said Stegner, a retired grain dealer. Issues include having the whole state pay for something that does not directly impact all residents, and seeking government solutions to some fundamentally economic issues, he said.
“I think it’s going to be a significant issue. I think it will dominate a considerable amount of time in the Legislature, talking about water again,” he said.

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