House Bill 342 — Sales tax, transportation funding

House Bill 342 — Sales tax, transportation funding

by
Parrish Miller
March 17, 2021
Parrish Miller
March 17, 2021

Bill Description: House Bill 342 would increase transportation funding from the general fund to the state and to local governments. 

Rating: +1

Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?

House Bill 342 amends Section 63-3638, Idaho Code, to increase the percentage of the funds collected through the state sales tax that is continuously appropriated to the "transportation expansion and congestion mitigation fund." Under current law, this amount is 1% of sales tax revenue but not less than $15 million. House Bill 342 increases this to 3% of sales tax revenue but not less than $45 million. 

House Bill 342 further amends Section 63-3638, Idaho Code, to add a new subsection requiring that 1.5% of sales tax revenue but not less than $22.5 million be continuously appropriated to "local units of government as provided in section 40-709, Idaho Code."

The referenced section of code sets the distribution formula, with 30% going to cities based on population and the remaining 70% going to counties and highway districts based on a complex formula. 

House Bill 342 is not a spending increase but a spending shift, with at least $52.5 million shifted from the general fund to transportation. This shift can be viewed positively for two reasons. The first is that transportation is no less important than education, health and welfare, or other traditional priorities paid for out of the general fund. 

The second is that reliance on dedicated funding from gas taxes, registration fees, and so forth essentially requires regular increases to these taxes and fees to fund ever more expensive and complex transportation needs. By shifting some transportation funding to the general fund — which has grown considerably in recent years — the state can increase funding for transportation without increasing taxes and fees. 

While the following claim is somewhat speculative, it is likely that the funding shift in House Bill 342 will indirectly prevent or forestall tax and fee increases that would otherwise be implemented. 

(+1)

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