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Legislature unwilling to eliminate agencies, goes with tax credit instead

Legislature unwilling to eliminate agencies, goes with tax credit instead

Wayne Hoffman
March 16, 2010

The state Legislature will conclude its work this winter having determined that there's not a single agency in all of state government that can be eliminated. The conclusion could be interpreted to mean that every last agency is a necessary and proper component of the state government and that there is no duplication of services or opportunities to combine agencies. I find that hard to believe, and many Idahoans would, too, I suspect. The real reason agencies have staying power is that agencies have constituencies who would be upset if their programs were dissolved.

Apart from moving the state's Human Rights Commission to the Department of Labor and eliminating about $47,000 in state support for the non-profit Idaho Council for Economic Education, Idaho government in 2010 will be structurally the same as it was last year.

What's more fascinating is how Otter's plan to phase out general fund support for certain state agencies has morphed into a plan to give a tax break to Idahoans who donate to those agencies. A bill that passed the House unanimously on Thursday would provide a five-year increased tax credit of $500 (or $1,000 for joint filers) for taxpayers who donate to the Hispanic Commission, the state Independent Living Council, the Council on Developmental Disabilities and the Council for the Deaf and Hard of Hearing. The bill also includes support for the state Blind Commission, which was not on Otter's phase out list, but is definitely among those that could easily combine with other agencies of state government. Donors to Idaho Public Television, another of Otter's phase out targets, were already receiving the tax credit and would continue to be eligible for the expanded tax break.

The concept of a tax credit for state agencies can be legitimately interpreted a number of ways. Some, like me, are a bit resentful of the notion that the government will be willing to reduce my tax liability if I donate money to the government. It also seems strangely self-serving that donations to government agencies qualify for a tax credit while donations to non-profit charities that offer similar services but are not part of government would qualify for the smaller benefit of a tax deduction. And finally, it's a bit concerning that state agencies are now going to be focused on raising money and gathering donations, rather than the delivery of services.

Supporters of the tax credit are broken into two camps: Some supporters believe the tax credit is the only political way to decouple popular state agencies from general fund support. In the course of the next five years, they speculate, these agencies will learn to be self-sufficient and manage to operate without direct appropriated taxpayer funding, and the Legislature will be able to reallocate resources accordingly. Still, other supporters of the tax credit view it as a stop-gap to help agencies through lean times, and in five years, when the expanded tax credit is slated to go away, the agencies can continue to receive state taxpayer support as they always have.

We'll know who is right in five years. We'll know sooner than that if the Legislature's unwillingness to eliminate superfluous agencies results in the decision to raise taxes.

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