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Personal property tax repeal will be an issue for 2013 Legislature

Personal property tax repeal will be an issue for 2013 Legislature

Mitch Coffman
August 22, 2012
August 22, 2012

The business personal property tax has been a hot button item for the last couple of legislative sessions with some lawmakers and business groups trying to repeal it. An effort is planned in the 2013 legislative session to get rid of the tax.

The most vocal opponent of the bill has been county government. A number of counties have come out against the repeal of the tax for fear it will shift tax burdens and may cause cuts in county services. Earlier this summer, southeast Idaho county officials said in a Pocatello newspaper article they estimated a $135 million loss in revenue.

The Idaho Association of Commerce and Industry (IACI) is leading the push to get the ball rolling to repeal the tax. Alex LaBeau, president of IACI, said that the $135 million revenue loss is for the entire state, not just those counties.

LaBeau said his group has been working with counties and the state county organization on finding some common ground for repeal of the tax, but without any success. He says it’s time to step away from negotiating with the counties and get the tax repealed. “The fact of the matter is, the counties and IACI, we’ve been talking for five years and we’ve tried to appease all of the concerns they have, and they just don’t want to negotiate. So I think that we’re in a position where we just have to move a bill.”

The counties’ unwillingness to compromise, says LaBeau, even when they’re getting what they want, is frustrating to IACI and proponents of repealing the tax. “We had a piece of legislation a couple years ago where they demanded eight different items in there, and we gave them all eight and then some, and they still chose to then oppose it.”

Why the resistance to repeal of the tax? LaBeau says, “I think there’s just an unwillingness to move on the personal property tax issue, in general. I’m in this position where we have to deal with this. It’s a bad tax, everyone knows it’s a bad tax and we can’t just keep perpetuating it just because a few local governments don’t want to step up to the plate and make some changes.”

LaBeau says that counties have been increasing their budgets rapidly during the last six years, while the state has worked hard at holding the line on spending. “It’s a pretty substantial increase (by the counties). You know, while it takes money to run government, the state budget has only increased 7.8 percent in that same time frame.”

The IACI president noted that the only county not to raise taxes during that timeline was Shoshone County.Caribou County, by contrast, raised taxes by 56 percent, making the county heavily reliant on the personal property tax.

House Majority Leader Mike Moyle, R-Star, says repeal of the personal property tax has a better chance than in the past of getting through the Legislature in 2013. He supports ending the tax.

Moyle says one element not in the proposed repeal legislation he has seen is a plan to provide some type of gap funding to compensate for the loss of personal property tax revenue. When the state repealed the agriculture tax in 2001, some monies were allocated to make up the difference to units of government impacted by the loss of the ag tax. “This bill (currently being floated) isn’t written that way yet,” says Moyle, “but it may get there eventually.”

Robert McQuade, Ada County assessor, said he can’t speak on behalf of the entire county, but only his office. McQuade says he personally wouldn’t mind seeing the tax go away if the revenue loss is replaced. According to McQuade, “It’s very difficult to assess, not everyone pays it who should be paying it. It’s just a very difficult tax to administer. So, in that sense, I think it’s really going to be welcome. But, some counties will be harmed by the amount of dollars lost if the money is not replaced.”

McQuade said should the money be replaced, he would be all for repealing the personal property tax because it would make his office’s job “that much easier and more fair.”

One of the southeast Idaho counties cited in thePocatello newspaper story as concerned about repeal of the tax is Caribou County, home of a Monsanto facility in Soda Springs that employs 300-400 workers. The plant processes phosphorous, which, for example, is used in producing Roundup.

Trent Clark, public and government affairs director for the company, says Monsanto “fully recognizes the counter-economic productivity that is created by the personal property tax, and we are supportive of action to make that tax not as counter-productive to economic development. To make it so that it does not run counter against the return on investment for new tools and equipment purchased. We think that hampers economic development.”

Clarkdid say, though, that a complete repeal of the tax is a different issue. “Fifty-two percent of our local school district in Caribou County is right now funded off of the personal property tax. We’ve been opposed to a simple, flat-out repeal of personal property tax that has the effect of doubling real property taxes.”

Clark says his company is willing to work with the county to find the best of both worlds. “We would be supportive of working with the county to make that tax so that it doesn’t stand in the way of economic development, but is not harmful to individuals’ home property taxes.”

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