If you’re a state and local taxpayer, have you wondered where your money goes — your income tax, sales tax and property tax dollars? Let’s examine a chart developed by the Legislative Services Office and updated annually.
DISCLAIMER: In our review of the budgets, the buckets depicting expenditures on the bottom row do not align with the Legislative Budget Book and contains errors. We look forward to a corrected version from the Legislative Services Office.
The following things are noteworthy:
Property taxes are collected and spent locally. Yes, the Legislature sets the property tax budget growth limits in statute, but local taxing districts set their own budgets. And to the extent these budgets grow, it is their decision. This includes city and county budgets.
Sales taxes directly provide about 19% of local funds, while property taxes provide 74% and the rest from the miscellaneous category. So if lawmakers eliminate the property tax, some portion of the $2.16 billion in property tax revenue that goes to local units of government must be replaced. (Local governments may also need to reduce their spending.) While some local governments rely more on property taxes than others, 74% is the average amount.
At the Idaho Freedom Foundation we increasingly refer to “state funds,” as a category instead of referring to the General Fund and dedicated funds separately. The lines on the chart that indicate revenues flowing to the General Fund and various dedicated funds criss-cross, as do lines representing spending from those funds. We bring this up because the state is increasingly transferring dollars from the General Fund bucket to programs that it categorizes as dedicated fund spending. This makes the growth of government look smaller than is the case.
For the upcoming Fiscal Year, FY26, the governor wants a 7.4% increase in General Fund spending. Add in the transfers, however, and you find an increase of 16.9%. This discrepancy illustrates how difficult it is to track spending.
What would this bucket chart look like in 2015? The total collections would only total $5.25 billion, meaning that all state and local tax collections grew 80% from 2015 to 2024. This will likely surprise many people. The property tax take has increased by 39%, and collections from sales taxes have increased by 113%. Motor fuel taxes are up 56%. Taxes on other purchases are up, too: cigarettes, liquor, beer, wine, other tobacco products, kilowatt hours and a few others are up 133%. Despite major cuts to the income tax rate, individual income taxes were up 52%, and corporate income taxes up 301%.
The government has many ways of extracting taxes from you, the Idaho taxpayer. If the citizens want to eliminate a class of taxes, like property taxes, luckily it is possible. But we must remember the old adage, low spending leads to low taxation.
