By Lindsay Atkinson & Fred Birnbaum
Gov. Brad Little needs to call the Idaho Legislature back to Boise so that the $1.25 billion the state received from the federal government in response to COVID-19 can be properly allocated toward tax relief.
Little appointed a Coronavirus Financial Advisory Committee, which is reviewing options for spending the money. But the committee is packed with government officials and too few voices outside of Boise. They have good intentions, but the voices of many communities are currently left out of the process, and those voices are screaming out for tax relief. That is where the Legislature should step in, as an already-established collection of elected community voices.
When united, legislators could cut any number of government taxes, using the coronavirus relief funds — including income, sales, and unemployment taxes — but one of the most impactful actions would be to use these federal funds to provide property tax relief to Idahoans. Before the pandemic even began, high property taxes had been a growing burden on residents throughout the state.
The state government should devote at least $375 million (30%) of the federal funds to property tax relief. The state should distribute these funds proportionately, based on either population or the number of property owners, to all local governments for the legally-dedicated purpose of providing property tax relief. The governor can set up the path for devoting these funds by calling a special session of the Legislature, where legislators can provide the statutory framework necessary to provide relief.
Devoting $375 million of relief money to the 2020 property tax cycle would pay down the property tax bills of Idahoans by an estimated 17%. Thus, for example, an individual with a property tax bill of $1,000 would pay $830 out-of-pocket under this proposal. Local governments would pay themselves their portion of the remaining $170 out of their dedicated property tax relief funds.
This property tax relief proposal benefits both Idaho residents and local governments. Local governments would ultimately have stable budgets and, along the way, Idahoans are provided some financial relief. This proposal also prevents local governments from “double dipping” to inflate their revenues. That is, local governments would not get federal relief funds in addition to collecting property taxes.
Outside of the $375 million devoted to property tax relief, the remaining federal funds should be used to provide additional tax relief to beleaguered Idahoans. For instance, the Legislature could establish a system of income tax relief, using these federal funds. Leaving more money in Idahoans’ pockets gives them more purchasing power to support local businesses when they reopen.
The governor and Legislature could also establish a sales tax holiday, using coronavirus relief funds to cover the lost government revenue. When the state offers a holiday on sales tax — whether for a day, a week, or preferably a month — that motivates consumers to get out and spend. They will go out and spend their money on the essential items they need, spend money supporting local businesses, and spend money supporting locally-sourced products, all the while providing an incredible jumpstart to the state’s economy.
As outlined above, Idahoans deserve the lion’s share of the $1.25 billion in coronavirus relief funds granted to the state. Idahoans have been adversely impacted as much by government action as by COVID-19. Gem State residents are facing extreme economic hardship, and they deserve a break.
Make your voice heard on this subject. Write Gov. Brad Little at Governor@gov.idaho.gov or call his office at 208-334-2100 to ask him to convene a special legislative session in order to offer tax relief to Idahoans.
Read IFF's research paper on this topic here.
Lindsay Atkinson is a Policy Analyst for the Idaho Freedom Foundation. Fred Birnbaum is Vice President of the organization. They can be reached at Media@IdahoFreedom.org.