Aug 20 2006

An effective protest?

Published by at 9:01 pm under Idaho

Since July 25, when Idaho Governor Jim Risch called a special legislative session and released the one piece of legislation it will be allowed to consider, two conflicting tendencies have been headed for a showdown. Come Friday, when the session convenes and the dramatic choice is made, we all get to learn something – through this conflict – about the character of Idaho politics.

The conflict is not over the core subject of the session, which is property taxes, which have been rising rapidly in a number of parts of Idaho, and which in many cases has caused a great deal of distress. A combination of factors, including but not limited to the recent boom in housing sales prices and therefore values, has made that a widespread concern. The question is what exactly to do about it.

Risch’s proposal, released in detail when he called the session, is summed up on his web site:
“Removing the 3-mil maintenance and operations levy will reduce property taxes statewide by $260 million. Risch proposes adding one-cent to the sales tax to bring in $210 million annually. The net overall reduction in taxes is $50 million. The one-cent sales tax increase would be effective October 1 if passed by the special session of the Idaho Legislature. The governor would use $50 million of the surplus to make up the difference between the property tax cut and the sales tax increase. He would also transfer $100 million to an education ‘rainy day’ savings account to protect education funding from any future economic downturn. The state’s fiscal year ended with just over $200 million more in the bank than projected. The proposal also includes an advisory vote on the November 2006 ballot.” None of that is in dispute, either.

The issues are whether this is the best way to ease the property tax explosion; and if so, whether legislators will insist on considering options. Risch’s legislative call appears ironclad: Either approve his idea, or go home having done nothing.

That would reflect badly on many legislators, of course, and also on Risch, who at this point has stake much of his prestige on this whole effort working. At his inaugural, he said he would not call a special session unless he was believed it would get the job done. At his call, he was joined by a large batch of legislators, including leadership, who pledged support.

It may pan out that way – certainly the pressure from Risch and leadership is intense. But there is a countervailing force that has gathered some steam of its own in the weeks since the call.

Idahoans have started to see report after report saying that Risch’s proposal might not be an especially good deal for them. Most of them have pointed out that while property taxpayers generally would, yes, get a cut, the tradeoff would be a sales tax increase that would cost many of them more than the cut would save. The Spokane Spokesman-Review has posted an on-line calculator allowing site visitors to work out, roughly, for themselves how they would come out.

Its projected results appear to match with a study by University of Idaho agricultural economist Stephen Cooke, quoted as saying, “Business makes out like a bandit – they get a $100 million tax reduction. If the intention is to give middle-class homeowners tax relief, you can’t get there from here, according to my analysis, because you’re going to be raising their taxes next.”

There have been a string of other studies, and most suggest that business property taxpayers making out (to varying degrees) much better than homeowners under the Risch plan. There have also been complaints from educators, including the state university presidents, that the plan may have the effect of harming education.

Complicating this further is the release of a property tax cut plan from legislative Democrats, one which didn’t include a sales tax increase. The Democrats are small in number in the legislature, but they have pounded their plan around the state, and have set up a petition campaign for it. They also have gotten some good reviews. The Coeur d’Alene Press stunned quite a few people with its editorial in support of it: “It is the state Democrats, not the fiscally proud Republicans, who have tendered what appears to be the more palatable of two property-tax proposals. It is the Republicans, not the Democrats, who have embraced the concept of higher taxes as a greater good.”

Newspapers around the state tended to support Risch’s decisiveness when he first called the session, but the tone has changed. Most of the dailies have talen repeated shots at either the idea of the one-bill special session, or Risch’s proposal specifically, or both. The reaction has been almost uniform, and such letters to the editor on the subject as have appeared give credence to the idea that the criticism of both has, in the last two to three weeks, started to sink in more broadly.

Such will be the atmosphere when the Idaho Legislature convenes on Friday. It should be good drama, or if not good, then at least instructive.

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