Bill Spence wrote an article about a property tax relief plan in the works. It’s so lame brained I’ve got to wonder if it’s just smoke.
Senator Jim Rice, chair of the Senate Tax Committee and Representative Mike Moyle, House Majority leader want to hike the Idaho sales tax to the highest in the nation, almost 8 cents on every dollar spent, then drop all property tax on owner occupied property.
When I showed up in the Idaho Legislature, without much of a clue about how the state moved money around, I was introduced to the three-legged stool. Seasoned legislators proudly told me about Idaho’s balanced taxation formula. Sales tax and income tax go into the legislature controlled general fund. The biggest general fund expenditure is to education, K-12 and higher Ed. I like stability. I became a fan of the three-legged stool.
Property taxes stay local but mainly support their local schools. The pride of the seasoned legislators was that this balance in revenue supported stability, thus school funding would be stable. Isn’t that what any proud parent would want for their kids, stability?
I was aware of the shift that then Governor Jim Risch had rammed through in a special session in 2006. He’d agreed to raise sales tax to 6% but capped what local property taxes could be raised.
I began my years in the state house in 2011, right after the Bear Stearns financial collapse in 2008, driven by the mortgage derivative bundling that got so many people into homes they couldn’t afford. Many saw this collapse coming. Nobody did anything, and the responses were weak. May I suggest listening to the “Meltdown” podcast.
I doubt Jim Risch knew the meltdown was coming. But when the economy tanked in 2008 and Idaho’s tax revenues tanked in 2009, and we burned through the biggest reserves we ever imagined having by 2010, we cut funding for schools for the first time in Idaho’s history. We still have not recovered.
The Jim Risch 2006 move that shaved the property tax leg off the once stable three-legged stool made locals decide to raise their local property taxes with supplemental levies to save their schools. We now have a record $218M in supplemental levies. Believe it or not, this was almost the exact amount Risch promised from the sales tax increase. The 6% sales tax increase had to fund prisons and roads and got eaten away as the legislature managed the budget.
It's unwise, unbalanced thinking like this that has driven Idaho schools into our dismal bottom dwelling funding position. And now the Rice/ Moyle “property tax relief” proposal wants to do it all again. Shave off the property tax leg, grow the sales tax leg, and we’ll have to try to balance our schools on this leaning structure.
The idea they suggest will make the three-legged stool really with just one and a half legs, all dependent on the legislature’s largesse. Next downturn and we’ll be so dependent on Boise legislators we all might as well move to the Treasure Valley and camp on their lawn.
Senator Rice is a seasoned and proud law maker. But both he and Representative Moyle can’t admit they made a mistake. When they voted, with the Republican majority in 2016 to cap the homeowners exemption, they started this cascade. All Democrats voted against it. But maybe stability and reasonable public-school funding isn’t their goal. Maybe they have listened to Wayne Hoffman and believe the Idaho Constitutions mandate for uniform public education and the requirement that the legislature fund it is hooey.
There are many reasonable and moderate proposals to fix this problem. We don’t need a wobbly stool to stand on. Give us stability. Give our kids stability.