Wednesday, August 23, 2006

Breaking down Idaho's tax relief options

Guest opinion by Wendy Jaquet, Donna Pence and Clint Stennett

Wendy Jaquet, D-Ketchum, is serving her sixth term representing District 25 in the state House of Representatives. District 25 includes of all of Blaine, Camas, Lincoln and Gooding counties. Donna Pence, D-Gooding, represents District 25, Seat B, in the House. Clint Stennett, D-Ketchum, is the state Senate minority leader.


On Friday, Aug. 25, we will attend a special session of the Idaho Legislature. The special session has been called by Gov, Jim Risch to consider his tax shift legislation on property taxes. The governor's tax shift legislation shifts school maintenance and operation budgets for all property-tax payers to the sales tax. His legislation raises sales tax 20 percent (1 cent) to cover this shift.

In response the to the governor's proposal, Democrats have proposed legislation that exempts homeowners who qualify for the Homeowners Exemption from the school maintenance and operations levy on their property tax. Our plan targets relief to homeowners who have been shouldering the heaviest burden for property taxes because of rising values in residential property.

Since our plan targets relief to homeowners it does not require a sales tax increase. The Democrats' homeowner property tax cut does not provide unneeded tax cuts to real estate speculators or to special interest properties like agriculture, timber, mining or commercial properties.

These special interest properties have not seen significant property tax increases. (In fact, agricultural and utility properties have actually seen a decrease in property taxes over the last five years.) Our legislation is targeted, doesn't raise taxes and is fiscally responsible.

Although our plan is a more conservative approach than the governor's tax shift, he refuses to let it have a hearing, either before a legislative committee or the full House and Senate. We pledge to try everything possible to get our plan heard by the Legislature, but we know that the governor's bill was a guaranteed victory even before he announced the details of it.

We wanted to take this opportunity to explain why the governor's tax shift harms most taxpayers in our district, especially Blaine County.

Gooding, Camas and Lincoln counties have not experienced the value increases found in Blaine County over the last 10 years. Just in the last two years, Blaine has had average increases of 18 percent and 20 percent in values. Gooding, Camas and Lincoln receive close to 80 percent of funding for their school budgets from the state. Property taxes are a smaller part of their budgets. Blaine is the reverse. Blaine receives about 20 percent of its budget from the state Legislature while the rest comes from local property taxes.

Whereas the Democrats' homeowner tax cut replaces school maintenance and operations budgets one-to-one, or one dollar for each one dollar paid in property taxes, the governor's bill runs the state funding through the state equalization formula. Blaine will receive $37.80 for each $100,000 in valuation. On a $500,000 home, there will be approximately $189 in relief. If your income is between $30,000 and $39,000 you will pay $105.93 more in sales tax (remember, food is taxed). Your gain will be $83. If you itemize your deductions on your income tax, you should expect to lose about 25 percent of the estimated relief. This is hardly the relief that Blaine County property tax payers need, or have been asking for.

In the meantime, your sales taxes will be covering the loss of property taxes from business, agriculture, mining, vacation homeowners and real estate speculators.

At one point, we suggested that the governor and the Legislature allow both plans to compete side by side on the November ballot, allowing voters to choose which one they liked best. You must ask yourselves why the governor and the Legislative leadership decided not to allow voters this choice.

Finally, we carefully considered supporting the governor's tax shift plan, since it is the only solution he will allow us to consider. After looking at the numbers, we cannot support this proposal. We pledge to you that we will continue to explore more meaningful and fair property tax relief in the upcoming 2007 session.

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