Laurie Welch reports: County and city officials across Mini-Cassia urged their residents Friday, Feb. 8, to fight a legislative effort to modify Idaho’s personal property tax on businesses.
Legislators are currently looking at a complete repeal of the state’s personal business property tax, which helps fund counties, cities and other taxing districts. A second option would be to put in a $100,000 exemption, which would eliminate it for nearly 90 percent of businesses that currently pay it.
The $100,000 exemption became state law in 2008, but with a catch — a trigger of 4 percent growth in state revenues that on the heels of the recession, means it’s never taken effect.
Cassia County Clerk Joe Larsen said Friday that if the entire tax is repealed, the county and other taxing districts within it will lose nearly $2.9 million in funding. Replacing that funding would increase property taxes for residents and small-business owners, unless the Legislature provides an alternative revenue source.
Larsen said the only two property categories to benefit from the repeal of the tax would be commercial and industrial property.
Minidoka County would lose an estimated $800,000 in funding annually, according to figures presented Friday. The city of Burley would lose $191,818 and Rupert would lose $170,000.
If the tax is entirely repealed, the estimated reduction in funding statewide is $140 million, said Bob Moore, Minidoka County commissioner.
“Our legislators only hear us for a small amount of time and then they tune us out,” Moore said.
Larsen said residents and business owners need to contact their legislators and let them know how they feel about the issue.
The officials also calculated what losing the personal property tax would mean for participants in the state’s Property Tax Reduction Program. Known as the “circuit breaker”program, it reduces property taxes for low-income residents who are blind, elderly, widowed, disabled or meet other qualifications.
Changes to levy rates if the business tax had to be replaced would increase what the program’s participants pay by as much as 63 to 97 percent, according to the figures presented Friday.
“Large business will be the only ones to benefit from this. It’s a misconception that mom-and-pop operations will benefit,” Rupert City Administrator Kelly Anthon said.
Idaho Gov. C.L. “Butch” Otter has proposed setting aside $20 million to help mitigate the loss, said Bob Moore, Minidoka County commissioner.
But, local officials argue, the amount is only a one-time stipend and the loss to the cities and counties will occur annually.
Burley City Administrator Mark Mitton said the repeal of the tax would essentially take away his city’s urban renewal agency’s incentives to bring in new business.
He said personal property tax never comes up when a company is negotiating a deal to come to Burley.
Mitton said some of the companies in the state to benefit most from the repeal are Idaho Power, Union Pacific Railroad, Century Link, Micron and Intermountain Gas.
Bob Dempsay, who is on the Association of Idaho Cities board for the district, said a recent Boise trip left him the impression that “the train had already left the station” in regards to legislators passing some form of the repeal.
Dempsay said repealing the tax will give legislators the opportunity to show their support for big business.
“This has been characterized as a Republican issue but as a conservative Republican this will be devastating to our community,” Anthon said.