Small Town News

Lawmaker seeks solution for personal property tax law

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BOISE - State and local officials for Power County likely will be "actively engaged in trying to modify" this year the state law that now requires $129.2 million in personal property tax payments from Idaho businesses, Rep. Scott Bedke, R-Oakley, said during an interview last week at the Idaho Capitol.

Bedke, the Idaho House Assistant Majority Leader, sits on the Idaho Legislature's Economic Outlook and Revenue Assessment Committee to which Idaho Association of Commerce and Industry (IACI) President Alex LaBeau recently expressed concerns about the continuation of personal property taxes paid by Idaho businesses at the local level.

Power County relies on those personal property taxes charged to businesses for 38.5 percent (according to 2008 numbers) of the county's annual budget and Power County officials about four years ago opposed efforts to eliminate the tax.

Idaho's 44 counties are political subdivisions of the state.

Bedke said during a Jan. 12 interview at his capitol office that while he hasn't yet seen a copy of IACI draft legislation of which he has heard, he would consider possible modifications proposed by IACI to the current personal property tax law.

Bedke, along with Power County officials, has been opposed to changes in that law. And in March 2008 Bedke and Rep. Fred Wood, R-Burley, voted against one failed version of IACI-driv-en legislation to eliminate the personal property tax before compromise legislation for $17.4 million per year in tax relief on the first $100,000 of property, with a trigger mechanism based on a 5 percent state revenue growth rate included, passed the Legislature in April without opposition.

Bedke last week took a conciliatory stand on the current personal property tax issue.

"You've gotta voice your opposition, but then you've gotta offer a solution as well, because, see ...this is a big deal for a bunch of people, a bunch of businesses in Idaho ... it disproportionately affects our county (Power County) and a few others," Bedke said. "And we need to, certainly, get something we can live with."

Bedke also said: "I do think at some point we're gonna lose ...I've talked to (Power County) Commissioner (Vicki) Meadows and the others ...back home on this. They understand this as well. And, I think we'll be actively engaged in trying to modify this in such a way that we can live with it."

A potential modification, according to Bedke, might be to remove many types of personal property from the list of those subject to the personal property tax charged to businesses, but transfer other property types to the real property tax rolls to offset the potential impact on county and school budgets.

"It needs to include some definitional changes," Bedke said. "I mean, I think that there's ...property in Power County that is now classified as personal that probably ought to be real property. And, then it wouldn't be as big an issue."

Of the idea, Bedke added: "It transfers it to real (property), so we don't lose ... that tax base in the county.

Recent numbers from Idaho Republican Gov. C.L. "Butch" Otter's Division of Financial Management (DFM) indicate that it would cost $ 129.2 million to eliminate Idaho's personal property tax-or $32.3 million per year on a four-year phase-in; just over $25.8 million annually with a five-year phase-in.

Otter during a Jan. 9 budget speech recommended that lawmakers cut $45 million in taxes overall without specifying where the price tags should be-although the governor's Division of Financial Management listed the personal property tax, individual income tax, corporate income tax, and tax credits as areas in which lawmakers should consider tax cuts.

Legislation made law in 2008 would partially eliminate that business tax based on the trigger mechanism of a potential 5 percent state revenue growth rate. But after the enactment of that law, that could have reduced the personal property tax to Idaho businesses by $17.4 million annually (exemption applies to the first $100,000 in business property), Idaho soon took the brunt of the Great Recession and that revenue growth rate has yet to be reached.

Now, IACI - Idaho's largest business lobby-has expressed an interest in changing the current personal property tax law in Idaho, although specifics of IACI's legislation have yet to receive committee action in the 2012 session of the Idaho Legislature-which began Jan. 9.

At a Jan. 5 meeting of the state's Economic Outlook and Revenue Assessment Committee, IACI President Alex LaBeau said the organization wants a revised Idaho tax policy that would eliminate the personal property tax "on tools, equipment, and machinery," a levy which he asserts is not only a burden on existing Idaho businesses, but is a deterrent" to companies looking to locate operations in the Gem State.

"It is a factor that businesses consider and we can ignore it no longer," LaBeau told the committee, of which Bedke is a member. A Friday afternoon (Jan. 13) telephone call by Idaho News Service to LaBeau wasn't returned that day.



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