BOISE — Four major bills dealing with the grocery tax credit and property taxes were introduced in the House Revenue and Taxation Committee on Wednesday.
Calls for a fifth bill to entirely eliminate the sales tax on groceries, however, were stymied, at least temporarily.
The House Republican leadership team sponsored the first measure, which increases the grocery tax credit to $135 for all Idaho citizens.
House Speaker Scott Bedke, R-Oakley, said the legislation would offset the impact of the 6 percent sales tax on food for virtually all Idahoans, while keeping the tax in place for nonresidents.
“We have numbers from the Division of Financial Management saying the average Idahoan spends $124 per year in sales tax on food,” he said.
The current tax credit is $120 for all Idahoans older than the age of 65, and $100 for everyone else. That’s enough to offset the sales tax on $2,000 and $1,666.67 worth of groceries each year, respectively, or $166.67 and $138.89 per month.
Boosting the credit to $135 per person would offset $2,250 worth of purchases per year, or $187.50 per month. For a family of four, that would increase to $750.
The estimated cost of the measure is $48 million to $49 million per year, Bedke said. The money would come out of a tax relief fund that was established in 2014 to collect the sales tax on out-of-state online purchases.
“At this point we’re putting $6 million to $7 million a month in that account,” he said. “So there’s ample money to fund this (proposal). It wouldn’t disrupt our current budget, and it negates the effect of the sales tax on food for all citizens.”
After the bill was introduced, Rep. Priscilla Giddings, R-White Bird, made a motion to introduce legislation next week that eliminates the sales tax on food entirely.
“I think it’s great that we introduced legislation today to start the public discussion on potentially expanding the grocery tax credit,” she said. “I believe the people of Idaho also deserve to have a public discussion on the full repeal of the grocery tax. I think this committee should provide equal opportunity for both actions to be discussed.”
House Revenue and Taxation Chairman Gary Collins, R-Nampa, said he hadn’t seen a copy of the proposal.
“It’s right here,” Giddings said, holding up a copy. “I’m sure we could get it to you by next week.”
Collins, who co-sponsored Bedke’s tax credit bill, said eliminating the grocery tax is a concept “that needs be discussed, and it will be,” but since he hadn’t seen the proposal he balked at Giddings’ motion.
Lewiston Rep. Thyra Stevenson, who serves as vice chairwoman of the committee, came to his rescue by moving to adjourn. That was a non-debatable motion that superseded Giddings’ motion; when it was approved, Collins immediately adjourned the meeting.
The other three tax bills introduced Wednesday all deal with property taxes. House Majority Leader Mike Moyle, R-Star, sponsored two of them; the third was sponsored by Rep. Steven Harris, R-Meridian. The bills include:
Capping the maximum annual increase in property tax revenue at 3 percent for cities, counties and other local taxing jurisdictions.
State law currently caps the increase at 3 percent; however, any new construction, annexations and property classification changes also get added to the base.
“What that does is make a bigger (base) next year, which gets multiplied by 3 percent and just adds on,” Moyle said.
His proposal would cap the annual increase at a flat 3 percent. Districts could exceed that with a two-thirds public vote; they could also forego a portion of the 3 percent and bank it for future years.
“I think this is a fair start to look at solving the property tax issue,” Moyle said. “I don’t think it’s the ultimate answer.”
He noted that the cap only applies to the property tax portion of a jurisdiction’s budget.
“For most cities, that’s only about 20 percent of their budget,” he said. “For counties it’s a little higher, at 40 to 45 percent.”
In Lewiston, the 2020 property tax levy provides $21.9 million, or 28 percent, of the budgeted expenditures. However, the expenditures include enterprise funds such as water and sewer services, which are paid for through user fees. When looking exclusively at the general fund, property tax revenue supports more than half of the budget.
Freezing property tax increases for one year.
To “give the Legislature time to figure out how to proceed,” Moyle proposed freezing property taxes for one year.
He noted that the Legislature took a similar action in 1978.
The freeze would apply to fiscal 2021. Jurisdictions could sidestep the freeze with a two-thirds public vote.
Requiring a public resolution whenever a city or county wants to reserve foregone property tax for use in future years.
Harris said the current process for accumulating foregone taxes “is pretty invisible.”
When a district chooses not to use the entire 3 percent, the foregone amount automatically accumulates and can be tapped in future years.
“It just happens,” he said.
His bill would require the city or county to pass a formal resolution specifying the dollar amount being reserved. If they failed to take that action, they couldn’t come back and collect those dollars in the future.
“This might add some public pressure on them to not use those funds, and perhaps reduce the growth in property taxes,” Harris said.
Now that the bills have been introduced, they can come back to the committee for public hearings.
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