During the brief seven months he served as Idaho’s interim governor, Sen. Jim Risch did more permanent damage to the state’s public schools than virtually anyone who preceded or followed him in that office.
And what is Senate Local Government and Taxation Committee Chairman Jim Rice, R-Caldwell, planning to do about it?
Compound Risch’s error.
In a one-day special legislative session held in the middle of the 2006 summer while most Idahoans were preoccupied, Risch rammed through a plan to remove about $260 million worth of school maintenance and operation property tax levies. He replaced it with a penny increase in the sales tax.
It wasn’t enough.
Going from a nickel to 6 cents on every dollar generated only $210 million.
It wasn’t fair.
Sales taxes fall disproportionately on low-income families. Says the Institute on Taxation and Economic Policy: Idaho families earning less than $20,400 now spend 6 percent of that income on sales and excise taxes. People making more than $410,000 pay about 0.9 percent of their incomes in sales taxes.
It wasn’t reliable.
Say what you want about property taxes, but they were a stable source of support for local schools. Sales taxes, however, ebb and flow with the economy. When Idaho’s boom went bust in the Great Recession, state dollars evaporated. Rather than replace them, lawmakers cut school budgets.
The result was a steadily rising dependence on so-called supplemental property tax levies. Before Risch got involved, 59 of Idaho’s 115 school districts raised $79 million this way.
Now 92 school districts are collecting $214 million in property taxes.
Long gone are the days when this money actually paid for extras. Now it fills in the gaps left by the state. If you doubt it, visit any district that can’t persuade voters to pass a levy. Kamiah voters, for instance, defeated a $500,000 supplemental last March and the schools have been struggling to maintain a bare-bones system by closing the middle school and sticking to a four-day-a-week schedule.
Now Rice proposes — in a bill he plans to release by month’s end — to raise the sales tax to 7 cents. That would generate $280 million, most of which he intends to use to phase out supplementals.
“We need to move off of supplemental levies for the school funding,” he told Betsy Russell of the Idaho Press. “That will help with the property tax situation.”
Depends on who you ask.
Low-income families — especially those living in rental homes who would get no corresponding break from lower property taxes — will get soaked, again.
A stable source of school support will disappear, again.
Those funds will be replaced with volatile sales tax dollars, again. And the tax shift will occur at a time when the traditional source of sales taxes — brick and mortar retail outlets such as Macy’s, K-Mart and ShopKo in Lewiston — are disappearing. More money is coming in from sales tax revenues generated by the expanding e-commerce sector, but GOP lawmakers have been socking it away for tax cuts.
A group of winners and losers will be created, again. Still to be determined is how Rice will deliver his program. But some schools — notably Lewiston and Moscow — raise a lot of supplemental tax dollars from a considerably smaller group of patrons than, say, Coeur d’Alene or even Boise. Replacing the supplemental taxes on a dollar for dollar basis will help Lewiston and Moscow. But the people of Boise and Coeur d’Alene might complain. Doling out the money based on enrollment while depriving local schools of the extra property tax could spell just the reverse — more money for growing communities while guaranteeing cuts elsewhere.
While the people who pay sales taxes have been pinched during the past decade, those wealthier families and corporations have benefited from the Idaho Legislature’s relentless effort to drive down the income taxes they pay.
In the past decade, lawmakers lowered the tax burden by almost $335 million a year.
That works to the advantage of Idaho’s top 1 percent, which pays out 4.6 percent of its earnings in income taxes. If you’re among the bottom fifth, however, income taxes are a relatively small concern. Those earning less than $20,400 pay 0.1 percent of their earnings in income taxes.
Zealotry for cutting income taxes has handcuffed the state budget. That explains how a state enjoying an economic boom can’t afford to make the kinds of public school investments that would reduce pressure on the property taxpayers.
It’s why the Reclaim Idaho movement is promoting an initiative to reverse some of those tax cuts on corporations and higher income families. Doing so would generate $170 million for public schools.
If Rice truly wants to help, he’d sit back, avoid repeating Risch’s folly and wait for Reclaim Idaho’s ballot measure to ride to the rescue in November. — M.T.