Idaho special session aims for tax cut, education spending

BOISE, Idaho (AP) — Idaho Gov. Brad Little on Tuesday called a special session of the Legislature beginning Sept. 1 to use the state’s projected $2 billion budget surplus for a record $500 million income tax rebate this year to help residents deal with increased food and gas prices due to inflation.

The Republican governor also proposed an ongoing tax cut of more than $150 million annually by creating a corporate and individual flat tax rate of 5.8% starting next year. The first $2,500 of income for individuals and $5,000 for those filing jointly would be exempt from taxes.

Finally, Little wants to bolster K-12 public schools and ongoing education with $410 million annually from sales taxes starting next year.

Language in Little's proclamation calling the special session cites high inflation, currently about 8.5%.

“Idaho taxpayers and the education system are especially imperiled by the consequences of historic inflation,” Little's proclamation states.

The proposed bill already has enough co-sponsors in the 70-member House and 35-member Senate to make it to the governor’s desk for his signature. The Legislature when it meets in regular session in January would decide how to spend the education money. Of the $410 million, $330 million is proposed for K-12 and $80 million for ongoing education.

The special session comes roughly a month before the November election when all 105 legislative seats are up for election as well as the governor and other statewide elected officials.

Also on the ballot in November is an initiative called the Quality Education Initiative that backers say would boost education funding by raising taxes on corporations and individuals making $250,000 or more annually. Backers say Idaho schools are badly underfunded, and the initiative would raise more than $300 million for them.

If passed by voters, it would take effect Jan. 1. However, if lawmakers in the special session approve the proposed bill and Little signs it, it would take effect Jan. 3, negating and replacing the initiative.

Little in February signed into law what was then the biggest tax cut in the state’s history — a combined $600 million that included a one-time $350 million in rebates and $250 million in permanent income tax reductions going forward for people and businesses. That’s on top of tax cuts in 2021, which combined with the tax cuts enacted earlier this year reach nearly $1 billion.

If the new tax rebate and cut is approved, tax relief under Little would climb to more than $1.5 billion.

Also earlier this year, Little signed into law a K-12 education funding increase of $300 million, a 12.5% increase over the previous year and what was then the largest increase in state history.