Proposed tax exemption could hurt homeowners

An Idaho lobbying group’s push for corporate tax breaks could increase costs for residents across the state.

The Idaho Association of Commerce and Industry, or IACI, wants to do away with the personal property taxes paid by businesses, which is raising concerns among county commissioners.

All parties agreed the tax is hard on businesses and tough for the state to administer. But eliminating it completely could eliminate some funding for local taxing districts, like counties, cities, and schools, if the plan doesn’t include a way of replacing that revenue.

“Bad for business and bad for our economy.” That’s what IACI says about the personal property taxes paid by Gem State businesses every year on things like equipment, furniture, and computers.

“It’s just simply a bad tax, not fairly administered and time to go away,” said IACI President Alex LaBeau by phone.

A law was passed in 2008, said Senator Brent Hill, R-Rexburg, to get rid of the first $100,000 on equipment and assets, but only when the state hit a certain dollar amount of state revenue, which hasn’t happened.

So LaBeau said he will be working with lawmakers to form a new plan to repeal the tax ahead of the 2013 legislative session.

“Are they going to replace that with state dollars or are they just going to eliminate it?” asked Bonneville County Commissioner Roger Christensen, echoing the concerns of dozens of other counties that depend on a cut of those tax dollars.

According to a study by the State Tax Commission, nearly $134 million in property taxes was collected in 2011. Of that, $35 million went to counties.

“The toughest areas for us would be the justice fund, which funds the Sheriff and a lot of the court operations,” said Christensen.

Seth Grigg, an analyst with the Idaho Association of Counties, said county services from fire protection to public education would face cuts, or commissioners could shift costs to homeowners.

Hill said the legislature would love to get rid of the personal property tax, but there are a lot of details to work out, such as defining exactly what personal property is and balancing the needs of other groups involved.

Christensen said until a final proposal is presented, it’s difficult to speculate on the impact. However, some in Power County and Caribou County were already panicking on Monday.

Caribou County will lose an average of 44.6 percent of its tax base. Power County stands to lose an average of 38 percent.

Power County Commissioner Vicki Meadows said the services that depend on the personal property tax base in Power County are hard to escape.

From Harms Memorial Hospital, to the American Falls School District, to the city and infrastructure, there aren’t many public entities that aren’t funded by these tax dollars.

If this exemption passes, Meadows said that farmers, homeowners and small businesses are the ones who will suffer a huge blow, and they saw that happen when FMC left town.

The FMC plant closure cut just 12 percent of the personal property tax base, and moved the county from 39th to 2nd place on the list of how high tax levies are.

Meadows said the exemption would cripple rural communities.

“I think it will devastate Power County. It will just cut us to the bone to the point where we’re not going to be able to attract business because we’re not going to be able to provide the infrastructure to get the businesses to come back and move in here and I’m not sure that there’s a lot of the counties that can do that,” Meadows said.

According to Meadows, the Power County Assessor calculated that, to replace this exemption, Power County would need 333 $1 million homes or 30,000 mobile homes to move in to the area.

Members of the IACI, whose dues help to fund this lobbying, include Monsanto, Simplot and Melaleuca.