Local governments would lose millions if personal property tax eliminated

Earlier this week, Idaho Governor C.L. “Butch” Otter announced possibly doing away with personal property tax.

It’s a move that would cost the state around $141 million, but the governor said local governments could be reimbursed.

All taxing districts would be effected. That means city government, county government and even school districts would lose money.

In his State of the State address, Otter said $20 million has been set aside as a transition, but is it enough?

Before the state legislature convened Monday, Governor Butch Otter said personal property tax is an “unfair drag” on Idaho’s economy.

“As you know, personal property tax receipts are a significant part of how some of our counties pay for the public services,” said Otter.

This statement holds true for most counties in eastern Idaho. In 2012, Bannock County collected a little more than $2 million in personal property taxes, while Bonneville County taxpayers contributed almost $2 million. That money goes toward supporting services such as public defense, the court system, and indigent care.

“They require us to do those services and if they remove the revenue and don’t replace it, it’s a very difficult situation to be in,” said Roger Christensen, Bonneville County Commission Chairman.

Governor Otter suggested possible state funding and implementing new taxes to make up the difference.

“If the state is going to take revenue away from us, then we’ve either got to replace that from somewhere else or reduce the amount of services that are provided,” said Mark Hansen, Bonneville County treasurer.

A local option tax is another possibility, but commissioners say the county hasn’t had one for years.

“The legislature has dealt with the issue of local option many times in the past, and they’ve never been willing to grant that to local governments,” said Christensen.

“Whether the tax is eliminated all at once or phased out over a few years is less important to me, then an exit strategy that considers our counties financial stability,” said Otter.

While Bonneville County would lose $2 million if the personal property tax is eliminated, the City of Idaho Falls would lose $2.5 million.

The legislature is in session for three months and will have to make a decision by spring.