Reclaim Idaho initiative could carry an unexpectedly high price tag
According to language of the initiative, which qualified for the November ballot Friday, the measure could roll back the income tax cuts passed by the 2022 Legislature. Attorney General Lawrence Wasden’s chief deputy confirmed this in an email last week. And this wording would drive up the cost of the initiative to $573 million a year, according to the Idaho Freedom Foundation, a conservative lobbying group opposing the Reclaim initiative.
Reclaim maintains its intent is to increase corporate taxes and income taxes on Idaho’s wealthiest residents, raising $323 million a year for K-12, while leaving the rest of the tax code untouched.
In three months, voters will have to figure out what they make of Reclaim’s Quality Education Act, and its costs. And if a simple majority of voters approve the initiative, the Legislature gets a chance to put its mark on the law.
What does the initiative say?
The ballot language includes the tax increases Reclaim has discussed all along.
It creates a new, 10.925% income tax rate, for individual incomes exceeding $250,000 and family incomes exceeding $500,000.
It increases the corporate tax rate to 8%, up from 6%.
These changes are expected to generate the $323 million, which would go into a dedicated fund for K-12. The money could then be used for a variety of purposes — such as increasing teacher pay, recruiting and retaining teachers or counselors, or career-technical education, music or special education.
But the initiative language also calls for individual income tax rates ranging from 1% to 6.5% — even though the 2022 Legislature reduced or eliminated most of these rates. For Idahoans making more than $5,000 in taxable income, for instance, the Legislature reduced the tax rate from 6.5% to 6%.
Part of this could be a function of timing. Reclaim began gathering signatures for its K-12 initiative before the 2022 legislative session, and before the new tax cuts became law, and the initiative language reflects the pre-2022 income tax rates.
But regardless, the initiative turns back the clock on Idaho’s income tax rates, months after Republican lawmakers and Gov. Brad Little agreed on what they hailed as the largest tax cut in state history.
“The ballot measure reverses recent tax cuts … in the 2022 legislative session,” chief deputy attorney general Brian Kane wrote in a Tuesday email to Chad Houck, the chief deputy to Secretary of State Lawerence Denney, Idaho’s chief election official. Idaho Education News obtained the email Monday.
So what does this mean?
Depends who you ask.
As the Reclaim initiative secured its spot on the Nov. 8 ballot, the Freedom Foundation went on the offensive.
The group — which does not respond to most media requests — sent out more than two dozen tweets over the weekend, labeling the Reclaim initiative a tax hike on Idahoans both rich and poor, and saying reporters have lowballed the cost of the initiative. The Freedom Foundation is also armed with a recent report from the Tax Foundation, a Washington, D.C., think tank, which labels the Reclaim initiative as “gaffe-riddled.” This is the report that prompted Houck to seek a legal opinion from Kane.
Reclaim, meanwhile, focuses on other language in the initiative, and its stated intent.
Reclaim has maintained that its initiative will increase income taxes only for 1% of individuals and households. And on Sunday, Reclaim co-founder Luke Mayville said his group has been clear: It wants only to create a new income tax bracket for the wealthiest of Idahoans. He points to the initiative’s fiscal note, which says the measure would only affect Idahoans making more than $250,000 a year, who would fall under the new, top-end tax bracket.
“There is no evidence in our initiative of legislative intent to alter the lower brackets,” Mayville said in an email.
And on Monday, Mayville dismissed Kane’s email — saying Reclaim has a legal opinion of its own. Former Idaho Supreme Court Justice and Attorney General Jim Jones has told the group that its initiative would clearly affect only the wealthiest Idahoans.
“In any case, an opinion issued by the (attorney general) is only advisory,” Mayville said. “The only definitive opinion would be the opinion of the court. In the event that our initiative passes in November and public officials decide to undermine the intention of the initiative, we are prepared to take the issue to court and we are confident that we would prevail.”
So who sorts this out?
There’s no way to change the language of the initiative at this point. So at some level, voters will have to decide who they believe.
Expect Reclaim and the Freedom Foundation to continue to spar over this issue. The two groups have filed written arguments for or against the initiative with the secretary of state’s office, the state’s elections arm. Now, the groups must file their rebuttals with the secretary of state by Aug. 1. The arguments and rebuttals will appear in a voter pamphlet that will be mailed out a few weeks before the election.
“We accept them as written, and don’t make judgment calls up or down on them,” Houck said Monday.
And voters won’t have the last word.
Mayville says it will fall to the Idaho Code Commission — a relatively obscure offshoot of the secretary of state’s office — to come up with the code language for a successful initiative. This panel of three attorneys, appointed by the governor, updates Idaho code annually.
And the Legislature would certainly weigh in. Lawmakers are not obligated to sign off on an initiative as written. They have the chance to amend — or even reject — a voter-approved initiative.
In this case, for example, lawmakers could simply pass the same income tax cuts they voted into law in 2022.
“There is nothing that we can do at this point about the ballot language or the text of the initiative,” Kane wrote last week. “If it passes, it will be up to the Legislature to sort it out as it sees fit.”