A day after a major tax-cut bill backed by House GOP leaders was introduced, House Democrats have unveiled their own “Idaho Working Families Agenda” that instead calls for property tax relief for homeowners and seniors; an increase in the child tax credit; more school funding to allow optional full-day kindergarten statewide and one-time boosts to schools to deal with the fallout from the pandemic; and a new earned income state tax credit.
“The Idaho Working Families Agenda is fiscally responsible and sustainable,” said Rep. Lauren Necochea, D-Boise, who announced the package at a virtual news conference. “It fits within the governor’s budget framework and doesn’t use one-time dollars for ongoing commitments. It is a plan that balances overdue tax benefits for working families and the school investments our children need.”
The Democrats’ plan calls for shifting all money now in a “Tax Relief Fund” to the state general fund, as opposed to the GOP bill, HB 199, which would tap that fund each year to partially offset income and sales tax rate cuts. Lawmakers created that fund in 2019 and routed all proceeds from sales taxes on online transactions there, where it’s simply sat awaiting future decisions. The Democratic plan would do away with the fund.
“HB 199 is a stunning example of a lopsided proposal,” Necochea declared. “Idahoans with modest incomes can expect to pay more in taxes, due in large part to the complete elimination of the popular grocery tax credit, which totals $400 each year for a family of four.”
HB 199 calls for hundreds of millions in tax cuts for individual and corporate income taxpayers in all brackets, plus cutting the state’s sales tax rate from 6% to 5.3%, while also eliminating the current grocery tax credit. It doesn’t remove the state’s sales tax from food; that’s what the grocery tax credit was created to offset.
The Democrats’ plan also doesn’t include removing sales tax from food; it would leave the grocery tax credit in place. The minority party released the text of three proposed bills: One to lift the current $100,000 cap on the homeowner’s exemption from property taxes, which was imposed by lawmakers in 2016, setting it at $125,000 and pegging annual increases thereafter to median home price increases in each county; one to substantially increase the “circuit breaker,” Idaho’s main property tax break for low-income seniors and people with disabilities, which hasn’t been updated for inflation since 2006; and a third to create the new earned income credit, which would be pegged at 20% of the existing federal earned income credit.
However, Necochea said the Democrats have already been told their circuit breaker bill won’t be granted a hearing. “We would love for a reversal of a decision on that one,” she said. Necochea said Democrats are currently working to recruit GOP co-sponsors for their bills.
Since the 2016 change in Idaho law, Necochea said, home values have soared even as values for other types of property stagnated. “The resulting tax shift onto homeowners is unsustainable,” she said. She released calculations from the state Tax Commission showing that if the law hadn’t changed, Idaho’s homeowner’s exemption would now be close to $150,000.
At the end of last year’s legislative session, frustrated by House GOP leaders’ refusal to consider legislation on the homeowner’s exemption or the circuit breaker, the Senate introduced its own bills on both, and approved a circuit breaker increase on a 31-1 vote. At the time, then-Senate Majority Leader Chuck Winder, R-Boise, now the Senate president pro tem, said, “It is tax relief for those that need it the most, so hopefully the House will consider it.” That defied tradition in that tax bills usually start in the House; the House refused to consider the measure. The Senate’s homeowner’s exemption bill cleared a Senate committee but died on the last day of the session without a vote in the full Senate.