Power County commissioners oppose possible legislation to remove personal property taxes. The legislation, proposed by the Idaho Association of Commerce and Industry (IACI), is anticipated to be introduced before the Idaho Legislature this session.
The personal property tax charges businesses for equipment from machinery to furniture. Personal property taxes represent a large part of the tax revenues for Power County. Power County elected officials say the proposed legislation doesn’t do enough to replace lost revenue for counties.
The proposed legislation also excludes the payment of taxes on smaller utility equipment, which represents about 40 percent of the personal property taxes paid by utilities, said Power County Assessor Doug Glascock. Personal property taxes as a whole make up about 43 percent of the county’s income.
Counties with small populations but large industrial facilities, like Power and Caribou counties, are most dependent on the tax. Counties with higher populations are less dependent on the tax. For example, personal property taxes are only about 8 percent of the total revenue of Ada County.
The proposed IACI legislation would replace the lost funding to counties with state sales tax revenues. The taxes would be replaced over time as the state general fund increases and meets certain triggers that would route more sales tax finances to the counties.
Seth Grigg, a policy analyst with the Idaho Association of Counties, said the current proposed legislation fell far short in returning the lost revenues to the counties through sales tax. Also, the counties would be paid out of the general fund, which must be budgeted through legislation. The Idaho Association of Counties did not want the reimbursement for the lost taxes to be routed through legislation. Grigg made his comments during a meeting of the Power County Commissioners on Monday, Jan. 11.
IACI points to a drop in personal property taxes since 1999 as reason to do away with it. But new equipment entering the counties would assure the tax would have a slow but steady increase in the future, and the proposed legislation does not entirely replace the possibility of future growth, Grigg said. New industry would also not increase the replacement dollars from the state. However, businesses leaving the county may not lower the replacement dollars either.
Grigg said the removal of utility taxes in the proposed legislation represented IACI’s stance that separating utility property from other property was constitutionally wrong. Power County Commissioner Vicki Meadows pointed out that the bill was problematic, especially for taxing interstate property like railroads, which pay taxes that are then divided up among the states where a given railroad operates.
Meadows also pointed out the proposed legislation included no appeals process for counties who feel the state’s reimbursements were unfair.
The commissioners hoped to stop the proposed legislation before reaching the senate floor; it does not yet have a sponsor. All the commissioners agreed that the proposed legislation would be easier to stop before someone in the Idaho Legislature became its sponsor and the bill entered formal debate.
The Idaho Association of Counties is working with IACI to make the proposed legislation more palatable to counties. One of the new provisions suggested by the association would increase the negotiation ability of county commissioners, giving them the power to work out agreements for payments from businesses after the tax has expired.
IACI hopes the removal of the personal property taxes would attract more businesses to Idaho.
“It is a barrier to economic development, and studies indicate that the elimination of the tax not only benefits business, but will increase the personal income of Idaho citizens,” IACI’s website states about the tax.
Power County fought a similar measure in 2008 successfully. A bill was passed that would eventually phase in the elimination of the personal property tax for property worth less than $100,000, but also had significant concessions to the counties.