Keough: Local option tax idea intriguing

SANDPOINT — Local authorities could someday have a larger hand in paying the bills based on a vision outlined Monday by Gov. C.L. “Butch” Otter.

Perhaps the most discussed aspect of Otter’s address centered around his advocating for the repeal of Idaho’s personal property tax, which generates $141 million in revenue each year. His budget includes $20 million to facilitate the transition from that income stream. However, the most interesting thing about the proposal to District 1 Sen. Shawn Keough, R-Sandpoint, are his ideas of how to cover that lost revenue.

“I’m intrigued by his mention of local option taxes in his discussion about repealing personal property taxes,” she said, adding,

“That’s one way that local jurisdictions could make up that lost revenue. This discussion will unfold in the next couple of weeks.”

According to Otter, allowing local communities to propose their own taxing strategies would put the big decisions regarding spending in the hands of community members.

“My preference is granting local-option taxing authority that enables county voters to decide for themselves how to address their most pressing needs,” Otter said in his address, later adding, “I look forward to hearing your debate and considering your alternatives. Like our counties, our state has the right and we certainly have the responsibility to keep as many options as possible open to the people.”

As a region filled with towns which qualify as resort communities, or cities that generate a significant part of their revenue through tourism, many Bonner County communities already exercise the right to implement local option taxes through Idaho’s resort city tax allowances. Both Sandpoint and Ponderay have hotel taxes implemented to generate income from visitors, and both made unsuccessful bids in the 2012 November election to establish a local option sales tax.

According to Keough, another interesting aspect of the proposed repeal is that legislation already exists to accomplish just that. The Idaho Legislature passed a bill years ago to phase out personal property tax.

“The Legislature has a repeal on the books, but it’s tied to certain growth triggers,” she said.

Thus far, Idaho’s economy has not grown to the point where the bill would kick into effect. However, the bill remains as one option to accomplish that goal.

According to Keough, Otter’s general budgeting approach reflected an accurate assessment of the state’s current economic condition.

Otter’s budget estimates a 5.27-percent increase to revenue for the 2014 fiscal year with modest spending increases to match. Keough said those numbers were a sensible reaction to improved revenues.

“I’m pleased that he recognized the economy is still rebounding from the downtown and being conservative as he moves forward,” she said. Finally, Keough praised Otter’s reaction to the repeal of the Students Come First education reforms.

While Otter threw his full weight in support of the reforms prior to the election, Keough said he’s recognized that the measures were not the true will of the people.

“He’s really set the tone for an inclusive and thorough discussion rather than saying, ‘It’s my way or the highway.’ ”

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