Officials call for revenue replacement - Bonner County Daily Bee: Local News

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Officials call for revenue replacement

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Posted: Sunday, February 10, 2013 10:00 am

SANDPOINT — The personal property tax may not be popular, but it’s still an important revenue stream, according to city, state and public service officials.

Debate continues in the Idaho State Legislature over whether or not to repeal the personal property tax, a government revenue stream drawn from business assets that fall outside of real estate. While many state and local officials agree that the personal property tax is not the most preferable way to obtain revenue, eliminating it without a planned replacement could be very damaging.

“As a former business owner, I can say the personal property tax is an awful tax — it discourages investing into your business,” City Planner Jeremy Grimm said. “But this would hurt us almost to a level where it would make us fairly ineffectual,”

That’s especially true for some of the urban renewal districts in Bonner County. For example, almost 60 percent of property tax funding in the Northern Urban Renewal District in Sandpoint, or $217,720 out of $367,663, comes from personal property tax, according to data from the Idaho Tax Commission. Oldtown’s urban renewal project, despite its comparatively small total property tax intake of $4,951, also gets just over half of that from personal property tax.

However, the percentage of tax income drawn from personal property doesn’t necessarily have to be extremely high to hurt a budget. The city of Sandpoint, for instance, receives $220,979 from taxed personal property out of a total $3,410,339. While that only amounts to 6.5 percent of the total, Grimm said that still amounts to an entire project or two that can no longer be funded. And considering that the loss of the revenue is a yearly occurrence and not a one-time hit, the missing cash starts to really hurt over time.

Ponderay presents another situation where the lack of personal property taxes could be troublesome. As a city that operates on a much smaller budget than Sandpoint, a missing $131,775 out of the total $740,033 in property taxes would likely take its toll.

The lack of a personal property tax would have an interest affect on school districts as well. For one thing, Lake Pend Oreille School District receives $538,828 from personal property taxes — a solid chunk of change in itself.

Because local supplemental levies operate on a fixed dollar amount, however, the lack of personal property tax would mean an effective increase on property and home owners. If voters pass the proposed $7.8 million-a-year levy in March and personal property tax no longer exists, it will mean an effective increase of the levy rate on property tax payers.

Gov. C.L. “Butch” Otter’s proposal for local communities to replace that income through local option taxes has also been a controversial one — Sen. Shawn Keough and Rep. George Eskridge have both said they would not support an elimination of the tax without a stateside replacement.

For one thing, it would require convincing communities to pass the measures in local elections. Sandpoint and Ponderay experienced the difficulty of that in November, when a pair of coordinated local option taxes failed at the polls. A majority of Sandpoint voters supported the measure, but it failed to achieve the required 60-percent supermajority. A majority of Ponderay voters opposed the measure. While Grimm said relaxing the requirement to a simple majority could be feasible, the approach is not without its difficulties.

“We’re running pretty lean right now, and to have (an elimination of this tax) hit us on top of everything else would be very difficult for Sandpoint,” Grimm said.  

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  • Here's What I Say posted at 6:46 am on Wed, Feb 13, 2013.

    Here's What I Say Posts: 1240

    When was the last time you have heard anything from the mayor? Out on the town with her girlfriends, most likely.

  • Here's What I Say posted at 6:58 am on Tue, Feb 12, 2013.

    Here's What I Say Posts: 1240

    I think the personal property tax is unfair for most businesses. It taxes the same equipment you have had for years and years over and over each year. I don't own a business but have had to do inventory for those who do. Every stapler, chair, the office supplies, coffee pot or lamp is continually taxed. I don't see the purpose of this tax except as an excuse to suck money out of a small business that probably needs the money for expenses or other new equipment. It's as if they were taking back your investment credit for new equipment. If the state legislature would tax the incomes of all businesses the same way it taxes individual's income, without a myriad of loopholes, the PP tax would not be necessary and so burdensome.

  • IdahoGal posted at 2:51 pm on Sun, Feb 10, 2013.

    IdahoGal Posts: 76

    My question is this: Why is the city planner speaking for the city on this matter instead of the mayor or another elected official? If a staff member representing the city were to speak on this, wouldn't it be the city treasurer?

  • KJB posted at 2:44 pm on Sun, Feb 10, 2013.

    KJB Posts: 644

    Would like to know how much personal property tax 1-person or 2-person businesses are contributing. I don't have much against business taxes, but:

    1) The way it is calculated is very burdensome. Why couldn't it be simplified based on revenue categories, rather than business property owned?

    2) Please tell me the cost to the county of administering this tax...on a per business level. I will absolutely bet you that many of these small businesses that pay this tax barely pay the costs of administering their paper work and record-keeping.

    I get that, as a whole, businesses taxes fund worthy efforts in Bonner County. My problem is including very small businesses in this tax structure. Is it really worth the effort?