Having successfully pushed partial responsibility for public school funding to the local school district and the safe haven of the supplemental levy, the Governor suggested Monday that the state do much the same thing again — with cities, counties, colleges and all other local taxing entities.
The Governor wants to eliminate the business equipment tax, more commonly and more erroneously referred to as the personal property tax. When the tax is removed — and $141 million is taken away from cities, counties and other local taxing districts — the Governor wants those tax districts to come to you and ask you to vote on whether you’d like them to maintain services that would otherwise be cut.
In short, the Governor wants to replace the personal property tax with a local option tax. Except the local option tax is the euphemism for a plan to create a tax rather than being a true replacement.
Interestingly, the Governor auditioned his proposal to eliminate personal property tax with the media last Friday and emphasized his commitment to “do no harm” to funds that local taxing bodies rely on. In his State of the State address three days later, Otter said that his proposal “isn’t necessarily about using state revenue to make counties ‘whole’.” So much for do no harm.
Of course, the Governor did say that his budget would set aside $20 million to pay cities and counties to ease the transition. Let’s see: $141 million goes away and is replaced by $20 million. That’s 14 cents on the dollar, clearly indicating that Monday’s statement on not making counties whole was far closer to the truth than Friday’s “do no harm.”
This is not to say that the local option tax is without merit. Currently allowed only in “resort” communities, we editorialized in its favor a year ago as a way of providing cities and counties to pay for something that their residents wanted enough to pay for. We like the emphasis on “option.”
Monday’s proposal would make the local tax more of a necessity than an option. Just like local school districts have been forced into asking residents to approve supplemental levies to backfill state funding shortfalls, cities and counties would need to do the same to replace a net loss of $121 million.
What does this mean for individual local governments?
On Monday, Twin Falls City Manager Travis Rothweiler estimated the city would lose up to $1.3 million if personal property tax is eliminated. Of course, at 14 cents on the dollar, the city may get back a tidy $182,000. So where’s the harm in that?
Worse yet is the predicament in Camas County, which currently receives close to 40 percent of its budget from the personal property tax. With just more than 1,100 residents, there simply are no options — local or otherwise — that could possibly make up the shortfall.
Eliminate the personal property tax Mr. Governor? Perhaps.
Eliminate the personal property tax while doing no harm to local taxing districts, Mr. Governor? Not even close!
We hope the Legislature says “No” to the Governor’s plan and demands from themselves a more thoughtful and far more thorough solution.