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Confusion surrounds state financial review of Reclaim Idaho ballot initiative
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Confusion surrounds state financial review of Reclaim Idaho ballot initiative

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Reclaim Idaho

Second-grade teacher Leah Jones gathers signatures for Reclaim Idaho on Nov. 5, 2019, at the Twin Falls Reformed Church in Twin Falls.

BOISE — Officials with Reclaim Idaho have paused efforts to collect signatures for a new education funding ballot initiative as they await a new financial analysis of the initiative from the state.

But new documents the Idaho Capital Sun obtained late Monday afternoon raise uncertainty about whether the state analyzed the most up-to-date version of Reclaim Idaho’s ballot initiative. If the division analyzed outdated ballot language, it would make the Reclaim Idaho initiative appear much costlier to taxpayers than the organization has promoted.

“The signature drive is on pause until the Secretary of State’s clock runs out, which is Wednesday,” Reclaim Idaho co-founder Luke Mayville said in a telephone interview Monday afternoon. “Beyond that, we need to decide whether to begin collecting signatures, which is our right under the law.”

Mayville announced last Thursday that the Secretary of State’s office had given Reclaim Idaho volunteers the go-ahead to collect signatures for a ballot initiative last week. But then on Friday, Reclaim Idaho leaders announced on social media that they would pause the signature drive until the state supplied a financial analysis of the ballot initiative, which is called a fiscal impact statement.

Overall, Reclaim Idaho organizers want to use the initiative, which they hope to get on the 2022 ballot, to raise more than $200 million per year for K-12 education funding. The money could go toward hiring teachers, reducing class sizes, launching all-day kindergarten and more.

A law passed during the 2020 session requires ballot initiatives to have a fiscal impact statement conducted by the Idaho Division of Financial Management. This is one of seven fiscal impact statements completed so far this year under that law.

Jair Carrero, an elections compliance specialist with the Secretary of State’s Office, wrote to Reclaim Idaho organizers Friday telling them to pause the drive even though the Secretary of State’s Office had already given them the initial go-ahead.

“The information received from the Office of the Secretary of State to proceed (collecting signatures) was premature,” Carrero wrote, according to a copy of the email obtained by the Idaho Capital Sun.

Carrero pointed out the requirement for the fiscal impact statement, writing, “We will follow up as soon as we have the financial statement from (the Division of Financial Management).”

That’s only the beginning of the confusion.

House Bill 380, timelines complicate Reclaim Idaho initiative

A big part of the issue involves timelines and House Bill 380, a large income tax cut bill the Legislature passed this session.

Legislators introduced House Bill 380 on April 22, before Reclaim Idaho filed its initiative with the Idaho Secretary of State’s office on April 28. The bill later passed and was signed into law by Gov. Brad Little on May 4, state records show. House Bill 380 included an emergency clause that made it effective retroactively to Jan. 1, 2021.

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House Bill 380 decreased the number of income tax brackets in Idaho from seven to five and set the top individual and corporate tax income rates at 6.5%.

Reclaim Idaho organizers originally filed ballot initiative language using the seven tax brackets that were in Idaho law on April 28, Mayville told the Idaho Capital Sun on Monday.

After Reclaim Idaho filed its initiative, the Secretary of State’s Office forwarded it to the Attorney General’s Office to review the initiative for what is called a Certificate of Review for form and style and what is called “substantive import” in Idaho law.

The AG’s office then had 20 business days to recommend any revisions or alterations. Mayville said the AG’s certificate of review flagged the passage of House Bill 380, which occurred after the initiative was filed. Mayville said Reclaim Idaho then adopted the revisions to reflect there were now five income tax brackets in the state, not seven.

And when Mayville supplied the official ballot language to the Idaho Capital Sun that he said the Secretary of State’s office approved last week, that language accurately reflected five tax brackets, not seven.

However, in putting together its fiscal impact statement, the Idaho Division of Financial Management analyzed the old ballot language that showed seven brackets, according to documents the Idaho Capital Sun obtained Monday.

Division of Financial Management Administrator Alex Adams, told the Idaho Capital Sun late Monday afternoon that the division analyzed ballot initiative language that included seven tax brackets because that is what the Secretary of State’s Office supplied to the Division of Financial Management.

A cover sheet attached to documents the Idaho Capital Sun obtained Monday also seemed to indicate that the Idaho Secretary of State’s office attempted to mail a request for the fiscal impact statement to the Division of Financial Management on April 29, only to have it returned undeliverable due to “insufficient address.”

The Secretary of State’s Office followed up with the Division of Financial Management on May 14, pointing out the letter came back undeliverable and informing Division of Financial Management officials they had 20 working days from receiving the May 14 note to provide the fiscal impact statement.

Fiscal impact statement for initiative at heart of confusion

The fiscal impact statement that was obtained Monday shows the ballot initiative would increase taxes much more than Reclaim Idaho officials promoted.

“For an average Idaho family, e.g. a joint return of median taxable income among joint filers, the change would be $380-$410 in additional taxes per year,” according the fiscal impact statement.

The first line of the impact statement says, “The ballot initiative appears to raise income tax rates (and reintroduces tax brackets) to what they were prior to House Bill 380 of the ID FY21 legislative session.”

Mayville said that is not what Reclaim Idaho is doing. Instead, he said their initiative creates a new tax bracket for those people making in excess of $250,000. It also increases the corporate income tax rate to 8%. House Bill 380 set the top income tax rates at 6.5%.

It was unclear on Monday evening what will happen next or how the uncertainty will be cleared up. Mayville said he will meet with Reclaim Idaho volunteers and reach out to state officials for more clarity. The Division of Financial Management may also issue a new fiscal impact statement based on the correct ballot initiative language.

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