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Lawmakers talk local option sales taxes at Twin Falls policy summit

Lawmakers talk local option sales taxes at Twin Falls policy summit

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Chamber Alliance Twin Falls Legislative Policy Summit

Sen. Lee Heider, R-Twin Falls, speaks Thursday at a legislative policy summit hosted by the Idaho Chamber Alliance in Twin Falls. 

TWIN FALLS — Idahoans can look forward to discussions on local options sales tax authority, liquor licenses and the public school funding formula in the next legislative session, Magic Valley lawmakers and a lobbyist with the Idaho Chamber Alliance said Thursday at a policy summit.

The Twin Falls event, which brought together elected officials and business owners from across south-central Idaho, opened with presentations from groups supporting and opposing a ballot initiative to expand Medicaid in the state. But the most spirited debate came during a segment on local option sales taxes.

Sen. Lee Heider, R-Twin Falls, said he is prepared, if necessary, to carry a bill this session that would let cities and counties vote to implement a local option sales tax to fund community projects. Under current law, only resort cities, such as Ketchum, Hailey and Sun Valley, are allowed to introduce such a tax.

“I personally think it’s a great program,” Heider said. “It can provide opportunities for cities other than resort cities to generate income for projects that citizens want.”

The concept of expanding local option sales taxes to non-resort cities and counties is not a new one for the Idaho legislature. For years there has been talk about what this kind of legislation would look like. But no bills have made it out of committee. “The reason there hasn’t been a bill is because there hasn’t been a good groundswell of support in the legislature to bring it up to date,” John Watts, legislative advisor for the Idaho Chamber Alliance, told the crowd.

But a bill “very likely will come forward” this coming session, Watts said, whether brought by Heider or another lawmaker.

The proposed legislation outlined by Heider would limit the option sales tax at .05 percent for cities and 1 percent for county and intercity projects. It would also cap the length of the tax at 10 years.

Projects would likely have to earn more than 50 percent of the vote to be approved.

The local option tax could be used to fund recreational development opportunities, such as a walking trail, recreation center or performance venue. But it could also potentially be used to fund local government projects, such as the construction of a new fire station or jail, Heider said, in response to a question from Twin Falls County Commissioner Jack Johnson.

Retiring Rep. Steve Hartgen, a Republican from Twin Falls who sits on the House Revenue & Taxation Committee, said he had concerns about the bill. Implementing an additional sales tax in Twin Falls could cause some residents to travel to nearby cities without a tax to make large purchases, drawing customers away from local businesses, Hartgen said.

Hartgen also said he thought it was unfair to tax people visiting from out of town, who may not directly benefit from the funded project.

“This is a tax without representation,” Hartgen said. “The last time this happened, some tea went into the harbor.”

Heider pushed back on that argument, pointing out that visitors benefit from city services while they are in town.

Here are a few other topics to watch this legislative session:

Liquor licenses

A bill expected this coming session aims to crack down on the “black market” of liquor license sales, Watts said. The proposal would give cities the authority to distribute liquor licenses to restaurants and hotels only while tying the license to a specific owner and facility. If that facility changes hands, the license would go back to the city to be redistributed.

Public school funding formula

A committee to explore and rewrite Idaho’s public school funding formula may have a piece of legislation ready by this session, Watts told summit attendees.

“My understanding is they are making really good headway and there may actually be a piece of legislation that comes forward this year,” Watts said.

Rep. Lance Clow, a Republican from Twin Falls, said he anticipates the funding formula will be a “big question” in the legislature this year — particularly how it relates to Idaho’s “career ladder,” a five-year plan to boost teacher salaries.

Internet sales tax

Last year, the legislature passed a bill by Clow requiring some out-of-state retailers to collect and remit Idaho’s sales tax on online purchases. The new law applies to retailers that gross at least $10,000 in Idaho sales annually and have some affiliation with an Idaho-based seller.

In June, the U.S. Supreme Court ruled in South Dakota v. Wayfair that states can require out-of-state retailers to collect taxes on online purchases, even if the seller doesn’t have a physical presence in the state — a development that may lead Idaho lawmakers to take another look at their own law. “With the Wayfair decision, we’re going to have to revisit that and either broaden what we’re doing,” Clow said, “or revise it in some ways to make sure we’re following the guidelines of the Supreme Court.”

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