House Bill 824 died in a 33-36 vote. The legislation had been reworked twice, and objections from legislators led to $307,000 being cut from the commission’s budget, which would eliminate a statewide e-book collection. The ongoing money had been used annually to purchase new e-book and e-audio titles for K-12 students at all Idaho schools, since many districts lack an adequate book budget. The e-books in the collection are also available to homeschooled students and others through most public libraries.

Republicans didn’t believe the cut went far enough, leading them to kill the bill. Assistant Democratic Leader Lauren Necochea (D-Boise) said it was clear the attack on library funding was motivated by GOP legislators’ desire for vengeance over House Bill 666, which sought to criminalize librarians, being held in the Senate.

“The revised budget already punished Idaho students, reducing their access to books so that House GOP legislators could make a political statement,” Necochea said. “This vote was senseless retribution against the librarians who spoke out against the absurd House Bill 666. When you propose legislation that threatens jail time and fines for librarians, you should expect their opposition. Ultimately, Idaho’s children are paying the price with diminished access to books, especially in schools with limited resources.”

The budget will now have to be revised in the Joint Finance-Appropriation Committee, then pass both the House and Senate before the legislature can adjourn.

The bill, which later passed the House, increases the grocery tax credit by $20 per person starting in the 2023 tax year. The motion sought to amend the legislation to instead repeal the grocery tax versus increasing the credit. Democrats have advocated for eliminating the sales tax on groceries throughout the 2022 session, since it would help Idaho’s working families each time they shop.

“We have been saying all along that if the legislature pushed $600 million out the door for corporate and income tax cuts benefiting the wealthy, we would not have dollars available for meaningful tax solutions that benefit working Idahoans. House Bill 509 illustrates this exact result: all the legislature can now do is promise a modest benefit for regular Idahoans two years from now,” Asst. House Democratic Leader Lauren Necochea said. 

The proposed increase to the grocery tax credit is modest, and doesn’t fully account for inflation that has occurred since the credit was last updated and the expected inflation that will occur before the bill takes effect, Necochea said. Idahoans wouldn’t receive the benefit until they file taxes in 2024. If the state is going to promise this future benefit to Idahoans, Democrats have stressed the need for a bolder proposal providing meaningful aid.

“The House GOP has an ongoing pattern of providing huge tax breaks for people at the top, and only after their priorities are brought to light, throwing occasional bread crumbs to working Idahoans,” House Democratic Caucus Chair Sally Toone said. “Our people need help. We receive calls and emails from constituents daily asking us to repeal the grocery tax. As lawmakers, we have a duty to listen to the people of Idaho, but the majority party isn’t doing that. House Bill 509 isn’t nearly enough. Our working families deserve real help.”

“We need inflation relief now. At 9%, Idaho is a hotspot for inflation and Idahoans need inflation relief, not $20 two years from now,” Rep. John Gannon said. “We also need to address the homeowners exemption and quit borrowing and spending money. Policies need to change.”

House Bill 442 would prevent cities from setting reasonable maximum fees or deposits for residential rental properties, like application fees or pet deposits. With cities unable to ensure these basic protections, there are no checks on unscrupulous landlords who can bankrupt families with exorbitant fees. 

Idaho is home to some of the most overvalued housing markets in America, which ripens opportunities for exploitative practices against desperate renters, and HB 442 weakens the ability of local officials to respond to this crisis. The National Low Income Housing Coalition shows 30% of Idahoans are renters. As the legislation is written, landlords would be able to collect application fees or security deposits from an unlimited number of people, charging whatever they want, without ever having to prove a unit is even available.

“This bill is proof that Idaho renters have no allies in the Idaho GOP. This bill offends the notion that the government closest to the people governs best and paves the way for tenants to be exploited by out-of-state property managers who are gobbling up investment properties at the expense of Idahoans who are increasingly struggling to afford a most basic human need, a place to live,” Rep. Colin Nash said.

“Government should protect consumers from unscrupulous bad actors. This bill protects unscrupulous bad actors from consumers,”  Rep. Steve Berch said.

“Our local communities should have the right to respond to the pressing issues impacting them. The application fee ordinance was the city of Boise’s appropriate response to the predatory behavior that is preventing our neighbors from putting a roof above their heads. Until we have a statewide solution, I will continue to support my community in protecting renters from this egregious behavior,” Rep. Brooke Green said.

“While many long-standing Idaho landlords treat renters fairly, we are seeing an increase in out-of-state investors turning the desperation of renters into quick cash with predatory fees. With a severe shortage of homes and prices skyrocketing, Idahoans are easy targets. This bill takes away the ability of local leaders to provide basic consumer protections so that Idaho families can get a fair shake,” Rep. Lauren Necochea said. 

Rep. Lauren Necochea

We were disappointed to see our high hopes dashed so quickly when the GOP rushed to advance House Bill 436. In doubling-down on the trickle-down approach from last year, Republicans are closing the door on important policies Idahoans want.

It is past time we prioritize working families. Every major tax bill the legislature has passed for more than a decade has prioritized profitable corporations and people at the top of the income spectrum. We must balance this out by focusing on the needs of everyday Idahoans, such as repealing the sales tax on groceries, increasing property tax assistance, and using state funds to plug the holes in school budgets that must be filled by supplemental levies paid for with property taxes. With a $600 million price tag, HB436 will gobble up dollars we need to deliver far more critical tax solutions.

Just like last year’s tax bill, the benefits of HB436 are completely lopsided. The priorities of GOP legislators are upside down when they want to send $8,000 checks to households in the top 1% and $75 to Idahoans who work for modest wages. The ongoing tax benefits follow a similar pattern. The top 1% will receive an ongoing yearly tax cut of $5,000, on average. Idahoans with modest incomes will receive little to no ongoing benefit.

We should instead be putting more dollars in the hands of working families. This is not only popular among Idahoans, it is better for our economy. Working Idahoans power our local economies when they buy groceries, get an oil change, or have their hair cut. Small businesses depend on a strong middle class to thrive.

Rep. James Ruchti

What we do not need are more tax cuts for profitable corporations. HB436 would result in the lowest corporate tax rates of this century, landing at just 6%. Yes, corporations would pay the same tax rate on their profits that regular Idahoans pay in sales tax on food, diapers, medicines, and other necessities.

Bad economics aside, this bill is troubling in another way. As we write this, we are still receiving emails from regular Idahoans asking us to oppose HB436, and instead reduce property taxes, repeal the grocery tax, and make sure schools are well funded. Neither of us has been contacted by a single constituent asking for this bill. Even in committee, every constituent who testified opposed it. Only lobbyists testified in favor.

Our political system is seriously broken when the GOP supermajority rams through a bill that voters are asking us to reject. We don’t believe the legislature has ever thrown such a hefty sum of money ($600 million) at something Idahoans clearly don’t want. Idahoans deserve better. They deserve leaders who will listen and deliver the policies they support.

We have a once in a lifetime opportunity to make the state of Idaho a place where working families can thrive and live their best lives. Let’s use the dollars available to provide meaningful tax reform to working Idahoans and improve our schools. Let’s do what Idahoans are asking us to do.

Rep. Lauren Necochea

House Bill 436 passed and now moves to the Senate. All Democrats voted against the legislation, and instead advocated more critical tax solutions, such as reducing property taxes or repealing the sales tax on groceries — both of which would bolster Idaho’s working families or local economies. The income tax cut is in large part funded by internet sales tax, a more regressive form of taxation paid disproportionately by those with lower and middle incomes, creating a reverse Robin Hood effect.

Per the legislation, someone with $1 million in annual taxable income will receive an ongoing yearly tax cut of over $5,000 on top of a nearly $8,000 one-time rebate. Idahoans with the most modest incomes will receive a rebate of about $75. 

Rep. James Ruchti said Idahoans have expressed a clear desire for property tax relief, a repeal of the grocery tax, and adequately funded schools. However, the bill — which has a one-time cost of $350 million in addition to an ongoing cost of $250 million — effectively precludes the state’s ability to eliminate the grocery tax while meeting the other stated funding objectives.

Rep. James Ruchti

“Idahoans want property tax relief, to be able to feed their families, to have well-funded schools, good paying jobs, and sustainable infrastructure. Nowhere on that list will you find people clamoring for an income tax cut,” Ruchti said. “We need to put dollars in the hands of people who need it most.”

Assistant House Democratic Leader Lauren Necochea said small businesses depend on a strong middle class to thrive, but the legislation does nothing to bolster Idaho’s working families or local economies. Instead, it would reduce the corporate income tax rate from 6.5% to 6%, leaving in place the sales tax rate people pay for food, diapers, medicines, and other needs. 

According to the Idaho State Tax Commission’s Tax Burden Study, Idaho is already below the national average for corporate taxes collected relative to state income, at 1%.

Rep. Ilana Rubel

“What we do not need are more tax cuts for profitable corporations. More than 80% of revenue cuts that benefit corporations ultimately flow out of state. That does not build a vibrant Main Street,” Necochea said. “Our political system is seriously broken when the GOP supermajority rams through a bill that voters are asking us to reject.”

House Democratic Leader Ilana Rubel said the bill highlights the legislature’s blatant disregard for the wants and needs of everyday Idahoans.

“This bill literally takes from the poor and gives to the rich at a time when the state has yet to allocate a single penny in the budget toward education, infrastructure or other vital needs. This is not how responsible government should work. Fix the schools, and the bridges and the critical problems first, then consider whether giant tax cuts that overwhelmingly benefit the wealthy and most profitable corporations make sense,” Rubel said. “I want grocery tax repeal, property tax reductions — the tax cuts that help working families meaningfully, that help fixed-income seniors, and that the people of Idaho actually want.”

Rep. Lauren Necochea

The House Revenue and Taxation Committee forwarded House Bill 436 to the full body in a party-line vote following the public hearing. Every constituent who testified spoke against the bill; only lobbyists were in favor.

Per the legislation, someone with $1 million in annual taxable income will receive an ongoing yearly tax cut of $5,000 on top of a nearly $8,000 one-time rebate. Idahoans with the most modest incomes will receive a rebate of $75. The bill also reduces the corporate income tax rate from 6.5% to 6%, matching the sales tax rate people pay for food, diapers, medicines, and other needs. 

Assistant House Democratic Leader Lauren Necochea spoke against the costly legislation in committee, and said if passed, the bill will gobble up dollars that should be used for more critical tax solutions, such as reducing property taxes or repealing the sales tax on groceries. She added that it does nothing to bolster Idaho’s working families or local economies.

“The priorities of GOP legislators are upside down when they want to send $8,000 checks to households in the top 1% and $75 to Idahoans who work for modest wages,” Necochea said. “We need more dollars in the hands of working Idahoans who power our local economies when they buy groceries, get an oil change, or have their hair cut.”

Rep. James Ruchti

Her comments were echoed by Rep. James Ruchti, who also expressed concern that once the legislature decides to commit funds toward another income tax cut, there would be no money available to address the real needs of Idahoans.

Both said they haven’t been contacted by a single constituent asking for income tax cuts, but many have asked for repealing the grocery tax, meaningful property tax relief, well-funded schools, and sustainable infrastructure.

“It’s clear; this is not the tax bill Idahoans want. Idahoans are very clear that they want property tax solutions and a repeal of the sales tax on groceries. No one is asking for income tax or corporate tax cuts,” Ruchti said. “This year, we have the opportunity to be creative and really invest in our working families. This proposal only leaves them further behind.”

According to the Idaho State Tax Commission’s Tax Burden Study, Idaho ranks 18th for corporate taxes collected relative to state income, at 1% below the national average.

Rep. Sally Toone

The Economic Outlook and Revenue Assessment Committee met Thursday to adopt a revenue assessment. The committee’s recommendation was then accepted Friday by the Joint Finance-Appropriations Committee (JFAC) for budgeting purposes. 

The Republican legislators on EORAC voted to adopt the governor’s forecast, which was lower than almost every committee member’s, as well as the various modeled projections from experts. House Democratic Caucus Chair Sally Toone made a substitute motion to adopt a realistic revenue estimate: the average of projections from EORAC members and experts. Her motion failed on a near party line vote with Democrats supporting it.

For Fiscal Year 2023, EORAC adopted a revenue estimate of $5.464 billion, even though the committee’s average projection was $5.515 billion. Since JFAC adopted the recommendation

Rep. Lauren Necochea

Friday, there will be $51 million less available for budgeting during the current Legislative Session. The State Tax Commission projects revenue at $5.693 billion for that year. If the committee had adopted the Tax Commission projection, the legislature could have put an additional $229 million to use to meet the needs of Idaho communities. 

For this current year, the governor’s forecast adopted by the committee is just 3.6% growth, while the Tax Commission predicts 7.2%.

“Idahoans deserve transparency and honest math when it comes to our budget. We know GOP politicians like to take credit when revenues come in above projections, as they are doing now with the so-called ‘surplus.’ But that’s just celebrating bad math,” said Toone, a former math teacher. 

Sen. Mark Nye

“When we politicize and lowball the revenue estimate, we take opportunities off the table. Boosting property tax assistance for seniors is just one critical priority that the governor excluded from his budget. We can more easily identify dollars to reduce property taxes if we use an accurate revenue estimate that balances what the Tax Commission, other experts, and the members of this committee project,” said Rep. Lauren Necochea, the assistant House Democratic leader. “An artificially low revenue estimate places unnecessary limitations on what we can accomplish for Idahoans.”

EORAC also accepted a lowball revenue last year, which contributed to the current gap between actual and projected revenues. The GOP is touting it as a “surplus” even as basic responsibilities go unmet. For example, inadequate state funding for schools translates to schools needing supplemental levies just to maintain basic operations.

“We’ve been putting off fixing our ‘roof,’ and now, we have the money to do it and more,” Sen. Mark Nye said. “Our deferred maintenance alone approaches nearly one half of the so-called surplus. We have to take care of what we built — and this is after we take care of our kids.”

The proposed one-time tax rebate increases with income level, so the higher one’s income is, the more money they will receive. The ongoing revenue cuts also direct the largest benefits to the top of the income spectrum. Someone with $1,000,000 in annual taxable income will receive an ongoing yearly tax cut of $5,000 on top of a nearly $8,000 one-time rebate. Idahoans with the most modest incomes will receive a rebate of $75.

“This costly legislation will take other opportunities off the table such as reducing property taxes or repealing the grocery tax. Every major tax bill in Idaho for at least the last decade has prioritized profitable corporations and the wealthy,” Rep. Lauren Necochea said. “We have an opportunity this year to prioritize working Idahoans and bolster our middle class. I’m extremely disappointed to see that squandered with more of the trickle-down approach.”

“In my district, I simply don’t hear my constituents complaining about their income taxes being too high. But I do hear frequent complaints about property taxes being too high. That is the problem my constituents want fixed,” Rep. James Ruchti added.

First, GOP legislators ended the annual adjustment to the homeowner’s exemption that used to keep pace with housing prices, causing a dramatic shift of the property tax load away from commercial property and onto homeowners. So, even if county budgets didn’t increase by a penny, the legislature caused property tax on your home to increase every year. Meanwhile, many corporations have watched their property tax bill decrease while yours goes up. GOP legislators slightly increased the exemption this year, but not nearly enough to remedy the harm they inflicted on homeowners by ending the indexed exemption.

Second, they severely underfunded schools, with the lowest per-student education investment in the nation. This forced voters who want adequate schools to pass bonds and levies, further spiking property taxes. Want to fix the school roof before it collapses? Better pass a bond — the legislature won’t help. Want full-day kindergarten? Or enough operating funds to stay open five days a week? Better pass a levy — the legislature won’t help.

Third, for 14 years GOP legislators stopped every effort to increase property tax assistance for low-income seniors and veterans. This year they allowed a miniscule increase in the aid amount for some, but financed it by kicking 4,000 people out of the program.

Reps. Ilana Rubel, Lauren Necochea, and Sally Toone

Fourth, they denied local government their share of internet sales tax. You buy a shirt at Target, 11% of the sales tax collected funds local government. But if you buy that same shirt on Amazon, GOP legislators have blocked local government from receiving any of the tax collected. As sales have shifted online, this has hit local governments’ revenue stream and forced them to rely more on property taxes.

Finally, the GOP bill shamefully touted as “property tax relief” limits taxes that can be collected based on new development, blocking growth from paying for growth. Thus existing homeowners must either pay more in property taxes to make up for the deficiency (as happened in Meridian, which was forced to raise property taxes by this legislation), or suffer cuts to vital local government services like police, fire, and paramedics. Cities like Caldwell and Ketchum, already operating on tight budgets, were forced to halt new construction, exacerbating the state’s housing crisis.

For years, GOP legislators have blocked every bill providing meaningful relief, like capping assessment increases, restoring the indexed exemption, treating internet sales tax the same as regular sales tax, and increasing property tax assistance for low-income seniors and veterans. The result has been rising property taxes driving people from their homes.

A recent study from the Idaho Office of Performance Evaluations showed it isn’t “spendthrift counties” causing the problem. County populations went up 39% over the last 20 years, but their budgets only increased 27%. Counties are running extremely lean budgets that underspend compared to population growth.

Rather than admit to having caused the problem or try to fix it, GOP legislators are pointing fingers at innocent local government officials. You deserve the truth, and we hope you will respond by electing legislators who will work to reduce your property taxes while preserving vital local services. Idahoans need leaders that deliver real solutions, not scapegoats.

House Democratic Leader Ilana Rubel and Assistant House Democratic Leader Lauren Necochea spoke on the legislation, which slashes income tax rates with the benefits flowing overwhelmingly to those at the top of the income spectrum.

Rep. Ilana Rubel

The legislation also provides a lopsided one-time tax rebate equivalent to 9% of a taxpayer’s state income tax due in 2019, or a floor of $50 per person. Under the bill, a couple bringing in $1 million annually would receive more than $10,000; while a couple making $50,000 would receive only $113. The ongoing tax cut for the household earning $25,000 is only $13 a year.

“I have knocked on more than 20,000 doors during my time in the legislature. Countless voters have spoken to me of their desire for reduced property taxes, better-funded schools, affordable housing and investment in infrastructure. Not one has ever asked for bigger tax cuts for the wealthy. Idahoans’ true priorities are severely jeopardized by HB332 — the money we need to solve their real problems will be gone. I dare the proponents of this bill to knock on their constituents’ doors and ask what they think of a bill that gives $13 to the poor and $10,000 to the rich, while diminishing the funds available for education by almost $400 million.” 

House leadership used procedural maneuvers to hastily approve this bill, which also threatens Idaho’s COVID-19 relief package. The American Rescue Plan Act allocates $1.2 billion for Idaho, but will likely be clawed back dollar-for-dollar if the state enacts this tax cut. House Bill 332, at a cost of $390 million, puts one-third of our relief dollars in jeopardy in this first year. Idaho could stand to lose more of those relief funds due to the out-year costs of the bill.

Rep. Lauren Necochea

“This is not the tax bill that Idahoans want. The vote today demonstrated that the House majority is not listening to Idahoans and is uninterested in responding to the needs of working people,” Necochea added. “This is a very costly bill. We ought to be taking a balanced approach, increasing investment in education and delivering targeted tax reform that benefits working Idahoans. This deep revenue cut locks us in at 50th in the nation for school investment.”

Necochea submitted legislation weeks ago to create a sliding scale tax credit for working families and increase the child tax credit, while making it fully accessible to all families, as part of the Democrats’ Idaho Working Families Agenda. It has been denied a hearing.