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.