Tax cuts, education funding will headline special legislative session
Idaho lawmakers will return to Boise next week for a special session designed to further lower taxes and substantially raise education funding in light of a projected $2 billion budget surplus.
Gov. Brad Little announced the special session at a Boise grocery store Tuesday morning, citing high inflation as the driver for the plan.
“The costs of the basic fundamentals to live everyday have skyrocketed in just a matter of months,” Little said.
The Mountain West region has regularly experienced higher inflation than other parts of the country. July’s year-over-year price hike here was down from previous months, but still sits at 9.6%.
The bipartisan plan has 62 co-sponsors, including majorities in both the House and Senate, as well as key committees.
Under the proposal, Idaho’s personal income tax rate would flatten to 5.8% for all earners making more than $2,500. The corporate income tax rate would be set to the same rate.
Those changes are expected to cost $161.1 million ongoing.
The package also includes $500 million for a third round of one-time rebates that could go out as early as September. Each full-year resident who filed tax returns in 2020 and 2021 would get a minimum of $300 or 10% of the tax levied in 2020, whichever is greater.
Finally, if approved, $330 million from Idaho’s sales tax revenue would go toward public K-12 school funding beginning next July. That amount would increase by three percent per year to account for inflation.
Another $80 million would also be dedicated to a new “in-demand careers fund,” though specifics weren’t immediately available.
Two views on funding public schools
That $330 million boost to education funding nearly mirrors the goal of a ballot initiative from the group Reclaim Idaho that’s set to go before voters in November.
The initiative would raise taxes on the wealthy and corporations to cover its costs, but the plan seems moot should lawmakers approve this new legislation.
Even if voters sign off on Reclaim Idaho’s initiative, the tax rate provisions in the proposal would take effect a few days after the initiative in January, essentially overwriting it, according to the Little administration.
The group’s co-founder, Luke Mayville, issued a statement Tuesday afternoon, saying the “bad” elements of the proposal are outweighed by the “good.”
“This proposed investment in education is a big step forward for Idaho and a victory for the thousands of volunteer petitioners and petition signers across the state who’ve called for large-scale investments in our public schools,” Mayville said.
That said, he notes Reclaim Idaho will continue advocating for its ballot initiative for the time being.
Idaho’s largest teachers’ union, the Idaho Education Association, endorsed the plan.
“If approved, this proposal puts Idaho on the right path to correct long-standing structural funding inadequacies crippling public education,” said Layne McInelly, IEA president.
The timing of the special session also appears to be critical to the success of the legislation.
Out of the 62 co-sponsors of the legislation, 25 of them are either stepping down from their seats at the end of the year or were defeated in May’s primary election – including the chairmen of the committees the bill is assumed to go through.
Without those 25 co-sponsors, the proposal wouldn’t have immediate majority support in either the House or Senate.
Little said the special session couldn’t wait until January.
“I was getting asked by people all over Idaho, ‘You’ve got all this money. What are you doing on it right now?’”
When asked whether he thought he had the votes if he would’ve waited for the new class of lawmakers to take office next year, he said, “Who knows?”
Democrats are split on the package
Sen. Janie Ward-Engelking (D-Boise) joined Little, along with other Republican legislative leaders at the press conference Tuesday and signed on to the bill as a co-sponsor.
A longtime educator, Ward-Engelking said she, her Democratic colleagues and Reclaim Idaho have been pushing for more school funding for years.
While she views the tax cuts, and the associated revenue losses into the future, with a critical eye, she said the tradeoff is worth it.
“This is a way to get this going right now,” Ward-Engelking said.
But not all Democrats back the plan.
Assistant House Minority Leader and state Democratic Party Chair, Rep. Lauren Necochea (D-Boise) said the bill “shortchanges working families.”
“Our revenue could have been used to provide meaningful benefits to Idaho families who are struggling with the rising cost of housing, property taxes, and other challenges. This bill continues the pattern of Republican lawmakers heaping more and more benefits onto the well-off,” Necochea said.
Senate Minority Leader Michelle Stennett (D-Ketchum) didn’t put her name on the bill, either. She said she would’ve rather used the money to pay off school bonds and levies to give homeowners a cut to their property taxes.
Lawmakers will convene the special session Sept. 1 at 8 a.m.
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