Idaho

Bringing the Economy Home

Nixing Personal Property Tax Would “Devastate” One Eastern Idaho County

Molly Messick / StateImpact Idaho

Power County Hospital is funded in part by taxpayer support. A good deal of those taxpayer dollars will disappear if lawmakers eliminate Idaho's business personal property tax.

This week, we’re devoting some time to understanding Idaho’s business personal property tax. Ending that tax is a priority for the governor and some of the state’s biggest businesses. But it generates millions for local government. Yesterday, we explained what the personal property tax is. Today, we go to Power County, in eastern Idaho. Local leaders say getting rid of the tax could have serious effects.

Here’s the full transcript:

MOLLY MESSICK: Power County doesn’t look like much, if you see it from the highway. But people who live here are loyal. You can hear the pride in hospital administrator Dallas Clinger’s voice, when he talks about what he fondly calls “our little hospital.”

DALLAS CLINGER: We have a small emergency center, one major trauma room and then a smaller treatment room…

MESSICK: It has 10 beds and two doctors, and it provides long-term care to 14 elderly residents. It has modern equipment, but the building hasn’t changed much in decades.

Molly Messick / StateImpact Idaho

Power County Hospital Administrator Dallas Clinger

CLINGER: It’s not a big hospital; it’s a small hospital. But it’s so critical to our area.

MESSICK: Critical because parts of Power County are downright remote. Clinger says this hospital is saving lives. That’s part of why he has joined the fray. He wants state lawmakers to keep Idaho’s personal property tax.

CLINGER: If it does go away – I’m not sure what we’ll do. I will do everything in my power to keep this little hospital going, because I love it and I know that there’s a huge need for it here. But numbers don’t lie. I don’t know what we’ll do.

MESSICK: Here’s the bind Power County Hospital is in: local taxpayers help keep it afloat. An unusually large amount of the total taxable property in Power County is personal property. If that personal property is suddenly exempt, 40 percent of the tax base that brings revenue to Clinger’s hospital will vanish. A break-even budget will fall into the red.

VICKI MEADOWS: It’s difficult for a small county, Power County, to get the ear of the legislators…

MESSICK: Vicki Meadows is a county commissioner.

MEADOWS: It’s kind of a difficult battle to have.

MESSICK: Meadows was born in Power County. She’s a fourth generation farmer. She says she doesn’t know how the county will pay for important services if its personal property tax revenue is cut in half. She wonders what they’ll do about local law enforcement and road maintenance. And she’s skeptical about one of the arguments for getting rid of the personal property tax: that it will boost growth.

MEADOWS: In order to get Idaho to grow, we have to have the services.

MESSICK: Maybe Boise will be able to capitalize on the tax cut, she says. But no one’s going to plop down a business in a place with bad roads and no hospital. She hopes that realization is dawning on other small communities, too.

MEADOWS: I think people are saying – “Hey, whoa, wait! All of my taxes aren’t bad. I want that snow plow to be in front of the school bus on Monday morning.”

Emilie Ritter Saunders / StateImpact

Click on the map to see which companies will benefit most if Idaho's personal property tax goes away.

MESSICK: It’s a particular kind of rural place that will lose a big share of total revenue if the business personal property tax goes away. The steepest cuts will come in towns and counties where home values aren’t high, but there is some local industry, like a mine or a manufacturing plant that involves expensive — and taxable — equipment. Meadows is worried her community could go bust.

MEADOWS: If we lose this, we lose our county.

MESSICK: She isn’t speaking figuratively. We’re sitting in her truck outside the courthouse. She’s late for a county commission meeting when she starts wondering aloud about the process for dissolving a county.

MEADOWS: In all reality, this county could have to be – and I don’t even know how that works! I don’t even know if the Legislature knows how that works. I don’t know if there’s ever been a county dissolved. I know there’s been counties that have been split into two different entities.

MESSICK: I’m a little surprised. You’re actually thinking about dissolving the county?

MEADOWS: I think it’s something that we have to look at.

MESSICK: “How can the county function on half the revenue?” she asks. It’s the same story at the school superintendent’s office. Ron Bolinger has spent 40 years working in the local school system. I ask him what he’ll do if the tax on personal property goes away, costing the school district well over a million dollars. Does he have a plan?

RON BOLINGER: At this point in time the answer is no. Quite honestly, I don’t know how we would be able to cope with that. It’s just too great of a loss.

MESSICK: The school district is in pretty much the same spot as the hospital. If the tax base suddenly shrinks, so does its ability to raise money from taxpayers.

BOLINGER: It provides a devastating circumstance. Not just a bad situation, but a devastating circumstance.

MESSICK: Two of Power County’s biggest personal property tax payers are companies you’ve heard of: Simplot and Lamb Weston, owned by ConAgra. Together, they pay more than $2 million in personal property tax in Power County. I asked both companies if they support eliminating the tax, given the impact that could have in some rural communities. Both declined to comment.

As I ended my interview with Dallas Clinger, the hospital administrator, I asked this question: Does he think state lawmakers will repeal the tax? Does he believe the local hardship he and others describe could actually happen? He pauses.

CLINGER: I really believe that I have to work as though it were going to be fully implemented. It has such a negative impact on me, on my community, on my hospital, on my school.  So I have to go as though this is on a railroad train headed at full speed, and I’ve got to stand on the tracks and try to stop it.

MESSICK: Clinger is a conservative guy, and he thinks of himself as pro-business.  He doesn’t see the effort to repeal the personal property tax as a Republican effort.  He just sees it as a bad idea.

For StateImpact Idaho, I’m Molly Messick.

Listen to the first story in this two-part series here.

Comments

  • NotChickenLittle

    This is misleading to say the least. It may be accurate to say that personal property tax represents 40% of the property taxes paid in Power County, but property taxes are not the only, or even the largest source of revenue for the county. Power County taxing districts have a total budget of more than $48 million dollars. Of that only $11.5 million is property taxes, 40% of which are personal property taxes. The rest of the money comes from the state and federal government, including sales tax revenue sharing, as well as fees, taxes and over-ride levies. When you look at the total budget, the personal property tax revenues equal less than 10% of the total budget. If you phase the repeal in over 6 years that is about 1.5% less growth in local government budgets than would have occured without leaving the dollars in the pockets of those businesses who actually earned the money. Government always thinks they know better how to spend other people’s money. You can shout “the sky is falling” all you want, but it does not make it so.

    • NotChickenLittle

      My numbers are inclusive of ALL taxing districts in the county in aggregate, including the county, cities, hospital, schools, highway districts, etc. They come from the state tax Commission. However we can use your numbers to illustrate the same principle. You say the county has an ANNUAL budget of $10.17 million, with $3.5 million coming from property taxes, both personal and real. According to your story, 40% of total property taxes is from personal property taxes, or $1.4 million. That amount is still only about 13.7 % of their total budget using your numbers. I think you must be somewhat confused to state that the rest of the funding for their budget besides fines, fees, grants, etc. comes from “unexpended contingency funds set aside for things like economic development, property improvements, a capital crimes defense fund, etc.” Those are not ongoing sources of funds that would be used for annual budgets but are monies that have been set aside for specific projects, kind of county savings accounts from past years. Therefore, by definition they cannot be said to be sources of funding for an ongoing, annual budget or else the county is deficit spending. The claim by the county officials that they will be devastated without personal property taxes, even in Power County, the most extreme example in the state, is unsubstantiated when you compare the more than 20% cuts in spending the state had to make during the 2009-2010 budget years. Their loss of 13.7% is not nearly as extreme as the state has just lived through. Why do most reporters automatically see a cut in government funding as bad, while leaving the money in the hands of the businesses who earned it would be far more beneficial to the local economy and community.

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