Not long ago, Sen. John Tippets (R-Montpelier) found himself in a peculiar spot. This summer and fall, influential lawmakers and the Idaho Association of Commerce and Industry made it clear that phasing out or eliminating Idaho’s tax on business personal property would be a focus of the 2013 legislative session.
Tippets is a public affairs manager for fertilizer producer Agrium. It’s the parent company of Nu-West Industries, which pays the biggest business personal property tax bill in Caribou County. Tippets represents the company on the board of the Idaho Association of Commerce and Industry (IACI), which has championed getting rid of the tax.
Still, Tippets’ view on the issue was clear. More than any other county in Idaho, Caribou County depends on personal property tax revenue. He had to support his constituents.
“My position was that I would not support repeal of the personal property tax if it’s going to negatively impact the services that cities, counties, schools and other local taxing districts are able to provide,” Tippets said.
Agrium went along, even though the company could save more than $600,000 each year if the tax goes away. Another multinational company with a presence in Caribou County, Monsanto, has also come out against a repeal.
Only one other of the state’s top personal property tax payers reached by StateImpact has said it opposes eliminating the tax. That company is utility Avista, which is not an IACI member. Its regional business manager said in a Lewiston Tribune op-ed that the company “does not support the elimination of property taxes at the detriment of communities in Idaho.”
Many of the companies
StateImpact contacted have kept their cards closer to the vest. “With our substantial presence in Idaho, Union Pacific would receive a proportionate benefit should the Legislature decide to end the personal property tax,” reads part of an emailed statement from a Union Pacific spokesman.
A Simplot spokesman passed on offering comment. The company is the top personal property tax payer in Power County, which relies heavily on personal property tax revenue.
Anheuser-Busch and ConAgra — parent companies of some of the state’s largest payers — said they are IACI members but have not been active on this issue. Several other companies, including Idaho Milk Products, Glanbia Foods, Inc., and Sorrento Lactalis, Inc., did not return calls.
Only a few top payers we contacted have indicated they favor eliminating the tax. Those are Micron Technology, Idaho Power, and Clearwater Paper Corporation.
“We have a policy from the 1900s being applied to the 21st century,” Micron government affairs spokesman Mike Reynoldson said.
Idaho Power was less direct. “Since there’s no bill at this point, we don’t have anything to say about the issue,” said spokeswoman Stephanie McCurdy in a voice mail message. “I would say talk to IACI, because they speak for the industry on this issue.”
Clearwater Paper spokesman Matt Van Vleet says the company supports the eventual elimination of the tax, but with an eye toward the welfare of local government.
“For us, the tax requires a significant amount of time and resources to process,” he said. Not only is the tax an administrative burden, he said, but it’s unfair. “All of our shipping and receiving equipment, we pay sales tax on that,” he explained. “And then we pay personal property tax on that.”
According to an estimate from the Idaho Center for Fiscal Policy’s Mike Ferguson, Idaho Power could save more than $15 million in personal property tax if the tax goes away. Micron paid well over $3 million in personal property tax in 2011. Clearwater Paper paid more than $2.5 million.
Sen. Tippets says he thinks lawmakers lately have become more cognizant of the purposes those tax dollars serve at the local level.
“I think that the worst-case scenario for taxing entities is probably off the table at this point,” he said. “There was talk early on that the tax could be repealed and there would be no replacement. I don’t hear much talk about that at this point.”