Idaho County And City Leaders Brace For Personal Property Tax Debate

Idaho Statesman

The Idaho Association of Commerce and Industry's Alex LaBeau is the face of the effort to eliminate Idaho's personal property tax.

Governor C.L. “Butch” Otter and prominent state legislators have lined up behind the idea of eliminating or scaling back Idaho’s personal property tax.  The issue was high on the agenda as local government leaders came together at an Association of Idaho Cities meeting on Friday.

Nearly all property tax dollars collected in Idaho are collected and spent by local governments.  The business personal property tax brings in roughly 10 percent of total property tax collections, sending about $140 million to local taxing districts each year.

Given that, it’s a small wonder that elected officials from cities and counties are crying foul at the notion that state lawmakers might do away with the tax.  After Friday’s panel discussion, Boise City council member Elaine Clegg said reducing or getting rid of the tax in the name of economic development simply doesn’t make sense. 

“Cities are the engine of the economy, and the metro areas in the State of Idaho are where the economy happens for the State of Idaho,” she says.  “And if we’re really serious about making economic development a priority, then we should be looking at providing cities and other local entities with tools to do that.”

Clegg maintains that if lawmakers change the amount of revenue local taxing district will receive from the personal property tax, they should find a way to replace that lost revenue.

The Idaho Association of Counties will put forth its own proposal for how state leaders might scale back the personal property tax, says policy analyst Seth Grigg.  He indicates their proposal would exempt the first $250,000 of personal property from taxation — which would effectively exempt most small businesses in Idaho from paying the tax — and include a mechanism for replacing those tax dollars.

It’s a plan that’s not likely to be well-met by the Idaho Association of Commerce and Industry (IACI), the state’s most powerful business lobby.  IACI President Alex LaBeau spent part of his presentation decrying the idea that lawmakers should make a distinction between big and small business when they address the personal property tax in the coming legislative session.

“To make this delineation is nonsensical in our mind,” he said.  Small businesses and large business rely on each other, he explained, and big businesses have as much right to be free of the personal property tax as their smaller counterparts.  “To segment them out and say, ‘You don’t matter’ is a problem to us,” LaBeau said.

To read StateImpact‘s guide to Idaho’s personal property tax, click here.