Rep. Collins: We Don’t Have The Money To Get Rid Of Idaho’s Personal Property Tax
Molly Messick / StateImpact Idaho
Rep. Gary Collins has served on the Revenue and Taxation Committee for 12 years.
Rep. Gary Collins, a Republican from Nampa, heads the Revenue and Taxation Committee. It’s a powerful position, because all tax bills originate in the House. What’s more, there’s bound to be particular attention focused on the committee this session as the Idaho Association of Commerce and Industry, the state’s most powerful business lobby, pushes for a repeal of the personal property tax.
In Idaho, the personal property tax only applies to personal property used for business purposes. According to a recent estimate from the Idaho State Tax Commission, revenue from the personal property tax totaled $141 million in 2012. Nearly all of Idaho’s property tax revenue is collected and spent by local governments.
Collins began by talking about the possible courses of action with respect to the personal property tax when we met in mid-December. This interview is one of several conducted by StateImpact to preview the 2013 legislative session, which begins Monday.
A: It’s not a new subject to Revenue and Tax. We passed a piece of legislation back in 2008 that would have exempted the first $100,000 worth of personal property, which would have covered a large percentage of the businesses here in Idaho. But one of the things we had to do in order to get it passed by both bodies was to put a trigger on it. Since the economy has went in the tank since then, the trigger has never been met.
There’s talk of taking the trigger off of that particular piece of legislation. There’s talk of maybe moving it to $250,000. The $100,000 – and these figures could vary – we’re looking at around $18 million as far as a hit to the counties. And the $250,000 would be in the neighborhood of about $10 million more than that, approximately. Then there are those who have expressed that they want to take it off of everything. I haven’t talked a lot to our caucus to get the feeling, and I can’t speak for the Speaker. He was on the committee and voted for the initial bill.
It’s going to be one of the bigger issues on Rev and Tax, but we have to decide which way we’re going to push. We’ll try to make a decision on which is the most feasible, and that’s what we’ll go with.
Q: When you say “which way we’re going to push,” do you mean the $100,000 exemption, the $250,000 exemption, or exempting personal property entirely?
A: Yes, exactly.
Q: There must be bills floating around for each of those ideas, at this point.
A: I’m sure there are. I haven’t seen them yet, but I’m sure there are. And of course, the $100,000 is already a piece of legislation. We would just have to tweak it a little bit.
It’ll be an interesting topic. I’m much in favor of it. The counties have a good point. There are counties that it’s as low as one or two percent of their total budget, but there are counties that are the low 40s, as a percent of their budget, so something is going to have to be worked out. We can’t just pull that out from under them and leave them to figure it out on their own.
Q: When you say that you’re in favor of it, do you mean you’re in favor of one of these three options, or is there a particular one that you favor?
A: I’m in favor of taking as much of the personal property tax off as we possibly can. I’m not going to come out in favor of one particular thing right at this time, but like I said, I voted for the $100,000 one, so I obviously supported that.
I’ve been to a number of different meetings over the last couple of months, and I’m sure I’ll be to a few more, from the counties as well as proponents of taking it clear off. The counties are in favor of it, but they have a big concern about taking the whole thing off.
With any tax issue that we do, there’s always some type of a shift. With $18 million, the lower one, that’s not a huge amount when you spread it across the state. But $140 million — that’s a big hit.
Q: It sounds like you favor replacement revenue of some sort. Is that right?
A: I don’t know that I would say that I am in favor of replacement, but I am in favor of trying to work out something so that those counties that really rely on the personal property tax don’t end up shifting the tax someplace else. That would defeat the whole purpose of it, in my opinion. If it got shifted from personal property to property tax, for example. I am against that.
Q: In your mind, what would be the options for helping out the taxing districts that are heavily reliant on the personal property tax, apart from just creating a formula for replacing that revenue using state funds?
A: Well, of course we took the personal property tax off of agriculture a few years ago. That amounts to about $12 to $13 million a year, and we replaced that. Of course, if we’re talking about $140 million, the budget has been dramatically reduced over the last couple of years, so there is not $140 million that could be put out to replace the whole thing in the counties.
I hate being pessimistic, but I feel that – especially with the mess our federal government is in right now – we don’t have the money. Maybe for the $100,000 or $250,000 exemption, but the total amount? I don’t see that. Let’s say it was $140 million over a six-year period — that’s still a hefty chunk of money that would have to come out of the general fund each year.
Q: You’re saying that’s a conundrum.
A: Yes, it is. And that’s what we ‘ll have to deal with. I’m sure we will work something out, but the particulars of it – I couldn’t say, right now.
Q: A couple of people – Alan Dornfest at the tax commission, along with Speaker Bedke – have talked about the importance of clearly defining what personal property is. Is that something you think you all have to take up?
A: We had a little bit of that with the last piece of legislation. That was a problem at that time – defining what is going to be taxed by Idaho and what isn’t. It’s a huge thing.
The tax commission is a resource for us. They’re the ones that enforce our tax laws, so they’re going to have to weigh in a little bit. They will give us their opinion and we will decide whether we think it’s right or not. It’ll come down to the legislature deciding what we think is real property and what isn’t.
Q: There are other issues that are expected to figure heavily this session, like whether to create a state-based health insurance exchange and expand Medicaid.
A: Well, the health insurance exchange has been something that we’ve been talking about for many years, since long before the Affordable Care Act was put on the books. I was in favor of it at that time. Of course, I had an insurance agency for many, many years, and I still have an insurance license.
The governor has weighed in. He kind of supports it, I think. He’s in the same position that we are, in that the rules are being written as we sit here today. We really don’t know how much control we’re going to have, how much control the federal government is going to have.
I’m co-chair of the Health Care Task Force. We had a piece of trial legislation that we passed out of the committee last year, but things changed after we passed that. A lot more information came out, and it didn’t go anywhere. It never even got a hearing.
Q: Was it really that a lot of things changed in that time, or was it just that lawmakers were hoping the Supreme Court would overturn the Affordable Care Act, or the election would overturn it. Were people just saying, “Let’s see if this whole thing goes away”?
A: To be honest about it, it’s probably the fact that a lot of us were hoping we’d have a different president. A lot of us were hoping, first off, that the Supreme Court would do away with the mandate. So it will be a major issue.
The Medicaid expansion is not supposed to be tied to that, but in a sense it is, because the health insurance exchange is, in my opinion, a portal to put people in Medicaid. Basically they would go to the insurance exchange, fill in the information, and if they qualify for Medicaid it just kicks them into Medicaid. I think that would also be an issue. Our caucus will have to decide which way we’re going to go.
Q: Do think there will be an attempt to come to a decision on the Medicaid expansion this session, even though there isn’t the same kind of deadline pressure that we have with the health insurance exchange?
A: Not as much as there will be with the health insurance exchange. I do think they’re tied together a little bit, but it depends on how fast things move as far as getting a piece of legislation and moving it through committee.
The Department of Health and Welfare, in their reports, has been moving along regardless of what we’re doing right now, to try to improvise and put in force what they have to do in order to do it. And that, again, is a proposition that’s in motion all the time, because the rules are changing all the time.
Q: What’s your thinking about the Medicaid expansion? Do you think it’s something the state should do?
A: Well, the proponents say it looks good on paper. So much of it hinges on what the federal government will reimburse us for. Not being one who has a lot of faith in what’s going to happen federally as far as our budget – sure, the piece of legislation says they will reimburse us 100 percent for a certain length of time and then it will go to 90 percent from there. But it doesn’t take a rocket scientist to figure out how much is going to be transferred back to the Idaho taxpayer, eventually.
The only other thing we would have a choice on is the type of benefits we would offer.
Q: Do you mean the state should establish a stripped-down benefits package for people who become eligible under the expansion?
A: That’s what we’ve always tried to do, even now with the Medicaid packages that we have. We try to keep it as bare bones as possible, but try to take care of people in a way.
Because the federal government is paying the major share of it, they control what we do, to a certain extent. They’re constantly pushing to cover more and more. It’s a constant thing. I would like to see as many people insured as possible, but it all costs money, and I don’t see where the federal government is going to come up with the dollars.
Q: Stepping back, what other issues should we be thinking about?
A: I haven’t been exposed to anything else big that’s coming down. I will have a very different committee than what we’ve had over the last few years. I’ve got a lot of new people. Probably what we’ll do the first week or two is try to get those people up to speed.
Of course, the gorilla in the room is the budget. Where are we going to be and what are we going to do? Things look better, but they’re far from being good. Far from being good.
This interview has been edited and shortened.
