Idaho Democrats say governor, GOP have given too many tax breaks to special interests

Idaho Dems: GOP lets special interests rob revenue

BOISE, Idaho — Republicans have let special interests loot from Idaho’s revenue stream by giving them special tax breaks, minority Democrats charged Tuesday in an angry response to Gov. C.L. “Butch” Otter’s bid to cut education and state agency funding.

House Minority Leader John Rusche, D-Lewiston, said Otter’s $2.46 billion budget proposal for fiscal year 2011, down from $2.5 billion in the year ending June 30, continues to slash critical services without a long-term job creation strategy.

Democrats, who hold just 25 of Idaho’s 105 legislative seats, were particularly incensed that Republicans haven’t more heartily embraced the elimination of state tax exemptions. Idaho has dozens of sales tax exemptions and exceptions worth some $1.7 billion annually in 2010, according to the Division of Financial Management.

Getting rid of the tax breaks would boost revenue and help pay for public education, the Department of Parks and Recreation and Idaho Public Television, all of which stand to see their funding slashed or eliminated under Otter’s plans.

Culling exemptions could reduce taxes for all sectors — rather than have only a few companies benefit, Democrats said.

But calls for similar action have failed in recent years. In 2008, the Republican-dominated House tax committee rejected measures to repeal five Idaho sales tax exemptions, saying that selecting which breaks to eliminate would be unfair.

Republicans countered Tuesday that eliminating exemptions during the two-year-old recession would amount to a tax increase on businesses that would hurt a possible economic recovery. And they said exemptions considered the most-likely prospects for repeal wouldn’t produce enough money to avoid cuts to Idaho schools, universities and other agencies.

In 2008, the five exemptions that survived the House Revenue and Taxation Committee — on purchases by funeral homes, ski resorts, free newspapers, vending-machine owners and for some automobiles — would have produced only about $4.5 million, had they been eliminated.

“Putting a sales tax on caskets is not going to save this budget,” said House Majority Leader Mike Moyle, R-Star.

Still, this issue is likely to become a central 2010 election theme.

A Democratic candidate for governor, Keith Allred, has called for exemptions to be trimmed and said the absence of such proposals from Otter’s State of the State speech Monday showed a lack of vision for pulling Idaho out of its deepest economic malaise in 40 years.

“If we do this, lives will be better for it,” said Allred, former head of the nonpartisan government reform group The Common Interest.

Otter campaign aides didn’t immediately return an e-mail seeking comment.

But the governor indicated in Monday’s address he instead favors measures to eliminate the personal property tax that businesses now pay on their equipment. He also said he’d like to create tax credits for infrastructure construction investments and home buyers — similar to a program used in Utah — to spur the economy.