Lawmakers at the Idaho Capitol in Boise will no doubt consider many bills in the upcoming legislative session beginning Jan. 10, but a statewide tax policy review process won’t be one of them, according to two legislators who are working on the subject.
Reps. Steve Berch, D-Boise, and Rick Youngblood, R-Nampa, requested a report in 2020 from Idaho’s Office of Performance Evaluations to determine if and how a review process for tax exemptions could be implemented by the Legislature. The office produced its findings in March, saying while the Idaho Legislature reviews direct spending every year, there isno process for reviewing those policies and their effects in the years after they’ve been approved. Idaho isone of 16 states without this type of review for tax exemptions, which are sometimes called preferences.
Idaho has at least 42 exemptions for income tax, 80 exemptions for sales tax and 44 exemptions related to property tax, and also exempts taxes for many services, including agricultural and industrial services. Without property tax exemptions included, the total estimated revenue that was not collected because of exemptions in 2020 was more than $3 billion, according to the report. Researchers also determined the lack of a review process means it is difficult to estimate the value of certain exemptions that have been in Idaho Code for 50 to 60 years, if not longer, and therefore the revenue impacts of the exemptions are considered unknown.
Idaho legislator anticipates upcoming session will be short as primary date looms
Berch and Youngblood met several times over the summer and fall months to discuss the report and potential next steps forward, but they said a solid bill for legislators to consider won’t be ready for this session. Youngblood said the fact that the 2022 legislative session will happen at the beginning of the election cycle makes it too difficult to tackle this subject, but he remains committed to the idea. Berch said the same.
“It’s an election year, and it’s going to be a very interesting one, and I suspect that there’s also going to be a strong desire for it to be a very short session,” Berch said. “What I would anticipate is that this conversation will continue from leveraging the work of (the Office of Performance Evaluations), but we’re going to have to get through the immediate political reality and priority of getting through the next session in an election year.”
Idaho’s primary election will take place May 17, 2022, if Idaho’s redistricting process isn’t slowed by legal challenges, and the general election will be held on Nov. 8, 2022. The deadline for candidates to file for statewide office is March 11.
The 2021 legislative session began Jan. 11 and recessed on May 13 after a vote from the House of Representatives to adjourn until later in the year rather than adjourning until 2022. Legislators reconvened in mid-November and House members attempted to pass several pieces of legislation related to vaccines, but the bills died in the Senate State Affairs committee. In total, the 2021 legislative session was 311 days, by far the longest in Idaho history.
“So they’re going to be under intense pressure to keep this session short and sweet and quick,” Berch said. “Trying to address probably what is the most difficult, thorniest issue that any legislative body anywhere has to deal with — tax policy — is not something that they probably want to put on their plate at this particular time.”
The next step, Berch said, is confirming there are enough legislators who acknowledge the state should have a review process and reaching out to other potential stakeholders to start a collaborative process before bringing any legislation forward.
“Once you can get that agreement with people in a somewhat informal setting, then you can shift the convo from ‘what’ to ‘how.’ So we can agree that yes, the time has come to take a focused look on this aspect of tax policy. How do we move it forward with an understanding of current processes, resources and climate?” Berch said. “If we can establish that there is a will, then the next step is to figure out the way.”