BOISE, Idaho (AP) -- About 90 percent of 53,000 Idaho personal property taxpayers would see the annual assessments eliminated under a measure that cleared the House Revenue and Taxation Committee on Tuesday.
With scant debate, the panel voted unanimously to send the proposal to the House floor. The quick action reflected the importance of the issue elevated by Gov. C.L. "Butch" Otter to one of his 2013 priorities.
The bill, promoted by the Idaho Association of Counties, exempts companies' first $100,000 worth of business equipment while also extending the break to railroads, regulated utilities and pipeline companies.
Local governments would see roughly $20 million in annual revenue lost in the move replaced by money generated through Idaho's sales tax — cash Otter has already set aside in his budget.
"We're hopeful it provides a path forward for the Legislature to deal with the personal property tax this year," Seth Grigg, the counties' lobbyist, told the panel about the bill.
Many residents have dubbed the tax on business personal property "Idaho's most hated tax," because it forces businesses to keep tabs on the value of desks, computers, chairs and other property — a tedious process they say involves higher administrative costs than revenue for Idaho.
The counties' proposal would streamline the reporting process for small and medium businesses by requiring reports just once every five years, instead of annually.
It is far more modest than the $120 million proposal floated by the Idaho Association of Commerce and Industry, which favors phasing out the tax for nearly every payer — including the biggest personal property taxpayers such as Micron Technology Inc. and J.R. Simplot.
Under the county plan, Micron, Simplot, Idaho Power and other heavyweights would see relatively little relief compared with the size of their total property tax bill.
Lawmakers appear to have concluded industry's plan is too ambitious, given the revenue Idaho has available to maintain funding for local governments.
Rep. Steve Hartgen, R-Twin Falls, praised the bill as a good first step, indicating that increasing the exemption is always an option.
"This is, in fact, a removal of a tax," Hartgen said. "It may not be as much as we would have liked under certain circumstances."
Following the vote, association president Alex LaBeau declined to take a position on the counties' bill.
Later, in the Capitol's basement hallway, LaBeau pointed out that not a single person from the private business community testified in favor of the county's bill.
"It's interesting that government seems to think it knows what is best for business better than business does," he said. "You'll notice the only people who testified in favor of the bill were from government."
Groups that did testify in favor of the bill, along with counties, included the Idaho School Boards Association and the Idaho School Administrators Association. They objected to the industry-backed proposal, largely on grounds that it would narrow the tax base for future tax levies.
For instance, many of Idaho's 115 school districts rely on supplemental levies to help cover operations. Schools feared that under industry's plan, the cost of future levies would shift to homeowners' local property taxes, making voters less likely to support educational ballot issues. Under the county plan, there's still a shift, but one school officials estimate it will be modest enough not to hurt their cause at the polls.
Under the county measure, purchases up to $3,000, including shipping and installation, would be exempt from future personal property taxes.
Asked how Idaho would make sure businesses were disclosing those purchases accurately, Grigg told lawmakers the State Tax Commission would do what it always has: Trust taxpayers.
"The fact of the matter is, dealing with the personal property tax, we've always relied on the honor system," he said.
Minority Democrats in the House, at least, think there's now little real opposition to the bill. "I think it's greased," said House Minority Leader John Rusche, D-Lewiston.