ID counties tout personal property tax relief plan

BOISE, Idaho (AP) -- Counties want the Legislature to dump Idaho's personal property tax for virtually all small- and medium-sized businesses, according to a bill introduced Thursday that will be considered against a competing version from industry aiming to eliminate the tax for nearly all companies, including the state's biggest.

The bill by the Idaho Association of Counties was filed a day ahead of the planned unveiling of industry proposal.

Lobbyist Seth Grigg said the counties' plan would exempt the first $100,000 in personal property from taxes, and the state would tap into its general fund to replace $20 million in revenue that local governments stand to lose.

"This proposal provides a clear path forward for a partial personal property tax exemption, that balances both the desires of businesses and the funding needs of local government," Grigg said.

The measure was expected to receive an initial vetting Thursday by the House Revenue and Taxation Committee.

The competing proposal by the Idaho Association of Commerce and Industry is due for a hearing on Friday before the panel. It would cut $120 million in personal property taxes in phases through 2020. The state would replace the revenue for local governments under the plan supported by the administration of Gov. C.L. "Butch" Otter.

Association president Alex LaBeau set the stage for a tough fight after Thursday's hearing, rejecting the counties' version and saying it neglected large companies.

"That's terrible policy — terrible economic policy — to tell large investors, Welcome to the state of Idaho, where you get to pay a tax that nobody else pays," LaBeau said.

Grigg countered that industry giants such as New York-based Chobani, which recently built one of the world's biggest Greek yogurt plants near Twin Falls, come to Idaho for a variety of reasons, not just tax policy. He noted that the company's home state has eliminated the personal property tax.

"The personal property tax is something to look at, but there's a broader set of factors," Grigg said.

There are things both sides agree on.

Many dub the assessment on business personal property is Idaho's most hated tax, in part because it forces businesses to keep tabs on the value of desks, computers, chairs and other property, a tedious process they say costs more to administer than the revenue it produces for Idaho.

In a crucial difference between the plans, the county version gives no breaks to companies with so-called operating properties, including railroads such as Union Pacific, pipeline companies, telecommunications providers and big regulated utilities such as Idaho Power Co.

The industry plan, meanwhile, would give relief to railroads, pipelines and phone companies.

Regulated utilities would see a tax break, too, but only on future expansions to their systems. That concession is intended to counter concerns, in particular among senators, that utilities wouldn't use tax savings on expanding businesses or producing economic growth.

Senate President Pro Tem Brent Hill, R-Rexburg, and a certified public accountant, said he's uncertain just how his members will vote, should a bill reach his chamber. But he's heard enough from them to know many are leery of doing too much, too fast.

"There are many members of our body — I can't say it's a majority — who have said to me, 'Why don't we do the $100,000 version,' and go home this year," Hill said. "I think that has a relatively easy road to adoption, if that's the only relief we feel like we can afford."