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ID Senate votes 35-0 for personal property tax cut

John Miller, Associated Press

BOISE, Idaho (AP) -- Nearly 90 percent of Idaho's businesses will no longer have to pay taxes on their computers, tables, chairs and other personal property, if Gov. C.L. "Butch" Otter signs a $20 million tax relief bill that's now cleared the Senate.

Tuesday's bipartisan 35-0 vote was a victory for counties and school districts that argued an alternative $120 million repeal proposal floated by industry was too expensive.

The plan that passed exempts businesses' first $100,000 of personal property from taxation. Purchases up to $3,000 are exempt from future taxes. The bill also streamlines reporting requirements for businesses that have long complained it costs more to add up the office equipment than the tax actually generates for the state.

This marks the second year in a row that Idaho lawmakers have passed tens of millions in tax relief for Idaho businesses. Last year, lawmakers cut income taxes by $35 million.

During brief debate, Republican Sen. Jeff Siddoway, of Terreton, said the repeal will make life easier and a little cheaper for most of the state's business community, while boosting the cash companies have available to invest in Idaho's economy.

"Senators, to be engaged in this process, you've got to be a believer," Siddoway said. "You've got to believe our tax policy can influence investment and jobs. I'm a believer. I think we can use this to induce businesses here."

The plan calls for the state to redirect about $20 million annually from Idaho's sales tax revenue to make up for money that local taxing districts including schools, counties, cities and even highway districts otherwise stood to lose through the property tax repeal.

Otter, who at the start of the 2013 session made a personal property tax break one of his priorities, has already set aside the money for fiscal year 2014 in his budget proposal.

But the measure was a setback for the Idaho Association of Commerce and Industry, which represents the state's largest companies including semiconductor-maker Micron Technology Inc. and utility Idaho Power Co. The association's president, Alex LaBeau, favored a competing proposal that would have eliminated nearly all of the total $141 million annual tax over the next seven years.

Having fallen short, LaBeau has pledged to return to the Legislature in a bid to win further expansion of the break. When he does, some senators suggested Tuesday he'll have willing Capitol allies.

"We'll need to continue to work on whittling away this tax, to get rid of it, if we're going to unskew our economy," said Sen. Jim Rice, R-Caldwell, adding he believes what remains of the tax falls on the biggest companies and dents their readiness to invest in manufacturing and other infrastructure that creates jobs.

Groups including the Idaho Association of Counties and Idaho School Boards Association promoted the bill that passed as relief that Idaho could afford.

They had been worried that IACI's further-reaching proposal would have left schools and other taxing districts in Caribou and Power counties in southeastern Idaho, which are up to 50 percent reliant on personal property tax revenue, without adequate resources to deliver services.