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Legislation to alter sales tax distribution method stalls

February 26, 2019

BOISE, Idaho (AP) — Legislation to change how millions of dollars in sales tax revenue is distributed to cities and counties in Idaho stalled in a House committee on Monday, but remains alive.

The meeting of the House Revenue and Taxation Committee got off to an unusual start when the bill’s sponsor asked the committee to hold onto the legislation rather than send it to the full House.

The committee partially complied with the request by Republican Rep. Jason Monks and voted 14-0 to hold onto the bill, but refused to kill it. That means it could come back this session.

Monks told the committee that the legislation is intended to fix what he says are unfair distributions to cities and counties, but still needs some work.

“I’m highlighting the fact that the current system is not fair,” he said. “We’re trying to make this a fair system.”

Sales tax in Idaho doesn’t automatically go to the cities or counties where the sale occurs. Instead, it goes through a formula and is distributed to cities based on population and property values.

Under that formula in 2018, the average amount a city received per resident was about $78. The resort town of Sun Valley in central Idaho, with some of the highest property values in the state, received $533 per capita. Tiny Hollister in an agricultural area in south-central Idaho, received $52 per capita.

Representatives of Idaho’s counties and cities testified against the proposal, noting potential uncertainty in future revenue if the current formula is altered and that the proposal left some areas shortchanged.

“There is a negative impact primarily on rural areas across the state,” said Seth Griggs, executive director of the Idaho Association of Counties.

Jess Harrison, executive director of the Association of Cities, also spoke against the legislation.

“Defining what is fair is almost impossible,” she told lawmakers. “There’s not widespread agreement in our association that there is a problem with the current formula.”

Lawmakers were provided with a list of several hundred Idaho cities and how they fair under the current distribution formula. Republican Rep. Mike Moyle, the House majority leader, said the current formula isn’t fair, but politics prevented a more equitable distribution when the issue appears before the Legislature.

“Every time the associations of cities and counties both punt because they know they can come down here and there are enough losers that they can get us to change our minds,” he said. “I would encourage all the cities to look at this list. This is disgusting. This needs fixed, and you guys know it needs fixed.”

It’s not clear when the legislation might again appear before the committee.