Who ever thought robbing Peter to pay Paul was a good idea? Some people in Idaho apparently.
Flashback to 2006. Like many states, Idaho’s property taxes were spiraling out of control and Governor Jim Risch decided to do something about it. In a special one-day session lawmakers cut property taxes used for maintaining and operating schools and raised the state sales tax from 5 percent to 6 percent.
The idea was property owners would get a tax break and some of the school maintenance costs would come out of the state’s general fund (financed by--you guessed it--that extra 1 percent of sales tax along with state income taxes).
So how did it play out?
Property tax owners had a net savings of approximately $315 million between fiscal years 2007 and 2009 according to Republican Senator Brent Hill, chairman of the Senate Local Government and Taxation Committee, in an article in the Idaho Statesman.
Even schools may have benefitted at least in the short term from access to a $100 million rainy-day education fund that has prevented midyear cuts, says Hill.
However, that good luck seems about ready to run out.
The extra penny in sales tax has generated less money than the property tax would have. Exactly how much has not been calculated but estimates range from $140 million to close to $180 million. Given Idaho schools face a projected $135 million reduction you do the math.
Like in many states, Idaho will be faced with cutting their school budgets. One could argue they should go back to the old system but most lawmakers seem to think that’s unlikely. With the struggling economy many people are fighting just to keep their homes and raising property taxes wouldn’t help.
Bottom line? Education may suffer but it looks like Paul is safe for now.
