BOISE -- Personal property tax is becoming a controversial topic in Idaho. It's a tax that the Governor and many businesses describe as unfair, illogical, and an undue burden.

They want to repeal it, as long as they 'do no harm.' But, 'harm,' is exactly what your local mayors and commissioners say a repeal would do. They say you'd see drastic cuts to the services you count on, and that some cities, counties, and schools would crumble.

The possibility of a personal property tax repeal in the state of Idaho this legislative session started on the first day during Governor C.L. Butch Otter's State of the State Address.

Of course, your agenda already includes discussions on eliminating the personal property tax which nearly everyone agrees is an unfair drag on our economy, said the Governor.

Otter believes eliminating the tax will help Idahoans do business here and bring more business to Idaho. That's because most other states, including every northwest state, imposes the tax.

The underlying caution is, whatever we do, let's do no harm, said the Governor in a later speech.

What is the personal property tax?

But, what is the personal property tax, and how might its repeal affect Idahoans? To try to get those answers, we headed to Elmore County, specifically the car dealership Performance Chevrolet in Mountain Home.

Businesses pay personal property tax on most things they own and use that are not land or buildings.


It just limits the amount of money we have, as a business, to continue to employ, said the dealership's owner K.R. Reinschmidt.

He says he pays thousands in personal property tax on everything from tools and lifts to calculators, things that he already paid sales tax on. Every one of these items, individually, down to these brooms, are on our personal property tax.

Reinschmidt says one of the biggest reasons he hates the tax is that he pays it every year. So, he and his staff have to catalog every single piece of equipment they use, and figure out how much it's worth. Our business gives us enough things to do that we just can't spend the time to track a stapler for what, eight years?

Local government

So, where's the harm in doing away with this tax? The harm could happen in local governments. They've been relying on this tax pretty much since statehood.

Cities, counties, schools, and other taxing districts would lose $140 million statewide. More than $1.2 million of that would come out of Elmore County. That's 21.48 percent of their entire budget.

Non-essential services, non-mandated services... we'd probably have to cut them all, said Elmore County Commissioner Al Hofer.

Hofer says things like senior centers, museums, and economic development would cease to get any money. But, the county clerk says that wouldn't be enough. She says the sheriff's department budget, along with others that ensure the public's safety, would have to be slashed.


But the county isn't the only entity to rely on revenue from personal property tax. In the Glenns Ferry School District, more than two-fifths of its budget is tied to that revenue.

Forty two percent would be the actual revenue that we would lose, said Superintendent Matt Murray.

He believes the repeal would cause one of two things. First, the state might step in and pay the lost revenue but then cut school budgets to make up the difference. We'd be getting it in one hand, and losing it out the other.

Or, he believes the tax burden will be shifted to homeowners, making passing a levy almost impossible. KTVB asked him if he ever thought he'd be able to pass a levy again. I don't think so. The community doesn't want one now, and I'm sure that they would want one less.

Commissioner Hofer agrees that the timing just isn't right. People are struggling now, and they just don't need that.

Hofer also believes deep cuts would totally counteract the whole idea behind the repeal, to bring business to Idaho. I think that if the cities, and the counties, and the school districts, and everybody is going backward, instead of forward... businesses come and look at that, and why would you want to stay here?

But, it might not come to that. Right now, it's hard to say what the repeal would even look like.

Governor Otter released a draft of the possible repeal. That plan would phase out the tax over six years. The state would replace some of the lost revenue, and give local governments the option of replacing the rest with increased homeowners taxes. But, Otter's chief of staff expects changes to that proposal.

Reinschmidt says he's one that's willing to meet in the middle. I don't want to take the money from the county. Let's find another way to get funds that makes more sense. This tax is the wrong tax.

Many on the local government level say that big businesses like Idaho Power, Union Pacific, and Micron are pushing the repeal, since they will benefit the most, by far. But, a spokesperson for a business lobbying group says that's not true. He says all businesses are asking for this because it would help all businesses, small to large.

It's still hard to say if a repeal will be passed by the legislature this year. There's a lot of people in business for it. There's a lot of people in local government against it. But both sides say, that they have the same number one priority, that whatever they do, to do no harm.

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