The House passed a $27.8 million bill that would cut income taxes and increase the income tax credit on groceries — amidst a larger debate over K-12 funding.
With the 53-16 vote Wednesday, House Bill 380 now heads to the Senate, where its prospects are uncertain.
Sponsored by House Majority Leader Mike Moyle, R-Star, HB 380 would reduce Idaho’s top two personal income tax rates from 7.4 percent to 7.3 percent, and from 7.1 percent to 7 percent. The corporate income tax rate would also drop from 7.4 percent to 7.3 percent.
For individuals and families who would not receive a reduction in income taxes, the state’s income tax credit for groceries would increase from $100 per person to $110.
Debate on the House floor mirrored debate in the House Revenue and Taxation Committee earlier this week. Moyle argued that the state needs to bring its income tax rates closer in line with neighboring states.
“Seventy-five percent of all income taxpayers in Idaho would get some tax relief,” Moyle said.”That’s a big deal. In the meantime, it also gives relief to those on the bottom end.”
Democrats said the bill would undercut school budgets — and force school districts to continue to rely on supplemental property tax levies.
Rep. Ilana Rubel, D-Boise, argued that with Gov. Butch Otter and state officials fighting to return education funding to 2009 levels, this is not the year to cut taxes and reduced state revenues.
“By pulling (nearly) $30 million out of a general fund that funds education, this bill makes us far less competitive,” Rubel said.
Moyle argued that with the uptick in state revenues, lawmakers aren’t forced to choose between the two priorities.
“There is a way we can do tax relief at the same time as taking care of education,” Moyle said. “We’re talking $28 million… We can give back just a little bit.”
Only one Democrat joined GOP ranks to pass the bill: Rep. Mark Nye of Pocatello. Three Republicans voted no: Maxine Bell of Jerome, co-chair of the budget-writing Joint Finance-Appropriations Committee; Mark Gibbs of Grace, a JFAC vice chair; and Paul Romrell of St. Anthony.
In other Statehouse business Wednesday:
Broadband legal bills. The Senate wrote a $229,300 check to continue to pay the state’s legal bills in the ongoing Idaho Education Network lawsuit.
The money would go to Hawley Troxell, a Boise law firm that has received more than $1 million defending the contract for the statewide high school broadband system.
A district judge tossed out the contract in November 2014, prompting the 2015 Legislature to mothball the network and reimburse local school districts for their local high-speed Internet contracts. And while there is no talk of reviving the Idaho Education Network, Hawley Troxell’s attorneys say the state could be forced to return or write off more than $25 million in federal money if it loses on appeal.
The Idaho Supreme Court will hear oral arguments on the appeal on Feb. 17.
The Senate voted 34-0 to pass Senate Bill 1217, which covers the added legal fees. The bill now goes to the House.
In a related development, senators confirmed former Senate president pro tem Robert Geddes to head the state’s Department of Administration, the agency which had operated the Idaho Education Network. Geddes was confirmed on a unanimous voice vote.
Linda Clark confirmation. Another gubernatorial appointment sailed through committee Wednesday afternoon.
With little debate, and a unanimous voice vote, the Senate Education Committee endorsed Linda Clark’s appointment to the State Board of Education.
The former West Ada School District superintendent has been on the board since July, but the appointment is subject to Senate confirmation.
The confirmation next heads to the Senate floor.
Idaho Education News reporter Clark Corbin contributed to this report.