At the Idaho Legislature, we find cities, counties and school districts at odds with state legislators intent upon repealing the personal property tax. Citizens are left to wonder why state elected officials are fighting with their local government counterparts. Do other states find themselves in similar top-down legislative spats?
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There are examples of state legislatures working together with local officials to create new economic development opportunities and provide needed regional services.
In Washington, the Legislature partnered with the City of Spokane, Washington State University and Spokane County to create a public facilities district and a new “University District,” two examples of state and local economic development for the improvement of the community. The public facilities district is responsible for financing and building several large public venues in Spokane including a performance hall, convention center and sports arena. The University District will channel sales tax revenues back into district infrastructure improvements. Both cases from Spokane required state legislative authorization and funding in addition to city and citizen approvals of bond sales.
In Utah, the state, local governments and private investors combined their efforts to provide funding for Rio Tinto Stadium, home to the Real Salt Lake professional soccer team. The funding streams included local urban renewal funds, private investment and state approved revenues.
In both Washington and Utah, local governments and state governments worked together for the good of communities. These examples provide an interesting contrast to Idaho, where legislators aren’t just uninterested in partnering with cities or counties to build facilities or infrastructure, they seem to be actively looking for opportunities to thwart local government attempts to build infrastructure and secure economic development. For example, in each of the last several sessions the Idaho Legislature has entertained bills to eliminate or circumscribe the powers of urban renewal districts, one of the few ways that Idaho communities can invest in and improve infrastructure. When the City of Boise proposed using a local improvement district (LID) to build a streetcar system, the Idaho House responded with a bill prohibiting the creation of a LID of over $500,000. And then there are the local option taxation authority bills, killed year after year by a Legislature unwilling to devolve any powers to cities or counties, in spite of the fact that such taxes are in wide use across the West.
Is the Governor’s 2013 endorsement of a local option tax a bright spot? Not really. Local option taxes are generally used to allow local communities to raise funds for projects of local importance. For example, Reno, Nevada used a local option tax to pay (in part) for a minor league stadium. Pueblo, Colorado’s local option tax is earmarked for economic development efforts. But local option taxes are poor replacements for long standing revenue streams like the personal property tax, especially in counties with little sales tax activity.
Of course, it could be worse. In fact, it has been worse in California and Nevada, where state officials used local tax revenues to solve the states’ fiscal problems. Both California and Nevada used local property taxes to patch state budget holes, leaving their counties to figure out how to cope with the loss of those revenues on their own. In California, the League of Cities helped pass an initiative in 2010, that made it illegal for the state to take local tax revenues. In Nevada, it took a state Supreme Court ruling in 2011 to stop the state from taking local tax revenue from its two largest counties: Clark and Washoe.
While not as blatant a grab of local tax revenue as in California and Nevada, the Idaho Legislature’s movement to repeal the personal property tax may have a similar effect on Idaho’s local governments if the Legislature doesn’t replace the local funding in some way. Will legislators claim credit for “tax relief” while mayors, councils, commissioners and school board members figure out how to continue needed services?
It is worth noting that the playing field is not equal between local governments and the state legislature. Local governments are considered “creatures of their states” and have only the powers and authorities granted to them by their state laws and constitutions. The rules about which taxes local governments may levy, and, of course, how state revenues will or won’t be shared are made by the state.
But from a citizen’s perspective, it makes little sense to provide tax relief to one set of state taxpayers while creating deep budget cuts to local government service budgets across the state. It does make sense, however, for state and local governments to work together to provide needed services to our citizens.
The views and opinions expressed here are those of the writer and do not necessarily reflect those of Boise State University or the School of Public Service.