The largest property-tax cut in Idaho history won final legislative approval Friday just hours before adjournment of the 1994 session.
But in voting 54-14 to shift financial responsibility for school operations from the property tax to the state treasury, the House sent the scheme to an uncertain fate.Democratic Gov. Cecil Andrus, who has backed a similar but less extensive property-tax shift in the past, has not publicly said what he will do when the bill reaches his desk. But he has hinted over several days that he may veto it because of the huge deficit it creates in the new state budget.
With no source of additional state revenue to finance the shift, Andrus worries that the plan of Republican Speaker Michael Simpson will generate the kind of debilitating red ink for Idaho that unrestrained congressional spending has for the federal gov-ern-ment.
"I'm not going to let that happen to the state of Idaho," Andrus said.
The bill shifts nearly half - $66 million - of the property taxes used to finance school operations to the state treasury during the 1994-1995 school year and then the rest - $84 million - during the 1995-1996 school year. But after that, the bill offers no guarantee that the state will continue reimbursing school districts for the property-tax revenues they will be denied. That would total $1 billion over five years statewide.
Since all projected revenues for the 1994-1995 budget year have already been committed by lawmakers, the deficit created by the $66 million shift will be the largest - measured against projected revenues - left by a Legislature on adjournment.
Although modified to correct relatively technical problems, the Simpson bill prompted concern about the future financial base for public schools, the impact of such a huge deficit on the state's credit rating for bonding and cash-management borrowing and the ability of local governments to continue using various creative financing schemes for their projects.
"It is always easier to stay with the status quo than to change it, but the status quo is unacceptable," Simpson countered. "A vision for the future, that's exactly what this bill is."
Simpson continued to maintain that natural economic expansion will cover the expense, but that would require a higher rate of revenue growth in the coming budget year than the state has experienced in any of the previous 10 years - even with tax increases.
But he also conceded that the next Legislature will have to make some difficult choices between cutting budgets and raising other taxes - choices current lawmakers have been unable to make. He wants the growth of government to be checked, but he cannot point to the place where government growth has gotten out of hand and the legislative history has been to solve financial crises with higher taxes.
The bill, a last-ditch attempt after failure of proposed shifts that included extending state sales taxes to exempt services to cover the cost, was spurred by the One Percent Initiative capping property taxes and shifting school financing to the state.
Simpson saw that proposal of anti-tax activist Ron Rankin as more damaging to government than his, although a top state education official has disagreed. Rankin has said he will drop the initiative if Simpson's plan is enacted.
"I'm tired and very pleased," Rankin said as the tax-shifting bill moved through the Legislature. "Until you run an initiative from home and try to move the entire Legislature, you can't know how hard it is."
Any doubt about legislative approval of the speaker's plan was erased the previous night when the bill cleared the Senate on a 24-11 vote as tax committee Chairman Jerry Thorne called it "a great re-election bill."
The original Simpson plan was approved on a 60-9 vote in the House, but was changed in the Senate to shift the multimillion-dollar deficit from the 113 school districts to the state.
Supporters picked up on of the earlier critics in Republican Bill Sali of Meridian but lost six to the opponents.