The Constitution: No Place for Local Option Taxes

by Senator Brent Hill

As the citizens of Idaho feel the ever-increasing burden of property taxes, they are seeking other alternatives to fund local needs. Because property taxes have generally been the only viable option for residents to finance street maintenance, sewer and water systems, school improvements, etc., the State Legislature is looking at ways to grant limited local option taxing authority to local citizens. This authority would permit the residents of a city or county to consider other tax options—such as a small local sales tax—in lieu of additional property taxes. The issue is usually not more taxes, but which type of taxes best fits the needs of the people.

“Misusing the Constitution to tie the hands of future lawmakers is indeed unwise.”

The main debate in the Legislature has turned to whether to grant this authority through statute or by amending the State Constitution, which would require a 2/3 vote from both the House and the Senate, then go before the people in a general election. All agree that a constitutional amendment is not required, but by placing the provision in the Constitution, future legislatures will find it very difficult to ever rescind the local option taxing authority or change the requirements for its implementation. Idaho’s 2009 Legislature can thereby insure that its preferences and priorities are binding on all legislatures in the future. However, the notion that today’s lawmakers are better equipped to make responsible decisions than future legislators is unwarranted.

With no sure way to predict Idaho’s future circumstances and needs, locking the provisions of a local option tax in the Constitution could easily result in unforeseen consequences. To illustrate, let us project ourselves, for a moment, thirty years into Idaho’s future, and consider a few scenarios:

Imagine the Treasure Valley with over 2 million residents. Rapid growth has left the valley’s highway system extremely inadequate. Instead of raising property taxes to fund road improvements, the people of Ada and Canyon Counties vote by a 90% majority to implement a half-cent-per-gallon local option fuel tax so that visitors to the area will help pay for the roads they are using. (This is already being done in neighboring states such as Nevada and Oregon.) Can’t do it. The constitutional amendment provides only for local option sales tax—it never anticipated the changing times and circumstances. The 2039 Legislature is powerless to provide an exception unless it keeps modifying our State Constitution.
Imagine that McCall is the tourist capital of Idaho in 2039. Out-of-state investors have pushed local real estate values beyond reason and the citizens would like to pass a local option sales tax strictly designated to reduce property taxes. The Legislature would like to permit certain qualifying communities to pass a 1% sales tax by a 60% supermajority, on condition that the sales tax provide direct property tax relief to the residents. Can’t do it. The constitutional amendment calls for a 2/3 supermajority no matter what other restrictions may apply—even if it is used to immediately reduce property taxes.

There are future events that haven’t even been imagined by Idaho’s 2009 legislators. To suppose that they can somehow control those unknown events by misusing the Constitution to tie the hands of future lawmakers is indeed unwise.

Certainly local option sales taxes do not come without risks. Decisions to implement such taxes should be made responsibly and infrequently. But local control is a conservative principle long treasured by Idaho citizens. People reserve the right to manage their own communities without excessive legislative interference.

I respect the good intentions of those who seek to protect future generations with a constitutional amendment, but I am putting my trust in tomorrow’s citizens to govern themselves.

Senator Brent Hill (R) Rexburg is Chairman of the Senate Local Government and Taxation Committee