By Cameron Rasmusson
Gov. C.L. “Butch” Otter’s veto of the grocery tax repeal on Tuesday is a setback for tax relief proponents, but it could make life easier for the city of Sandpoint.
According to Sandpoint City Administrator Jennifer Stapleton, the city’s local option tax, passed by voters to fund the construction of the new Memorial Field grandstands, is tied to the state’ sales tax, and around a third of the revenue from that tax comes from grocery stores. When the grocery tax repeal passed the Idaho Legislature and went to the governor’s desk, Stapleton said there was some concern in City Hall on how that would impact the progress of the grandstand project. Prior to the possibility of the grocery tax repeal, the local option tax was on pace to raise revenue for additional park projects beyond Memorial Field.
Otter, on the other hand, had state revenue on his mind in vetoing the bill. In his statement accompanying the veto, Otter reiterated his commitment to tax relief, saying he has approved around $1 billion in relief since taking office in 2007. However, he said the repeal of the grocery tax would represent a severe hit to the state general fund.
“Everyone benefits from some kind of government service. Everyone eats,” Otter said in his statement. “The income derived from a tax on groceries helps to even out the more dramatic ups and downs in our State revenue stream so that government avoids disruptive and dysfunctional shortfalls and funding holdbacks needed to balance the budget.”
Otter said he took a lesson from Utah’s recent lesson in grocery tax repeal. He said the result in that state was the removal of one of the state’s most stable revenue sources.
“The advice from Utah was simple and straightforward: Don’t do it,” Otter said in his statement. “The ramifications of lifting the sales tax from food had made budgeting much more difficult with the loss of what indisputably was their most stable and consistent source of revenue for essential government operations. Taxpayers benefited almost imperceptibly while lawmakers found themselves dealing with the peaks and valleys of income tax and other financial supports that are far more susceptible to economic fluctuations.”
Many lawmakers and state residents disagree with Otter’s assessment. The state’s 6-percent sales tax has opponents on both the right and the left, with one of the most common complaints being that a grocery tax hits low-income families disproportionately hard compared to middle-class and well-to-do families. District 1 Sen. Shawn Keough, R-Sandpoint, was among those who supported the bill, as did Rep. Sage Dixon, R-Ponderay, and Rep. Heather Scott, R-Blanchard.
“I voted yes on the bill, and while I understand and respect the Governor’s concerns about the state’s general fund budget I believe it is immoral to tax food—the sustenance of life,” Keough said on her Facebook page.
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