Sending more tax and spending decisions to your state capitol isn't conservative

If you distrust government with spending and tax decisions, why would you put politicians at your state capitol in charge of more of it?

That's the question at the center of Idaho's current debate over property taxes.

There is no statewide property tax in Idaho, but local governments can collect property tax revenue.

Property taxes frustrate homeowners for understandable reasons. Paying off your mortgage does not end the annual bill. A rising home value does not put cash in your checking account. For retirees and families with tight budgets, the burden can be substantial.

But property taxes in Idaho are a creature of local government: schools, fire departments, cities, sewer, etc. In many cases, local voters have approved the new taxes and fees collected. If you've voted in favor of a bond, levy, or other local tax measure, you are partly responsible for the extra rate you might be paying.

There are various ideas on how to eliminate the local property tax burden, but all of them have drawbacks.

For example, we examined the concept of doing away with property taxes and, in exchange, giving local governments the option to adopt limited sales taxes. The concept is that this spreads the burden and allows visitors to cover part of the burden. It might work well in some areas, but would likely be a burden too heavy to handle in others. It wasn't a proposal; it was a thought experiment.

Others have suggested you can do away with local property taxes by simply having local governments be funded by the state, in Boise. In other words, they want state taxpayers to pay for local government decisions. But directing state revenue toward local property tax replacement creates two significant trade-offs: greater dependence on Boise and less room for other state tax reductions (such as the income tax).

Today, local elected officials must answer to local voters for their spending and many of the taxes supporting it. The connection is imperfect, but important: Officials who approve spending should face the taxpayers expected to finance it.

Under a state-funded replacement system, local officials would increasingly look to the Legislature for revenue.

Instead of having to justify spending to local taxpayers, they would lobby for larger distributions from Boise. Local budgets would become more dependent on legislative formulas, negotiations, and priorities.

Supporters argue that local control would survive because local officials would still decide how to spend the money.

But spending authority is only part of the equation. Whoever controls the funding holds considerable power over the recipient.

Future legislatures could also change it. During a downturn, lawmakers would face competing demands from state programs and local governments counting on replacement dollars.

Imagine a scenario where your local government leaders are not talking to you about local spending, but instead wandering the halls of the state capitol looking for revenue from legislative leaders.

That's a concentration of power that is anything but conservative.

We should also carefully examine what this idea would mean for future state tax cuts.

After all, the state currently collects income and sales tax revenues. If some of those revenues now have to be used for local government spending, we would likely see fewer, if any, income or sales tax cuts. The dreams some have of a grocery tax abolishment would likely go out the window.

This is not to say there are not viable paths forward.

Idaho can and should restrain local spending, examine overlapping taxing districts, and adopt Truth in Taxation so officials must clearly disclose and defend proposed property tax increases.

Communities could also be allowed to consider voter-approved exchanges of property taxes for local sales taxes. Our study shows that approach would be more feasible in some counties than others. Any exchange should include reasonable rate limits and permanent, dollar-for-dollar reductions in property tax authority.

Every proposal deserves scrutiny.

Idahoans deserve lower taxes, accountable government and an honest explanation of the choices ahead.

Before making local governments dependent on Boise and committing revenue that could support future income tax cuts or grocery tax repeal, lawmakers should explain why that bargain serves taxpayers.

There is nothing inherently conservative about giving state politicians more financial power.