Idaho Gov. Brad Little, right, flanked by state Senate President Pro Tempore Chuck Winder, R-Boise, speaks outside Ranch Market in Boise during a press conference related to inflation on Tuesday, Aug. 23, 2022. Little announced a planned special session of the Idaho Legislature scheduled for Sept. 1. | Darin Oswald, Idaho Statesman
BOISE (Idaho Statesman) — For the third time in as many years, the Idaho Legislature will convene for a special session. Gov. Brad Little announced Tuesday he is calling lawmakers to Boise to address inflation amid a massive state tax surplus.
Little, a Republican who is seeking reelection in November, will issue a proclamation Tuesday directing state lawmakers to consider a single bill, according to a draft reviewed by the Idaho Statesman. It would create a flat income tax, issue income tax rebates and boost ongoing education funding.
“The need to respond to the effects of inflation on taxpayers and the education system constitutes an extraordinary occasion,” the governor’s proclamation read. “The state cannot risk inaction in the face of sustained, intransigent inflation.”
Little announced this month that Idaho’s revenue surplus — which has reached record highs in consecutive fiscal years — is expected to tally $2 billion, another record. Meanwhile, inflation in the West surpassed 8% this summer, driving up the cost of food, fuel and other goods and services.
The proposed legislation would return $500 million to Idaho income taxpayers through rebates. Each resident who filed income taxes for both the 2020 and 2021 tax years would receive $300 — or $600 for joint filers — or 10% of income taxes paid for 2020, whichever is greater.
The proposal also would eliminate Idaho’s tax brackets for filers who earn less than $2,500 or $5,000 for joint filers. The new flat tax for all individuals and corporations would be 5.8%. The current rate for the top individual and corporate income tax bracket is 6%.
The special session is scheduled for Sept. 1.
Per Idaho law, only the governor can call an extraordinary session, and lawmakers must confine their work to the purpose laid out by the governor.
Little’s proclamation states lawmakers may only consider the proposed bill and “shall have no power to legislate on any other subjects during the extraordinary session.”
Idaho Senators arrive to the chamber for session in March 2022. Gov. Brad Little is now calling them back for a special session scheduled for Sept. 1, he announced in a proclamation Tuesday, Aug. 23, 2022. | Sarah A. Miller, Idaho Statesman
EDUCATION BOOST RIVALS BALLOT INITIATIVE
The proposed bill would direct $410 million in state sales tax revenue annually to education, which, if passed, would be the largest single investment in education in Idaho history, according to the draft legislation also reviewed by the Statesman.
Most of the money would go to Idaho’s public school income fund, while the remaining $80 million would be directed to a new “in-demand careers fund.” Beginning in fiscal year 2025, the money distributed to each fund would increase by 3% annually. The Legislature would control all of the funding.
The Idaho School Boards Association said on Tuesday that it supports the education goals the governor laid out for the upcoming special session.
“Investing in our public schools is investing in our kids and communities alike,” Jason Knopp, the ISBA president, said in a statement to the Statesman. “This proposal shows that we can provide relief to families while still ensuring that we’re meeting the operational needs of our schools so that students in Idaho can thrive.”
The proposed education boost comes months before Idaho voters will consider a ballot initiative that would boost public school funding by more than $320 million. The initiative would create a new 10.925% income tax bracket for Idaho taxpayers who earn $250,000 or more in taxable income, and would increase corporate income taxes from 6% to 8%.
Tax experts in recent weeks, however, identified several flaws in the initiative if approved by voters. Among other unintended consequences, the initiative would revert income tax rates to their levels before the 2022 tax cut. That means it would raise taxes from 6% to 6.5% for the current top individual income tax bracket, according to analyses by the Tax Foundation and the Association of Idaho Taxpayers.
If approved, the initiative would go into effect on Jan. 1. The special session bill would go into effect on Jan. 3.
The Idaho Supreme Court has held that legislation enacted through a ballot initiative and legislation enacted by the Legislature each have equal footing. That means the special session bill, with a potential effective date two days after the initiative’s, would repeal and replace the initiative tax changes.
Idaho Statesman Education reporter Becca Savransky contributed to this report.
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