BOISE - For Idaho lawmakers, taxes are getting, well, personal.

With the nation's economy turned sluggish and Idaho's slowing down, a proposal to eliminate the personal property tax on businesses has reemerged in the halls of the 2008 Legislature. So far, it's unclear how, or if, such a massive tax cut - estimates are for more than $100 million - can be achieved but the chatter has certainly begun.

Lawmakers and companies call it unfair and unnecessary. The push for repealing the tax businesses pay on supplies has been strong since 2001, when a similar tax on agriculture equipment was eliminated. Last year, a bill passed the House but was held in the Senate amid concerns about how to replace the money.

"With globalization, there is so much competition out there," said Randy Nelson, executive director for the non-partisan Associated Taxpayers of Idaho. "Any way you can help get some more energy into the economy, I guess that does make the case for it."

The primary proposal is from the Idaho Association of Commerce and Industry, a lobby representing businesses. Under the legislation, the exemption would freeze personal property levels at 2008 values and phase in the relief by 25 percent over four years starting in 2010.

"What better time to incentivize growth for businesses in the state of Idaho than when there's the potential for a downturn in the economy?" asked IACI President Alex S. LaBeau. "I guess the quote should be, 'what better way to insulate yourself?'"

Supporters say that as growth occurs and increases the property tax base for counties, it naturally lowers the value of personal property tax revenue. As a result, businesses say they are taxed for money they would otherwise invest in the economy.

"If you take the Reaganomics approach, it'll work out," said House Majority Leader Mike Moyle, R-Star.

The main roadblock to lifting the tax has been how to make up the money cities and counties rely on, partly because it varies. The percentage of total property tax revenue in Twin Falls County has remained between 10 percent and 15 percent over the past nine years.

But in Custer County two years ago, the amount was 60 percent - $1.7 million - of the county's revenue from property taxes.

"The question really does come back to the economy - can we replace those revenues for the counties and the cities with state funding?" Senate Pro Tem Bob Geddes, R-Soda Springs, told reporters last week. "Right now that's looking very questionable at best."

IACI's proposal would replace the revenues - at the 2008 level - with sales tax revenues from the state's general fund. LaBeau said IACI's proposal will actually help counties like Jerome County, where the personal property tax was 20 percent of all property tax collected in 1999, but decreased to 12 percent two years ago. It also dipped by $1 million.

Meanwhile, the possibility of granting an exemption and forgoing a grocery tax credit relief - a promise since the sales tax increased in 2006 - could lead to political thorns.

"I don't think that'll happen," said House Assistant Majority Leader Scott Bedke, R-Oakley, on the business tax exemption. "It's not politically viable. We'll be viewed as helping out business and not the average citizen."

GOP leaders say a grocery tax credit bill will be unveiled this week. Bedke called it a compromise. A spokesman for Gov. C.L. "Butch" Otter said his preference for a means-tested credit remains intact.

Although lawmakers say the items are unrelated, some tax experts say it'd be a political tradeoff since one law helps families and the other helps businesses.

"I think it's apples and oranges, because it's a different thing," said Reading. "But the Legislature doesn't do apples and apples, and oranges and oranges. They make fruit salad."

If the IACI proposal surfaces, House Democrats have said they are eyeing a proposal to repeal the personal property for small businesses that pay $50,000 or less. That would be more than 80 percent of businesses in Idaho, but cost the state just $9.4 million, said House Minority Leader Wendy Jaquet, D-Ketchum.

While the businesses will take advantage of the exemption, the state may not expect too much resulting growth, said Don Reading, an economist with Ben Johnson Associates in Boise. Several years ago, a bill aimed at helping Albertsons proved unbeneficial after the company decided to leave Idaho. And after the Legislature approved a tax break for Micron to build a new manufacturing plant, they decided to go to Virginia.

"Businesses take advantage of them if they can, but the record of them recreating economic growth - the vast majority don't do that," Reading said. "You see business as usual. Things just clunk along as they clunk along."

Judith Brown, director of Idaho Center on Budget and Tax Policy at the University of Idaho in Moscow, said there will be three effects: freezing the tax rates will increase personal property in other classes of property and skew numbers that normally change each year; and using sales tax revenue means other ongoing programs would be sacrificed.

"I've been watching the Legislature for a long time and I've not seen IACI argue for anything but lowering taxes," she said. "I just think it's an opportunity they see given the current power structure in Idaho and they're going for broke."

Brown said that Idaho has already been cutting back taxes for businesses, and stimulus takes effect immediately - not in two years.

She said doing so could create a skewed tax structure - horizontal inequity - because some companies, such as manufacturing plants and utilities pay a lot of personal property tax but little in real property. Farms pay little personal property but more in real property taxes.

Jared S. Hopkins may be reached 631-793-5717 or jhopkins@magicvalley.com