By Jared S. Hopkins
Times-News writer
BOISE - The Senate passed a bill 27-8 on Thursday to increase the grocery tax credit in Idaho, overcoming warnings from some legislators that doing so will cause fiscal shortfalls in the future.
The decision almost ends nearly two years of squabbling between Gov. C.L. "Butch" Otter and lawmakers. Addressing the sales tax on groceries has been a priority for legislators since they increased the tax to 6 percent about two years ago to compensate for property tax relief.
The House voted 62-8 in favor of the measure. It now goes to Otter, who last year vetoed a similar bill.
The bill's passage came after an unsuccessful motion by Senate Finance Chairman
Dean Cameron, R-Rupert, to have the bill amended. It failed 25 to 10.
Currently, most Idahoans receive $20 in annual credit and seniors get $65. The multi-year measure, sponsored in the Senate by Sen. Russ Fulcher, R-Meridian, would increase the credit to $50 next year for the poorest Idahoans, and $30 for the rest. It would increase $10 yearly until it reaches $100.
If the state's economy suffers in the future, a legislative resolution or governor's executive order would stop the yearly increases.
"This is only on autopilot if we choose it to be," Fulcher told senators. "It gives us an incentive to take some of that money off the table. Because you know what? It's not our money."
But the bill carries a $22 million price tag for this year's budget - $122 million through 2016 - and with the nation's shaky economy and the state's declining revenue, Cameron insisted senators choose another route.
He said next year's budget-writers will have a tougher time than this year, and might need to raise taxes or cut budgets. He said that current projects next year show a 1 percent increase for state employees and teachers, an 8 percent increase in health benefits, and that the legislation will propel the state into a $45 million beginning deficit.
"If you don't want to release prisoners and you don't want to cut education and you don't want to cut health and welfare, you've got about 10 percent to play with," Cameron said. Education receives more than half the state budget.
The state's budgeting panel already approved $10 million to fix water issues, $12 million for college scholarships and $11 million in surplus money for substance abuse.
Senators said they'd prefer cutting the sales tax on groceries altogether, but the bill was written to satisfy as many people as possible.
Others said that bypassing the grocery tax would be hypocritical after they approved tax exemptions Monday for the Areva, the French-based nuclear company looking to build a $2 billion plant in Idaho.
"We just took the sales tax off uranium enrichment and now we have to decide whether to give some relief to Idaho's families," said Sen. David Langhorst, D-Boise. "I think there's been an article of faith … that we would do something about grocery tax."
Not lifting the grocery sales tax entirely means the state will still receive revenue from tourists, illegal immigrants and travelers. The credit does not apply to people on food stamps.
Sen.
Chuck Coiner, R-Twin Falls, was among the lawmakers who supported Cameron's motion but then voted in favor of the original bill, likely recognizing there was no alternative this session.
"I want to say yes to grocery tax but I don't like the implementation of how it's being done," he said before voting aye.
