BOISE - Gov. C.L. "Butch" Otter signed a bill Monday to increase the grocery tax credit in Idaho, ending nearly two years of debate with state lawmakers over how to offset property tax relief.

Currently most Idahoans receive $20 in an annual grocery tax credit and seniors get $65. The multi-year measure 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.

Addressing sales tax on groceries has been a priority for legislators since they increased sales tax to 6 percent in 2006 to compensate for property tax relief. The bill passed both chambers by wide margins, despite warnings from legislators that the bill will cause fiscal shortfalls in the future.

At a ceremonial bill signing, Otter, Lt. Gov. Jim Risch - who was governor during the 2006 special session for property tax cuts - and three state lawmakers all said the legislation was a political compromise from multiple parties that took two years because it's such a complex issue.

"It took a while to get it cooked up so everyone was willing to receive their serving of it," Otter said. "Things like this that are this momentous take a while to happen."

Seven states, including Idaho tax groceries at their full sales tax rate, according to The Tax Foundation, a non-profit, non-partisan foundation based in Washington, D.C.

In 2006, Risch had advocated a phasing out of the grocery tax altogether. He said Monday that the signed bill was not his preference of a tax reduction, but still helps Idahoans.

"It is a victory for the state of Idaho, particularly for the working people of Idaho," he said.

The legislation carries a $22 million price tag for this year's budget - $122 million through 2016 - and some legislators have said it could lead to problems as the state's revenue declines. Sen. Dean Cameron, R-Rupert, and co-chairman of the state's budgeting panel, has said the bill will propel the state into a $45 million starting deficit.

Supporters of the bill point to a legislative resolution or governor's executive order would stop place the yearly increases.

Otter also indicated that cutting the sales tax on food altogether - an option that's received bipartisan support - will not be revisited anytime during the next few years

"Quite frankly, I believe it's all settled now," he said.

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.

"It exclusively benefits Idahoans and I think that's very important," said Rep. Cliff Bayer, R-Boise, the bill's co-sponsor.

Last year, Otter had vetoed a similar bill on the account it didn't emphasize relief for the poorest Idahoans.

"The important aspect of this is I believe it got the money the quickest to the folks who needed it the most," he said Monday.

Jared S. Hopkins may be reached at 208-420-8371 or jhopkins@magicvalley.com