Record Idaho Budget Surplus Leaves Democrats and Republicans Arguing About What to Do

As the Idaho Legislature sits on a record $1.6 billion budget surplus, Democrats and Republicans are debating how best to use it. Some Republicans have indicated that they'll suggest tax cuts, including Governor Brad Little, while Democrats have listed affordable child care and housing among their priorities.

While speaking at the Idaho Press Club's 2022 Legislative Kickoff, lawmakers discussed potential tax cuts, but there was some disagreement on whether property, income or grocery sales taxes should be the recipient. Republican Senate President Pro Tem Chuck Winder noted that some members of the public have also called for infrastructure improvements.

"Any tax relief is going to be perceived by the public in a good way," Winder said. "It's interesting that some of the public is saying, 'No, I don't really want tax relief. I'd rather see you put the money into roads and schools and do the deferred maintenance things that need to be done to keep our state and our universities and colleges running properly.' So that's going to be the debate—how best to do that."

He added that there would likely be "significant tax relief, one way or another."

In addition to affordable child care and housing, Idaho Democrats have expressed support for getting rid of the grocery sales tax.

"It is the kind of tax relief that everybody gets, whether you're rich, poor or everywhere in between," said Democratic Senator Grant Burgoyne. "There are people in Idaho who are struggling. They do not enjoy much in the way of income tax relief because they don't pay much in income taxes, and this would be a way to help them."

But Republican House Speaker Scott Bedke objected to the idea, noting that tax filers in the state already receive a grocery tax credit that pays them back for taxes they pay on groceries.

Idaho Budget Surplus
As the Idaho Legislature sits on a record $1.6 billion budget surplus, Democrats and Republicans are debating how best to use it. Above, Idaho Republican Governor Brad Little responds to a question at the Idaho Press Club's 2022 Legislative Kickoff on Friday, January 7, at the Statehouse in Boise, Idaho. Keith Ridler/AP Photo

Bedke also said the state gets some $320 million from grocery sales tax, with $170 million sent back to Idaho taxpayers through the tax credit. That leaves $140 million the state wouldn't get.

He said people benefitting from eliminating the grocery sales tax would be people from out of state and those who don't file income taxes.

"I believe that our tax policy should always benefit hardworking, taxpaying Idahoans," Bedke said. He also said local governments would lose money from revenue sharing from the state's general fund if the grocery tax is eliminated.

Republicans last month publicly discussed plans for a $400 million tax relief package to be introduced this session. Republican lawmakers last year passed roughly $400 million in tax relief that Democrats said mainly benefitted the wealthy.

Budget analysts attribute some of this year's surplus to billions of federal coronavirus relief money Idaho has received that will eventually dissipate from the economy. That means ongoing tax cuts based on the surplus could in future years lead to cuts in services or a tax increase.

"We're cognizant of it and we're aware of it, but there are not very many orange flags on our radar screen going forward," Little said. "But that still doesn't mean we shouldn't be prudent and careful."

Idaho's economy is strong with one of the lowest unemployment rates in the nation at 2.6 percent. It's also among the nation's fastest-growing states with more people choosing to live in Idaho, which is also bolstering the economy.

Other topics discussed included an effort to pass legislation for full-day kindergarten, potential bills in the form of tax credits to help day cares and more money for schools.

The Legislature met in November to wrap up business after the House never formally adjourned to end the 2021 legislative session. During three days, the House passed multiple bills to prevent vaccine mandates, but none made it through the Senate.

Those bills are likely to return this year.

Another hot topic that could be introduced during this year's session, that is also an election year, is critical race theory, a way of thinking about America's history through the lens of racism. Republican lawmakers have accused universities of indoctrinating students. Others see it as a non-issue raised during an election year to draw voters.

The Associated Press contributed to this report.