by Logan Finney, Idaho Reports
Editor’s note: This story has been updated to reflect action on HB 159.
The House Revenue & Taxation Committee introduced several pieces of new legislation on Thursday, addressing taxes on tobacco products and certain types of property.
“We’re going to try to move these as soon as we can,” said chairman Rep. Jason Monks, R-Meridian, noting the late point in the session that lawmakers hope to wrap up before the end of March.
Data centers vs. urban renewal
The legislature passed a law in 2020 creating a sales tax exemption for data centers with the intent of relieving residential property taxes. Meta, the parent company of Facebook, used the incentive for its planned data center on the outskirts of Kuna in Ada County. The city is creating an urban renewal area around the site with the intent of developing an industrial park, which has drawn the ire of lawmakers who argue urban renewal was created to address blighted areas, not to encourage new growth.
The committee narrowly shot down — and then later reconsidered and passed — a bill earlier this session that aimed to make data centers choose between taking the sales tax exemption or being included in an urban renewal district, but not both.
“It removes any reference to the sales tax exemption, so it just references the definition of a data center,” Rep. Jeff Ehlers, R-Meridian, said of the new bill, specifying data centers would be added to regular property tax rolls.
“It’s a little cleaner language from HB 159,” Ehlers said. “It accomplishes the same objective.”
Lawmakers voted 11-4 to introduce the new bill and recommend it be sent directly to the full House rather than appearing before the committee for a public hearing. That decision is ultimately up to House Speaker Mike Moyle, R-Star.
“Here we go again, trying to interfere in urban renewal districts across the state of Idaho,” said Rep. Rick Cheatum, R-Pocatello, who voted against the motion. “Changing the rules in the middle of the game.”
House Bill 159 was returned to the tax committee later Thursday afternoon.
Taxes on tobacco products
The committee introduced two new bills that replace earlier bills concerning taxes on tobacco products. Idaho generally taxes tobacco products at 40% of wholesale price.
Rep. Jerald Raymond, R-Menan, is sponsoring legislation that would tax vaping products the same as other tobacco products.
“There’s a spectrum of risk when it comes to vape products,” Raymond said. “I think this day has been coming for a long time. Our manufacturers and retailers have known it is coming.”
Classifying vape products alongside other tobacco products will increase state revenue. The new version of the bill would direct part of the revenue toward a school districts facilities fund that would be created under a highly anticipated property tax relief bill, which is currently in the Senate.
If the property tax bill does not make it into law, Raymond said, his bill is written so that the revenue would go into an existing school fund instead.
“These revenues will go to that section [in HB 292 if it passes] against school bonds, school levies, and so on,” Raymond said. “We have an either-or situation, but either way it will go to property tax relief.”
The other bill introduced would cap the tobacco tax at 50 cents per cigar.
“This is not a tobacco bill, but more of a small business bill,” said sponsor Rep. Jordan Redman, R-Coeur d’Alene, arguing that Idaho cigar retailers need to be competitive with those in neighboring states.
An identical bill previously passed the Senate by a wide margin, but if a bill generates revenue, it is constitutionally required to start in the House.
“It never should have been introduced in the Senate,” Monks told Idaho Reports.
Property taxes on irrigation and utilities
Rep. Melissa Durrant, R-Kuna, carried a bill from the Senate that would allow irrigation and canal companies to receive their existing property tax exemption without having to reapply every year.
“Most of these structures are over 100 years old. They aren’t going anywhere,” Durrant said. “This is just to make the paperwork less.”
The committee approved Senate Bill 1031 unanimously. If passed by the full House, it goes to the governor’s desk for signature.
Chairman Monks also introduced a new bill that would overhaul the method used to assess property that is owned and operated by electric utility companies.
“Utilities are centrally assessed by the tax commission, so how we assess those has been a source of a lot of dispute over the years,” Monks said. “That’s expensive and costs the state money.”
The bill would expand an existing statute which allows for a gross receipts tax instead of property valuation for certain types of utilities.
“We thought it would be appropriate to extend that to our electric companies as well,” Monks said.
Committee members asked about how changing the valuation method would affect local governments who receive property taxes. Monks said he will bring projections about how the tax would work for a full committee hearing on the proposal.
“This money would be treated essentially as property tax… at least from the taxing district’s point of view,” Monks said.
Monks told Idaho Reports that this bill is more complex than the others introduced on Thursday and may take more time for the committee to review.
Affordable housing idea introduced
Rep. Rod Furniss, R-Rigby, introduced a bill that he said is only meant to start a discussion about the state’s affordable housing policies.
“We’re only looking for an introduction, we’re not going to take it to a hearing,” Furniss said.
According to Furniss, state law currently bars nonprofits from partnering with for-profit entities to build affordable housing developments. His proposal would allow those partnerships and offer a property tax exemption for housing developments with 100% affordable units that are available to people making 60% of the area median income.
“This could be an answer to affordable housing in Idaho,” Furniss said.
Logan Finney | Associate Producer
Logan Finney is a North Idaho native with a passion for media production and boring government meetings. He grew up skiing, hunting and hiking in the mountains of Bonner County and has maintained a lifelong interest in the state’s geography, history and politics. Logan joined the Idaho Reports team in 2020 as a legislative session intern and stayed to cover the COVID-19 pandemic. He was hired as an associate producer in 2021 and they haven’t been able to get rid of him since.
