Legislature passes Governor-backed bill to combat inflation, fund schools

Following a full day of politicking during a special session of the Idaho Legislature in Boise on Thursday, Governor Brad Little’s proposal to create a flat income tax, issue income tax rebates, and boost ongoing education funding is heading to his desk.

Passing in the House of Representatives, 55-15, and in the Senate, 34-1, the new bill is set to take effect Jan. 3, 2023- two days after a rival ballot initiative would if approved by voters.

Little called the special session, formally known as an extraordinary session, on Aug. 23 solely to have congress consider House Bill No. 1.

On Episode 162 of the North Idaho Now podcast, Little explained that the main purpose of HB 1 is to address inflation for both ordinary Idahoans and for education.

“I knew we had a big surplus at the end of July, but I didn’t know until August…that instead of $1.4 billion, we’d have $2 billion. I just couldn’t in good conscience sit on that much money when people are suffering the ravages of whether it’s fuel, or food, or fill in the blank, and the best way to take care of it is just to give them their money back.”

Co-sponsored by over half of the state legislators, the bill’s passage is expected to give $500 million to Idaho income taxpayers through rebates, implement a 5.8% flat income tax rate for individuals and corporations, annually add $330 million in state sales tax revenue for K-12 education, and allocate $80 million for in-demand careers.

The rebates to Idaho taxpayers are expected to start being sent out this September.

As for why Little, who is seeking reelection in November, chose education to benefit from the bill, he pointed to the Idaho Constitution.

“Everyone of us that gets elected takes an oath to uphold the constitution that we provide a uniformed system of free public schools,” he said. “It’s where we spend half our money in the State of Idaho anyway.”

He added that these additional funds going to Idaho schools will take pressure off of districts that are still sitting on Coronavirus Aid, Relief, and Economic Security Act (CARES) and American Rescue Plan Act (ARPA) funds.

The now-approved legislation did meet some minor opposition in both houses.

District 1 Rep. Heather Scott, R-Blanchard, attempted to split HB 1 into three distinct topics by moving to waive House Rule 54, which forbids that action.

“The reason I want to send it to the amending order is because I've taken an oath to the constitution and the constitution is super clear on putting more than one topic into a bill.”

Her motion would eventually fail, 22-48.

According to the Idaho Statesman, HB 1 would likely repeal and replace the Quality Education Act, a proposed ballot initiative that would increase public school funding by more than $320 million. The initiative, spearheaded by citizen advocacy group Reclaim Idaho, would create a new 10.925% income tax bracket for Idaho taxpayers who earn $250,000 or more in taxable income, and would increase corporate income taxes from 6% to 8%.

Luke Mayville, Reclaim Idaho’s co-founder, praised the proposed investment in education in a statement to the Statesman, but also raised some concerns over the governor’s proposal.

“This proposed investment in education is a big step forward for Idaho,” Mayville said.

But the proposal also includes some “bad elements,” he added.

It is “clearly designed to supplant” the Quality Education Act and it “overburdens” the middle class while giving tax breaks to large corporations and wealthy people, he said. “But on balance, the bad elements of the governor’s proposal are outweighed by the good,” Mayville said. “Even as the proposal aims to supplant the Quality Education Act, it hands a major victory to the thousands of volunteers and supporters who circulated and signed the initiative.”

Mayville credited the group’s efforts as the reason Little proposed such a large investment in education.