Originally published July 25 on IdahoEdNews.org.
The price to pay for the Reclaim Idaho the education initiative could be much higher than expected.
According to the wording of the initiative, which qualified for the November ballot on Friday, the measure could undo income tax cuts enacted by the 2022 Legislature. Chief Assistant Attorney General Lawrence Wasden confirmed this in an email last week. And that wording would drive the cost of the initiative up to $573 million a year, according to the Idaho Freedom Foundation, a conservative lobby group opposed to the Reclaim initiative.
Reclaim maintains plans to raise corporate and income taxes for Idaho’s wealthiest residents, raising $323 million a year for K-12, while leaving the rest of the tax code intact.
In three months, voters will have to determine what they think of Reclaim Education Quality Act, and its costs. And if a simple majority of voters approve the initiative, the legislature gets a chance to put its mark on the law.
What does the initiative say?
The ballot wording includes the tax increases that Reclaim has always discussed.
It creates a new tax rate of 10.925% for individual incomes over $250,000 and family incomes over $500,000.
It raises the corporate tax rate to 8%, from 6% previously.
These changes are expected to generate $323 million, which would go into a dedicated K-12 fund. The money could then be used for a variety of purposes, such as increasing teachers’ salaries, recruiting and retaining teachers or counsellors, or vocational technical education, music or special education.
But the language of the initiative also calls for personal income tax rates ranging from 1% to 6.5% – even if the 2022 legislature reduced or removed most of these rates. For Idahoans earning more than $5,000 in taxable income, for example, the legislature reduced the tax rate from 6.5% to 6%.
Part of that could be a function of timing. Reclaim began collecting signatures for its K-12 initiative ahead of the 2022 legislative session and before the new tax cuts become law, and the initiative’s wording reflects the income tax rates of before 2022.
But regardless, the initiative is pushing Idaho’s income tax rates back, months after Republican lawmakers and Gov. Brad Little agreed on what they have. hailed as the largest tax cut in state history.
“The ballot measure reverses recent tax cuts … in the 2022 legislative session,” Chief Deputy Attorney General Brian Kane wrote in an email Tuesday to Chad Houck, the secretary’s chief assistant. of State Lawrence Denney, Idaho’s election chief. Idaho Education News obtained the email on Monday.
What does that mean?
Depends who you ask.
As the Reclaim initiative secured its place in the November 8 ballot, the Freedom Foundation went on the offensive.
The group — which doesn’t respond to most media inquiries — sent out more than two dozen tweets over the weekend, calling the Reclaim initiative a tax hike for Idahoans, wealthy and poor, and claiming that journalists downplayed the cost of the initiative. The Freedom Foundation is also armed with a recent report by the Tax Foundation, a Washington, DC think tank, which calls the Reclaim initiative “riddled with gaffes.” It was the report that prompted Houck to seek legal advice from Kane.
Reclaim, on the other hand, focuses on other terms in the initiative and its stated intent.
Reclaim has argued that its initiative will only raise income taxes for 1% of individuals and households. And on Sunday, Reclaim co-founder Luke Mayville said his group had been clear: it only wants to create a new income tax bracket for Idaho’s wealthiest. He points to the initiative’s tax memo, which says the measure would only affect Idahoans earning more than $250,000 a year, who would fall into the new top tax bracket.
“There is no evidence in our initiative of a legislative intent to change the lower bands,” Mayville said in an email.
And on Monday, Mayville dismissed Kane’s email – saying Reclaim had its own legal opinion. Former Idaho Supreme Court Justice and Attorney General Jim Jones told the group his initiative would clearly only affect the wealthiest Idahoans.
“In any case, an opinion issued by the (Attorney General) is advisory only,” Mayville said. “The only definitive opinion would be the opinion of the court. In the event that our initiative is passed in November and public officials decide to undermine the intent of the initiative, we are prepared to take the case to court and we are confident that we will prevail.
So who takes care of that?
There is no way to change the language of the initiative at this point. So, at some level, voters will have to decide who they believe in.
Expect Reclaim and the Freedom Foundation to continue to argue over this issue. Both groups have filed written arguments for or against the initiative with the Office of the Secretary of State, the state’s electoral arm. Now the groups must file their rebuttals with the Secretary of State by August 1. Arguments and rebuttals will appear in an election pamphlet that will be mailed out a few weeks before the election.
“We accept them as written and don’t judge them up or down,” Houck said Monday.
And voters will not have the last word.
Mayville says he will return to Idaho Code Commission – a relatively obscure offshoot of the Secretary of State’s office – to find the coded language of a successful initiative. This panel of three attorneys, appointed by the governor, updates Idaho’s code each year.
And the legislature would certainly intervene. Legislators are not obligated to sign off on an initiative as written. They have the ability to change — even reject — an initiative approved by voters.
In this case, for example, lawmakers could simply pass the same income tax cuts they passed in 2022.
“There is nothing we can do at this point regarding the language of the ballot or the text of the initiative,” Kane wrote last week. “If it passes, it will be up to the legislature to settle it as it sees fit.”