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Supreme Court Ruling on Grocery Tax Repeal Means Status Quo for Now

Posted By Justin Ruen, Friday, July 28, 2017

In a ruling last week, the Idaho Supreme Court upheld Governor C.L. “Butch” Otter’s veto of a bill repealing the sales tax on groceries.  This means that the status quo prevailed and the sales tax on groceries will continue for the immediate future.

The case was brought by a group of 30 legislators who sued Idaho Secretary of State Lawerence Denney to challenge the Governor’s veto of House Bill 67, passed by the 2017 Idaho Legislature.  The lawmakers argued that the Governor’s veto should be struck down because he did not return the vetoed bill to the Secretary of State within ten days (excluding Sundays) after the Legislature adjourned.

Article IV, Section 10 of the Idaho Constitution provides:

“Every bill passed by the legislature shall, before it becomes a law, be presented to the governor. If he approve, he shall sign it, and thereupon it shall become a law; but if he do not approve, he shall return it with his objections to the house in which it originated…  …Any bill which shall not be returned by the governor to the legislature within five days (Sundays excepted) after it shall have been presented to him, shall become a law in like manner as if he had signed it, unless the legislature shall, by adjournment, prevent its return, in which case it shall be filed, with his objections, in the office of the secretary of state within ten days after such adjournment (Sundays excepted) or become a law.”

The Idaho Supreme Court interpreted this constitutional provision in Cenarrusa v. Andrus in 1978, holding that after the Legislature has adjourned, the Governor has 10 days from the time the bill is presented to him to act, not 10 days from the end of the legislative session.  The 3-2 ruling in Cenarrusa went unchallenged for nearly 40 years. 

The legislators challenging Otter’s veto wanted the Court to strictly interpret the constitutional provision and give the Governor 10 days from the Legislature’s day of adjournment to act on bills, as opposed to 10 days after presentment. 

The Court overturned the Cenarrusa decision and held that all bills must be presented to the Governor before the Legislature adjourns for the year, which will be a major change as bills have been presented to the Governor after adjournment since 1967.  The Court also held that the 10-day period for the Governor to decide on bills when the Legislature has adjourned for the year begins the date of adjournment, not when the bill is presented to the Governor.  The Court’s ruling applies prospectively, so any bills that have already been passed could not be challenged.

This means that, for the immediate future, the status quo prevails and the sales tax on groceries continues without changes.  AIC is aware of two cities—Sandpoint and Driggs—that have local option retail sales taxes that apply to food that would have been impacted had the Governor’s veto been struck down. 

Revenue sharing funds to cities will likewise see no changes because of the Court’s ruling.  House Bill 67 protected revenue sharing funds and even if the Court had struck down the Governor’s veto, cities’ revenue sharing funds would have been preserved.

However, the issue looms large in the 2018 governor’s race and grocery tax repeal is supported by candidates Lieutenant Governor Brad Little and former emergency room physician and developer Tommy Ahlquist.  It is not clear if 1st District Congressman Raul Labrador supports repeal.  Given the overwhelming support in the Legislature, the issue could gain a lot of traction once a new Governor takes office in January 2019.  

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