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House Rev & Tax Committee Does Not Advance Monks Revenue Sharing Bill

Posted By Johanna M. Bell, Monday, February 25, 2019

The House Revenue & Taxation Committee voted Monday morning to hold at the call of the chair House Bill 154 sponsored by Rep. Jason Monks, R-Nampa, on the revenue sharing distribution formula.

Some committee members expressed concern about what they described as inequities in the current system, but it is not clear at this point whether the bill has enough support to advance. 

We greatly appreciate the efforts by city officials who contacted legislators in regard to this legislation.

The hearing provided an opportunity for folks on all sides of the issue to share their perspectives. 

Rep. Monks characterized the current system as grossly inequitable, noting that cities of similar population size received widely differing amounts on a per capita basis.  “The current system is not fair, and population would be a fairer way to do it.”

Burley City Administrator Mark Mitton warned the committee members about possible unintended consequences when distribution formulas allocating state revenue are changed. 

AIC Executive Director Jess Harrison noted that AIC established a Revenue Sharing Task Force, which met over last summer to look at the issue in depth and to help inform the AIC Board’s policy position.  The Board’s decision to oppose the legislation was taken after considerable discussion of various points of view and the potential implications of policy changes.  

“One thing that I can tell you for certain after months of meetings with diverse stakeholders is that defining what is fair is almost impossible,” Harrison said.  “Is it fair to not include point of sale?  Is it fair to penalize those who don’t have large retail bases?  Is it fair to remove a historical component that was part of a promise of changing a previous formula?  Is it fair to take much needed revenue away from our rural cities that are stagnant in their populations?  Is it fair that to some these dollars represent a significant portion of their budget while to others the overall loss or gain is de minimis? These are just a few of the challenges of defining what is fair in a large group of diverse and interested parties.”  

“Our Task Force did agree on the following principles for any formula alternatives, including reliable and verifiable data; stability and predictability for city budgeting purposes; simplicity and ease of implementation; and a hold harmless so that communities don’t entirely miss out on growth and have their dollars eaten away over time by inflation.” 

We extend our appreciation to Rathdrum City Administrator and Revenue Sharing Task Force Member Leon Duce who provided excellent testimony on the bill.  Duce noted the challenges under the Monks bill of budgeting for revenue sharing increases annually for cities that are close to the per capita average.  “A city may be capped in one year and receive an increase in the next year and that is too unpredictable for budgeting purposes.” 

Duce noted that the base replacement dollars for the business inventory replacement are capped in dollars and that future growth in the County Distribution is being allocated solely on a population basis. 

Ammon Mayor Sean Coletti noted that his city has one of the lowest property tax levy rates for a city of its size in the state and has been challenged to fund infrastructure and services required for its rapidly growing population.  “How can a city like Ammon that’s growing keep up with the costs of growth when revenue is going to cities that aren’t growing?” 

AIC will continue to follow this issue closely and provide updates as needed.

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