Post Register editorial board members are Roger Plothow, acting publisher; J. Robb Brady; Marty Trillhaase; and Dean Miller.
There are less than two weeks to go before Idaho elects a governor, and we still don't know how this state will balance its budget. Will it cut spending? Where? Will it raise taxes? Which ones?
Gov. Dirk Kempthorne isn't saying. He dodged the question twice in last week's statewide debate on Idaho Public Television.
In contrast, Kempthorne's Democratic rival, Jerry Brady, said this: "I'll tell you one thing I do not favor. The governor may deny it, but in this administration, I know full well that they're planning on a sales tax increase. That's their idea of how to get back on level ground. I would oppose that. That's exactly the wrong way to go."
Give Brady points for candor, but he's putting himself in a box. A sales tax increase may be unavoidable - at least in the short term.
Here's why: Kempthorne cut spending and used up every pot of spare money he could get his hands on to balance the current budget. The next Legislature will face a $150 million hole in the budget it will draft for the year that begins July 1. To avoid more program cuts, the Legislature will need cash in a hurry - and it will have no margin for error.
Raising the sales tax rate raises money instantly and predictably. Each new penny in the sales tax rate generates about $130 million.
No other tax is as reliable.
Income taxes are volatile. Anybody who has watched the stock market in the past year knows how wildly investment incomes can fluctuate. Come April 15, when state income tax returns are due, the state could find it owes people more in refunds than it expected.
Brady - correctly - believes the state can raise more money by hiring tax auditors and collectors to go after tax evaders. But there's no guarantee that will generate enough money immediately.
How about repealing some of the special-interest exemptions to Idaho's sales tax? Good idea, but nobody knows precisely how much money those exemptions are worth. Guess wrong, and the state would be looking at more holdbacks next summer.
Even if those ideas worked, Idaho's business lobby will hold them up. But business doesn't care that a sales tax hurts Idaho's working and middle class families. Idaho taxes groceries. Someone with an income of $25,000 spends 58 percent of his income on necessities - food and clothing - that are subject to the sales tax. Someone who makes 10 times as much spends much less of his income on necessities - and therefore in sales tax.
Worse, this sales tax increase - in large part - is needed to replace dollars lost to the 2001 income tax cuts. In other words, Idaho will increase taxes on working and middle-class families to continue giving tax relief to wealthy families and corporations.
So the question Brady and Kempthorne need to answer isn't so much how they'll take care of the next year or two. The state's circumstances and politics have settled that. The sales tax is going up - at least for a couple years.
What matters is what happens next. Idaho's tax system needs to be redesigned for a 21st-century economy. Lower-income families shouldn't have a larger tax burden than the state's wealthiest people.
And the candidates for governor need to address questions such as these:
n Should we lift the sales tax on food?
n Should we remove sales tax breaks?
n Why not repeal the 2001 income tax cuts?
n Can Idaho's income tax become more progressive?
Kempthorne and Brady have one last debate scheduled. Tuesday,
they'll appear on the Boise TV station KTVB. It's probably the
voters' last chance to get some answers.
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