Idaho must invest for stronger economy
Most of us don't know the first thing about building roads. And we'd have a hard time teaching our kids calculus or chemistry. So we count on other people to do those things - road builders and teachers. That's why we pay taxes.
When applied properly, revenue from taxes has an excellent return on investment by providing essential services that enhance everyone's quality of life. But due to cuts in revenue since the late 1990s, Idaho has $500 million less to invest each year in education, health care and public safety, among other public services.
Many Idahoans may not know that Idaho collects less in taxes than all but two other states. We rank 49th among the 50 states and the District of Columbia for the amount of taxes collected and we are dead last among the 11 Western states. While some may consider those statistics a win for Idaho, this loss in revenue presents challenges. Idaho is falling dangerously behind in our investments in schools and workforce preparation, in our protection of the health and well-being of our communities, and in other indicators of economic prosperity.
State support for Idaho's grade, middle and high schools has declined by 16 percent (accounting for inflation) since 2008. As a result, school districts are forced to rely on property taxes to fund essential operations, and the percentage of districts with voter-approved levies has nearly doubled, from 36 percent to 70 percent. Wealthier districts, with higher property values, have a significant advantage in raising funds, which leads to wide disparities in how much schools across the state can spend on computers, textbooks and other essentials. All Idaho children deserve a quality education, not just those from wealthier districts.
Declining revenues also hurt those who go on to college, or would like to. Since 2008, Idaho's investment in colleges and universities has decreased by 37 percent per student. Reduced funding has likely kept many Idahoans from pursuing or finishing a degree program because of tuition hikes. And many others have been forced to take on more debt. While in 1980, tuition represented 7 percent of the cost of college, in 2014 it represents 47 percent. Idaho needs an educated workforce. We all benefit from ensuring widespread access to higher education.
Perhaps the greatest irony of Idaho's revenue decline is that low- and moderate-income residents pay a larger share of their income in taxes than the highest earners do. Those with incomes above $316,000 pay 6.4 percent of their income in state and local taxes, whereas those earning less than $18,000 pay 8.2 percent of their income. And while we are taxing the lowest wage earners at the highest rate, Idaho's per capita income is lower than all but one state - Mississippi.
Idaho can do better. Sensible tax policy - applied in a way that increases the quality of education in Idaho, while enhancing the important public functions that keep us safe and healthy - will make us stronger economically. Our future depends on mitigating dangerous declines in revenue and supporting sensible policies that invest in our future economic prosperity.
Lauren Necochea is Director of the Idaho Center for Fiscal Policy. Casey Shelley Bender, Christine Donnell, Jerry Evans, Kathleen Lewis, Jasper LiCalzi, Sue Lovelace, Marilyn Shuler and Rich Toney are members of the Idaho Center for Fiscal Policy Advisory Board.