Reforms proposed for Idaho tax agency

BOISE - Idaho Rep. Wendy Jaquet plans to introduce sweeping legislation to reform Idaho’s state Tax Commission, shifting it from an agency run by four full-time political appointees to one run by a professional director with a part-time commission. “It is high time to professionalize the Commission,” said Jaquet, D-Ketchum, noting that it’s been plagued by whistleblower allegations of sweetheart deals for influential taxpayers, plus an ongoing dispute with elected county assessors over property tax rules. Jaquet’s proposal would create a new Department of Revenue and Taxation, and she’d also consolidate the revenue forecasting functions that now fall under the governor’s Division of Financial Management into the new department. That move, she said, would help “keep politics out of revenue forecasting.” Jaquet also called for a full, outside forensic audit of the state Tax Commission and its operations, and a new process to determine who gets audited “where the selection is blind, which will ensure that the process is fair for all Idaho taxpayers.” “The governor’s office and I have talked about this for the last couple years, and they may be working on something themselves, but I just wanted to get out there and say it’s time to do this,” said Jaquet, an eight-term state lawmaker and the former Idaho House minority leader. Gov. Butch Otter’s spokesman, Jon Hanian, said he couldn’t comment on Jaquet’s proposal because the state currently is involved in a lawsuit over the issue. Rep. Shirley Ringo, D-Moscow, sued the state over alleged secret deals given to influential taxpayers; she’s offered to put her lawsuit on hold in favor of a state investigation, but so far, the state hasn’t accepted the offer. The allegations about sweetheart deals at the Tax Commission surfaced when longtime tax auditor Stan Howland sent lawmakers, the governor and the attorney general a 17-page whistleblower report in 2008, charging that tax commissioners routinely excuse large sums in taxes owed by large, multistate corporations, and confidentiality laws prevent anyone from finding out about it. He said the deals have become so frequent that corporations routinely protest their state taxes to get their “Idaho tax break.” Since then, two state investigations have concluded no laws were broken, but seven more longtime Tax Commission employees have come forward with sworn statements about the tax deals, including three current commission employees who came forward in the past three weeks. All said reform legislation enacted in 2009 after Howland’s revelations didn’t fix the problem, and may even have made it worse. Sen. Brent Hill, R-Rexburg, chairman of the Senate Local Government and Taxation Committee, disputed that. “We tried to address some of the concerns with compromises, and yet these whistleblowers keep claiming there should be no compromises, and I don’t agree with that concept,” said Hill, a CPA. “That’s why the Legislature stepped in and very clearly said, ‘Yes, there should be compromises under these circumstances,’ and we outlined those.” He added, “As far as I’m concerned, we have addressed this issue, we’ve taken care of it, but … we are certainly amenable to suggestions from the public, from other legislators, from anyone else of how we can run our government better, and that includes the state Tax Commission.” Idaho’s Tax Commission is bipartisan, with two Democrats and two Republicans. Its chairman is appointed by the governor; the current chairman is Royce Chigbrow, who long served as Otter’s campaign treasurer and whose son now has that role. Jaquet said, “The governor appoints the chairman, but he appears unwilling or unable to get his longtime political associate to address the obvious mismanagement at the Commission. It is time for the Legislature to act.” Jaquet said similar reform legislation passed the House in 1993, but didn’t win final passage. She said Washington, Montana, Oregon, Colorado and Wyoming operate without tax commissions, while Utah has four gubernatorial appointees who select an executive director to run day-to-day operations. Hill said issues like property tax rules and revenue forecasts ultimately are decided by the state Legislature. “How you depoliticize the Legislature I don’t know - politics is part of what makes representative democracy work,” he said. “I don’t think politics is a bad thing necessarily.”