From the July 2002 Idaho Observer:

Supreme Court declares K-county sales (jail) tax “unconstitutional”

BOISE -- On July 2, 2002, the Idaho Supreme Court unanimously declared the Resort County Local Option Sales Tax “unconstitutional.” The .5 percent sales tax, implemented January 1, 2001, to fund a jail expansion project that had been defeated twice by Kootenai county voters, has already produced some $9 million in revenue.

The Supreme Court reversed an August 21, 2001 decision by First District Court Judge Charles Hosack who determined that the Resort County Local Option Sales Tax was okay once he severed unconstitutional language from the law.

The Supreme Court reasoned that the tax was, “A local and special law in violation of Article III, Section 19 of The Idaho Constitution.”

Indeed, the legislative tracking of the tax as it was being sold to the legislature indicates that it was passed with assurances that the tax would only apply to Kootenai county. The tax could only be implemented if it were in a resort county of more than 80,000 people and within 50 miles of a county with a population greater than 350,000. “Why didn't they do something simple like say all counties that start with 'K' can use this?” Justice Jesse Walters asked last April when the state high court heard oral arguments.

The reversal is a victory for Concerned Taxpayers of Kootenai County (CTKC), the group that opposed the jail expansion project and use of the sales tax to fund it. Group chairman Tom Macy, a Libertarian candidate for county commissioner, said, “I want to know what the county intends to do with approximately $5 million in tax revenue it has not used and no longer has the authority to spend.”

After Judge Hosack legislated from the bench and sanctioned collection of the tax beginning Jan., 2001, Macy and CTKC members distributed some 2,000 protest forms to area businesses. Only a handful of business managers turned in the forms. Those who collected the tax under protest can request the money be refunded to them.

The county is threatening to raise property taxes since they can no longer collect an unconstitutional sales tax.

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