Opinion: Idaho Legislature

Six Good Ideas You Won’t See Out of the Idaho Legislature This Year

By Sharon Fisher, 1-01-10

With this year’s legislative session shaping up to be the worst bloodbath in years, it’s interesting that so many people seem to be looking forward to it. It’s like the way we can’t resist looking at an accident on the highway. Now that Christmas and New Year’s are over—and even before the Fiesta Bowl—people are already running articles and making Facebook posts talking about how much they’re anticipating the session.

Perhaps it’s the move back to the newly renovated Statehouse that’s causing the added excitement. It’s not just turning to look at an accident—it’s like seeing an accident with a Rolls-Royce.

It’s no news that Governor C.L. “Butch” Otter and the legislators are getting out their knives.

The thing is, it doesn’t have to be that way. But it will, for two main reasons.

First, this is an election year. With last year’s long struggle over raising transportation revenue fresh in their minds, there’s no way that the Governor and the Legislature are going to to impose anything that looks, smells, or could be framed as a tax, especially with Representative Raul Labrador (R-Eagle) trying to out-conservative outsider Vaughn Ward in the upcoming Republican primary to run against Democratic Congressman Walt Minnick in November.

(Labrador has already muscled out Majority Caucus Chair Ken Roberts (R-Donnelly), whose campaign manager was Speaker Lawerence Denney (R-Midvale); it will be interesting to see whether Republican leadership helps Labrador—who is, at least, one of their own—rack up points to be used against Ward in the primary, or holds a grudge against him.)

In fact, Labrador, as well as Majority Leader Mike Moyle (R-Star) and Marv Hagedorn (R-Meridian) are floating a plan to cut taxes by more than a third over the next ten years. Their excuse is that taxes in surrounding states are lower, and that cutting Idaho’s taxes will bring in more jobs—even though numerous studies, both inside and outside Idaho, say that taxes are not a major factor in site location.

The second reason is that the conservative and Libertarian-slanting members of the legislature, as well as Governor Otter, look at the current economic situation as an opportunity—and that’s the word they use—to cut state government. Both legislators and Otter have indicated that entire state agencies may fall by the wayside. With revenues beginning to creep upward, even if job creation is lagging, this may be the Governor’s and those legislators’ last opportunity to use the economy as an excuse for slashing the parts of the state budget they’ve always had their eye on.

Consequently, the Legislature and the Governor will avoid doing anything this year that could possibly raise revenues, and instead will focus only on cutting budgets.

Here’s some examples of revenue-raising opportunities that we won’t see.

* Representative Shirley Ringo (D-Moscow) suggested a 5 percent surcharge on state income tax for those with taxable income exceeding $50,000, which she projected would generate about $44 million per year. Republicans, including Otter, quickly leapt at the opening to talk about “tax and spend Democrats” and vowed they wouldn’t support her proposal.

* Similarly, when now-Senator Nicole LeFavour (D-Boise) was a representative on the House Revenues and Taxation Committee, she suggested adding new upper tax brackets. Currently, Idaho’s top tax bracket is at $25,441, meaning that people with incomes of, say, $100,000 pay the same tax rate as people with incomes of $25,000. In comparison, states such as Oregon have brackets up to $250,000.

* There are currently more than 120 tax exemptions, which, according to the 2009 Fiscal Facts book, could raise more than $250 million. An interim committee in 2007 made a number of recommendations to the Legislature about which ones could be dropped—which have largely been ignored.

* Similarly, by applying sales taxes to selected services, Idaho could raise up to more than $1 billion.

* Though former Governor Dirk Kempthorne issued an executive order in 2005 adding Idaho to the Streamlined Sales Tax project—which is intended to simplify sales taxes for Internet companies so such taxes can more easily be imposed—it has expired and attempts to have the Legislature re-impose it have failed. In fact, outdoor retailer Cabela’s set up shop in northern Idaho only after setting up a deal where the store wouldn’t “count” as a physical presence, which would otherwise make it liable for such a tax.

* There is also the perennial struggle for a local option tax, which would give citizens of a region the power to vote on whether to tax themselves for ongoing operations funding for public transit. Idaho is one of only a handful of states that does not give citizens this local control. In 2008, Legislative leadership proposed a Constitutional amendment that would have allowed local option taxing authority, but which hamstrung it so much that it would have been essentially useless—and, as a Constitutional amendment, essentially unable to be changed. In 2009, Speaker Denney flat-out refused to consider any local option taxing authority bill unless it included such a Constitutional amendment provision.

Otter’s State of the State message, where he’ll lay out his proposed budget—including cuts—is scheduled for 1 pm on Jan. 11.

Like this story? Get more! Sign up for our free newsletters.