Legislative Newsletter IX, March 7-13, 2009

Constituents:

     There is a lot of economic news on many fronts this week.   It looks like JFAC will start setting budgets this coming week.  Predictions are that we probably get out about mid-April.

1. The Economy  --  Idaho's unemployment rate continues to increase--it probably       will be up around 7 percent by April 1st.   Idaho is now in the top ten states in terms of the increasing number of foreclosures.

During the past year or so it is apparent that about 20 Moscow businesses have closed shop.  The layoffs at Bennett's and Potlatch are also indicators of us moving deeper into the recession.  Several businessmen told me they understood that Schweitzer Engineering might be considering moving to Mexico because of concerns over the Obama administration income tax proposals. I checked with Adina Bielenberg, Schwietzer Public Affairs Manager, and she reported that Schweitzer has no plans to consider such a move.

There are some interesting facts about the potential impact of the Hawkins development on Moscow's economy.   For example, if the megamall is built they will have more square footage than all of the Moscow business square footage combined.  The impact on the Palouse Mall could be dramatic in terms of more businesses closing down, lost jobs, and loss of sales tax.   Property taxes would also probably increase.   If the Palouse Mall closes down we would lose about $2,000,000 in property tax over a ten year period, and since the land the mall sits on belongs to the University of Idaho- then a closure of the mall would have an adverse negative impact on the University.  Again, I want to caution that the above scenario might only happen if and when the Hawkins development might come in.  Since the Giant Wal-Mart is being constructed this will naturally have a negative impact on Moscow's business community.

  SB1002 which would provide the means to legalize an agreement between Moscow to sell water to the Hawkins development if passed would be perfectly legal. If this was carried forward it would not only harm Moscow and Latah County's economy and citizens, but those of any area in Idaho that decides to sell Idaho water to another state. I do not think it is wise public policy to support legislation that allows the exportation of Idaho water at the expense of and subsidy by Idaho citizens -- especially to out of state developments that cost Idaho jobs, make Idaho businesses close, lose tax revenues, and increase local property taxes.

  It is interesting to note that Mayor Clay Larkin of Post Falls was recently approached by developers with plans to put up some major developments on the Washington side of the border, but they wanted to buy Post Falls water.   Mayor Lakin said, "We are opposed to SB1002, and we are notifying our legislators. We recently told a group wanting to buy water from us "NO".  The time to curtail it is now."

  Many south Idaho legislators are concerned about making changes in Idaho water laws.  Las Vegas/Clark County, Nevada, are buying water rights up to the Idaho border, and they have clearly indicated that in the near future they will be wanting to buy water rights in Idaho.    The bill is now in the hands of the House Resources and Conservation Committee and they will make their decision on Tuesday.   I've heard from over 50 constituents including major business owners who all oppose the bill. I believe that the sponsor of the bill had Moscow's best interest at heart when the bill was introduced but did not see some of the unforeseen consequences.

  If passed, SB1002 would extend the "right to continued use" of Idaho's waters to out of state users as long as they pay the ordinary charges. A city that availed itself of this opportunity to sell Idaho's water to foreign users at a time when the city believed they had surplus water available, would find that they could not ever stop the flow of Idaho water out of state as long as the out of state users paid their ordinary bills, even if the city's supply was diminished by drought or shrinking aquifers. In essence, Moscow would be up a creek.

   2.  Public Education Budget -- It appears that the Idaho Education Association, Idaho School Board Association, School Administrators, the PTA, and other groups have reached agreement on future public education funding. The details of the agreement will be made known this coming week.  There is concern that Governor Otter wants to hold back $78 million of the stimulus package for FY010 and FY11.  This is being opposed by many educators and SPI Tom Luna. One possible result would be to shorten the school year by 13 days.  This would provide students with about 167 school days as contrasted to 215-240 school days in most Asian and European countries.  As one legislator said, "This has all of the earmarks of the U.S. heading toward becoming a Third World Country."   The Governor wants to keep the money in reserve in case the recession stretches over the next two years.

  In the past both Senator Schroeder and I have pointed out that there are other sources of funding that could help fill the gap.   A major effort for tax reform should be called upon.  Senator Schroeder and I introduced the Taxpayer Accountability Act and it is being held in committee.   It basically calls for an examination of all of the 75 tax exemptions granted by the state to see if the state has benefitted by granting the exemptions. If an exemption is found not to be benefitting the state then the tax exempt money would flow into the General Fund and could be used to fund education programs. More auditors should be hired by the Idaho Tax Commission to go after out of state contractors who owe tax.  In past years over $15 million/year has been reclaimed.  The process should be made public so that no "sweet heart" deals made in private can be made.  These non taxpayers should not receive preferential treatment unlike the average Idaho taxpayer.

This winds up this week's newsletter.  I always like to hear from constituents regarding your concerns, ideas, and recommendations.  My e mail is ttrail@house.idaho.gov and phone 208-332-1184.

 Representative Tom Trail

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