2011 Idaho Legislative Preview Newsletter

Constituents:

     The official opening of the 2011 Idaho Legislative session begins on Monday January 10th. Governor Butch Otter will present his State of the State on that date as well. This year I am serving as Chair of the House Ag Affairs Committee and also on the House Education and House Human Resources and Commerce Committees. I plan on sending out a weekly newsletter. Those of you who do not wish to receive should let me know, and I will take you off the list. I can be reached at ttrail@house.idaho.gov via e mail and by phone (208) 332-1184 in my office and (208) 332-1260 in the House Chamber.

Now on to some of the major issues.

  1. Idaho is staring at a potential 2011-12 shortfall of $340 million which represents 14 percent of the budget.  During the 2010 session the public schools budget took a 7.5% cut and higher education suffered a 11.3 % hit. Further cuts of the magnitude facing education and other key programs will be catastrophic.

  2. Options  --  One positive piece of news is that the state's economy seems to be on a slow upswing. Tax revenues coming in to the state treasury since July 1st have been ahead of projects, and there may be as high as a $60-$80 million gain in state revenues.  Again, if this trend holds up it only slightly fills the $340 million hole.

     There have been very positive results by hiring extra tax auditors for the Idaho State Tax Commission.  The auditors pursue out-of-state companies that owe taxes in Idaho. For every dollar invested in auditors the return is about $15. It is hoped that the Governor and the Legislature will support hiring more auditors. Estimates are that there is in excess of $200 million in unpaid taxes each year in Idaho and including companies who conduct business in state but are head quartered out of state. Continued vigorous efforts could recover an estimated $40-50 million/year.

     Most Idahoans agree that we need a fairer and more equitable tax system. Rep. Shirley Ringo and I will be introducing legislation aimed at setting up a system to examine the 80 tax exemptions granted companies and organizations since 1965.  It is estimated that these exemptions total between $1.7 to $1.8 billion/year or almost as much as the current Idaho State budget. No organization has ever had to prove that the exemption they received has provided a benefit to the state. Many of us feel that if a system and process was set up to review each exemptions that some of them would not be able to prove to be a benefit to the State.  The result would be that those monies could then go into the general revenue stream and be used for education and other priority programs. We'll talk more about the details of our proposal in the near future.

     There has also been talk about increasing the tax on tobacco.  This could possibly raise about $70 million in additional revenue. Any type of tax increase will be realistically a very tough sell since many new legislators signed a No Tax Increase pledge.  However, if we can add additional revenue through making adjustments toward a fairer and more equitable tax system we may be able to help close the gap.

  3. Idaho State Tax Commission -- When eight former or current auditors of the Commission report that the Commission works out "sweet heart" deals with out-of-state companies to reduce the taxes owed to Idaho, then one has to question the fairness of such actions.  Does the Commission provide this type of treatment and service to the average Idaho taxpayer? Remember the heavy foot of the Commission last October in Lewiston when a member of Commission announced they would close down a pumpkin stand run by a 4 year old girl and her six year old brother if they didn't pay their sales tax.  The is in stark contrast to the so called "sweet heart" deals reported by auditors that the Commission carries out with out-of-state companies.  The time has come to professionalize the Tax Commission.  I understand that Gov. Otter may have a plan in mind.  If not then Rep. Jaquet has drafted a piece of legislation based on Montana statutes that would professionalize the Idaho Tax Commission.  I've communicated to her that I'd certainly support such a proposal.

There are many more key issues facing the Legislature, and we will touch on these in the next newsletter.

Rep. Tom Trail

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