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LEGISLATIVE NEWSLETTER II January 11, 2008
Concerns about the future of the Idaho Economy dominated much of the discussion of the first week of the 2008 Legislative
Session.
The Governor's adjusted forecast for FY2008 is for a 3.5% increase over last year's general fund revenues. The Governor's FY2009 revenue growth was forecast at 3.4%. Although the revenue growth currently is strong, some uncertain economic conditions from slowing construction and real estate could be reasons for the Governor's more cautious growth estimates. JFAC is now in the process of making its own forecasts.
Idaho's jobless rate is now running about 3% which is below the 5% national average. However, Idaho tends to run about 6-12 months behind the national economy.
The State has a surplus in excess of $200 million. Governor Otter wants to expend some of the funds on one-time projects, but is very cautious about committing money to ongoing projects. One of the on-going projects was Superintendent of Instruction Luna's Teacher Merit Pay Proposal which would have had a cost of $60 million or up to $110 million if fully implemented. Luna's plan was not mentioned in the Governor's State of the State address. The talk around the capitol annex is simply that the plan is too expensive under the current economic outlook.
Some other items of note:
1. Grocery Tax Credits --
Last year everyone submitted a plan at eliminating the tax on groceries but nothing passed. The Governor is coming back with his plan that would provide up to a $90 tax credit to low income individuals. One of the problems is that in order to get the credit you must file an Idaho income tax and many individuals are simply too poor to file - hence they do not get the credit. Some accommodation will need to be made to take care of these low income citizens.
2. Elimination of the Business Personal Property Tax
-- Businesses currently pay tax on business items such as equipment. The current thought is that elimination of this tax would serve as a stimulus to Idaho small businesses. We have about 2,300 small businesses in Latah County. However, the elimination of the tax would mean that the county would have to come up with $4 - $5 million over a number of years to replace lost revenues. This means that property taxes would increase; however, the sponsors of the bill indicate that counties would be held harmless and not suffer any loss of revenue. The revenue replacement source has yet to be defined. Under this condition I can support the legislation because it would help our small businesses and not increase property taxes.
3. Dog Fighting/Felony Penalty
-- Sen. Brad Little introduced the bill for print today in the Senate. We have over 30 co-sponsors for the legislation. I met with the Farm Bureau today and they support the bill. They have opposed the measure during the past three years. The Michael Vick case and the fact that two people in Oneida County pleaded guilty to running a dog fighting ring will hopefully help passage of the bill.
4. State Employees Pay
-- Governor Otter is recommending a $78 million to increase teacher and state employee pay. This is a 5% increase. He is also recommending cuts in medical insurance for employees because of the increase state liability. Many legislators feel that we need to closely study this aspect of employee benefits.
5. Scholarships --
The Governor recommended an additional $50 million for the Idaho Opportunity Scholarship Program. Last year we approved $10 million to start the program in establishing a trust fund under control of the Secretary of State. To date, the U. of Idaho has awarded $585,000 in scholarships to 196 students from low income families. Legislators generally support the program but feel that the Governor will not get all of the $50 million for the fund.
6. Water Issues --
The Governor recommended $20 million in one time monies to help look for long term solutions to Idaho's water problems. $2 million has been designated for water adjudication in Northern Idaho.
7. Transportation --
The Governor is looking for creative ways to help finance Idaho's highway and bridge infrastructure. He is asking for the authority to issue $170 million in GARVEE bonds. He wants to move $17 million from the Idaho State Police Fund to transportation. The ISP would make up the difference from the General Fund. The Governor will support a local option tax proposal to fund local highways and repair government buildings, but it would still take a 2/3rds majority vote. We may also see some other proposals such as increased registration fees.
We are just getting use to our "tight" quarters in the Capitol Annex, but we are all getting adjusted to the limited space.
Please send me your comments, recommendations, etc. via e mail to ttrail@house.idaho.gov. My office # is (208) 332-1184.
Representative Tom Trail
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