[Vision2020] Legislative Update Week I I (Jan 16-21) from Rep. Trail

[RepTrail]

Visionaries, 
 
I've summarized some of the legislative highlights from this week below:
 
1.  Salary Increases for State Employees  --  Many legislators are not
happy with the Governor's recommendation of one percent.  Toward the end
of this week there will be several proposals which will consider
alternatives that range from two to four percent.  These alternatives
will probably consider part of the increase to cover the employee's
portion of health insurance and move some employees closer to policy on
the scale.  Some of the proposed increase will probably be dependent on
the surplus eliminator  --  if the economy is moving ahead and there are
enough taxes collected, then the surplus eliminator would automatically
kick in the designated increase on July 1st.  However, any such increase
is only a one year increase and does not build into the base.  We'll see
what develops later this week.
 
     I mentioned last week that figures from the U. of I. last week
indicated that about 20% of staff are at or below the poverty level.
I'm informed by the Sojourner's Alliance that three U.of I. staff are
homeless and are staying at the shelter.
 
2.  Ethanol  --  This week the Senate Transportation Committee will
consider a bill that would mandate that all gasoline sold in the state
contain at least 10 percent ethanol.  The fuel would be cleaner, and
would provide farmers with an added outlet for their crops.  INEEL
scientists are working on a process that would allow straw to be the
source material for the ethanol.
 
3.  Budget  --  Tax returns for December returned $14.7 million over the
Governor's projections.  This is the sixth month in a row that tax
collections have been over projections.  By July 1st there may be a
total of around $120 million over projections; however, with the
elimination of the one cent sales tax we will lose $180 million for the
state budget.  I don't think the economy is going to continue to develop
rapidly enough to make up for the loss in revenue derived from the loss
of the one cent sales tax.  The coming fiscal year will be tight but the
two following fiscal years will be extremely tight unless some
additional revenues are found.
 
4.  Tax Reform--Idaho has not undergone major tax reform since 1965 when
we added sales tax to fund education.  Since that time we have approved
over 70 exemptions.  These exemptions total about $1.5 billion as
compared to $1 billion in sales tax.  Every exemption  favors a
particular interest group and taxpayers in general pay the bill.  Those
who receive exemptions so far have not had to justify the exemption's
benefit to the state.
 
     I will be introducing legislation this next week which proposes to
reduce the sales tax from 6% to 4%.  I'm proposing that 10 major
exemptions (excluding production activities) be eliminated and that
services be taxed (excluding medical and health related activities).
     If this legislation were enacted, the Tax Commission estimates that
about $60 million more would be realized than under the current tax
system.  I'm hoping that this proposal will at least get the debate
about tax reform started in Idaho.
 
5.  Highway Construction  --  The Governor proposed to fund $1.6 billion
for highway through the use of GARVEE bonds.  Under Grant Anticipation
Revenue Vehicle (GARVEE) bonding, states borrow money to build road
projects immediately, instead of waiting for money under the current
pay-as-you go basis.  States pay back the money with part of their
federal highway gas tax revenues.  This approach is used in 14 other
states.
 
     Many ask the question, "Can We Afford It?"  While GARVEE bonding
has significant expenses, like the interest to pay off the debt, it
saves money and is a fair way to charge newcomers for part of the cost
of growth.  The Idaho Department of Transportation figures that the
approach will save much money figuring that 30 years of construction can
be compressed into 10 thus resulting is savings that comes from the ever
escalating cost of construction and land.  
     The GARVEE system has potential risks.  To counter them, Idaho
should obtain bonding insurance.  This will protect taxpayer in against
the possibility of the federal government not giving the state it's
highway fund appropriation.
 
Rep. Tom Trail
     
 
 
These are just a few of the issues outlined in the Governor's State of
the State address.  Constituents can reach me via e mail at
ttrail at house.state.id.us   
 
I appreciate your comments and concerns.  You can reach me via e-mail at
ttrail at house.state.id.us or at my desk phone: (208)332-1260.
 
Rep. Tom Trail
 
 
 
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