[Vision2020] Legislative Update II from Rep. Trail

[ttrail at moscow.com]

LEGISLATIVE NEWSLETTER II--January 8-12/2007
 
Dear Constituents:
 
The first week of the Idaho Legislature was highlighted by Governor Otter's
State of the State Address.   Generally, the Governor received good
reviews, but it still remains to see what emerges from the detailed
analysis of the budget.  In one particular example, the Governor called for
a 5% merit increase for state employees; however, later analysis indicated
that no no funds were budgeted for benefits (health insurance).  So the
increase will be lower than the 5% figure.
 
Sportsmen gathered on the step of the Capitol and applauded the Governor
for signing a resolution to endorse the delisting of wolves and putting
them under state control.  We also heard testimony on Friday concerning the
Domestic Elk Ranch controversy.  Some 66 domestic elk escaped from an elk
farm in S. E. Idaho, and there are disease problems connected with the
issue.  There are apparently about 70 domestic elk farms in Idaho with over
5,600 elk and there are an estimated 125,000 wild elk.
 
SCHOOL, GROCERY TAX, AND PROPERTY TAX ISSUES
 
Much of the following information comes from an analysis written by former
Representative Ken Robison concerning these issues.  We went into this
session with a projected $200 million one time surplus of revenue.  In the
last five years state funding for schools has lagged behind increases in
basic school costs.  State funds increased a total of 8.7 % in five years.
 
While schools have fared poorly in the legislative budget process, colleges
and universities have fared even worse.  State general fund support is up a
total of $7.8 million, 3.3% in five years.  While state support increased
3.3% in five years, student fees increased $58 million or 92%.  In addition
there were no increases made in the scholarship areas.  This all made
access to higher education more expensive.
 
Governor Otter proposed better general fund budgets for public schools and
universities than those approved the the legislature in recent years.  His
proposed $1,360 million for public schools (which includes about $250
million for property tax levy replacement) is an increase of 5%.  His
proposed $275 million for colleges and universities is an increase of 13% 
He also is supporting taking $38 million of one time money to put into an
endowment fund to support need based scholarships  Higher Education should
fare well this year.
 
GROCERY TAX  --  Idaho is one of a few states that still taxes groceries. 
Taxing food makes the tax system more regressive or harder on middle-lower
income people.  The one cent sales tax approved in August to replace a
portion of property taxes tilted the tax structure even more.  Given the
revenue available, a six year phase-out of the tax at about $30 million
would help, but many lower-income people (those hurt most by the grocery
tax) don't apply for or receive the credit.  Governor Otter proposed $22
million for expansion of the credit which means a reduction of $22 million
in state ongoing revenue.
 
I plan on submitting a bill that would eliminate the grocery tax.   The
total impact on eliminating the grocery tax is $180 million.   My proposal
is to tax services (except for
health and medical) at the 4% level and this would raise sufficient funds
to pay for eliminating the grocery tax.  Dr. Steve Cooke of the University
of Idaho notes that taxing
services would affect higher income individuals proportionately more than
lower income people.
 
PROPERTY TAXES
 
The Governor asked legislators to look further at property tax.  He did
mention specifically the idea of reducing the personal property tax for
business.  A phase-out of the tax would cut business taxes about $70
million and reduce state revenue by an equal amount.  This would be in
addition to more than $45 million in other business tax cuts of recent
years plus about $80 million in property tax savings with levy replacement.
 The total would be nearly equal to revenue from the one cent sales tax
increase.
 
These are some of the heavy weight hitters in terms of issues coming up
this session.  We will have more details as the budget unfolds in the
coming weeks.   Please share your ideas, comments, and recommendations with
me.  My phone is (208) 332-1260 at my desk and my e mail is
ttrail at house.idaho.gov
 
Representative Tom Trail
 


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