<html xmlns:o="urn:schemas-microsoft-com:office:office" xmlns:w="urn:schemas-microsoft-com:office:word" xmlns="http://www.w3.org/TR/REC-html40">
<head>
<META HTTP-EQUIV="Content-Type" CONTENT="text/html; charset=us-ascii">
<meta name=ProgId content=Word.Document>
<meta name=Generator content="Microsoft Word 10">
<meta name=Originator content="Microsoft Word 10">
<link rel=File-List href="cid:filelist.xml@01C5018E.55C82110">
<!--[if gte mso 9]><xml>
<o:OfficeDocumentSettings>
<o:DoNotRelyOnCSS/>
</o:OfficeDocumentSettings>
</xml><![endif]--><!--[if gte mso 9]><xml>
<w:WordDocument>
<w:SpellingState>Clean</w:SpellingState>
<w:DocumentKind>DocumentEmail</w:DocumentKind>
<w:EnvelopeVis/>
<w:Compatibility>
<w:BreakWrappedTables/>
<w:SnapToGridInCell/>
<w:WrapTextWithPunct/>
<w:UseAsianBreakRules/>
</w:Compatibility>
<w:BrowserLevel>MicrosoftInternetExplorer4</w:BrowserLevel>
</w:WordDocument>
</xml><![endif]-->
<style>
<!--
/* Style Definitions */
p.MsoNormal, li.MsoNormal, div.MsoNormal
{mso-style-parent:"";
margin:0in;
margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:12.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";}
a:link, span.MsoHyperlink
{color:blue;
text-decoration:underline;
text-underline:single;}
a:visited, span.MsoHyperlinkFollowed
{color:purple;
text-decoration:underline;
text-underline:single;}
p.MsoAutoSig, li.MsoAutoSig, div.MsoAutoSig
{margin:0in;
margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:12.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";}
span.EmailStyle17
{mso-style-type:personal-compose;
mso-style-noshow:yes;
mso-ansi-font-size:10.0pt;
mso-bidi-font-size:10.0pt;
font-family:Arial;
mso-ascii-font-family:Arial;
mso-hansi-font-family:Arial;
mso-bidi-font-family:Arial;
color:windowtext;}
span.SpellE
{mso-style-name:"";
mso-spl-e:yes;}
@page Section1
{size:8.5in 11.0in;
margin:1.0in 1.25in 1.0in 1.25in;
mso-header-margin:.5in;
mso-footer-margin:.5in;
mso-paper-source:0;}
div.Section1
{page:Section1;}
-->
</style>
<!--[if gte mso 10]>
<style>
/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-parent:"";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:10.0pt;
font-family:"Times New Roman";}
</style>
<![endif]-->
</head>
<body lang=EN-US link=blue vlink=purple style='tab-interval:.5in'>
<div class=Section1>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'>Visionaries,
<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'>I’ve
summarized some of the legislative highlights from this week below:<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'>1.<span
style='mso-spacerun:yes'> </span>Salary Increases for State Employees<span
style='mso-spacerun:yes'> </span>--<span style='mso-spacerun:yes'>
</span>Many legislators are not happy with the Governor's recommendation of one
percent.<span style='mso-spacerun:yes'> </span>Toward the end of this week
there will be several proposals which will consider alternatives that range
from two to four percent.<span style='mso-spacerun:yes'> </span>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.<span style='mso-spacerun:yes'> </span>Some of the proposed
increase will probably be dependent on the surplus eliminator<span
style='mso-spacerun:yes'> </span>--<span style='mso-spacerun:yes'> </span>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.<span style='mso-spacerun:yes'> </span>However, any such increase is only
a one year increase and does not build into the base.<span
style='mso-spacerun:yes'> </span>We'll see what develops later this week.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><span
style='mso-spacerun:yes'> </span>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.<span style='mso-spacerun:yes'> </span>I'm informed by the
Sojourner's Alliance that three <span class=SpellE>U.of</span> I. staff are
homeless and are staying at the shelter.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'>2.<span
style='mso-spacerun:yes'> </span>Ethanol<span style='mso-spacerun:yes'>
</span>--<span style='mso-spacerun:yes'> </span>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.<span
style='mso-spacerun:yes'> </span>The fuel would be cleaner, and would provide
farmers with an added outlet for their crops.<span style='mso-spacerun:yes'>
</span><span class=SpellE>INEEL</span> scientists are working on a process that
would allow straw to be the source material for the ethanol.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'>3.<span
style='mso-spacerun:yes'> </span>Budget<span style='mso-spacerun:yes'>
</span>--<span style='mso-spacerun:yes'> </span>Tax returns for December
returned $14.7 million over the Governor's projections.<span
style='mso-spacerun:yes'> </span>This is the sixth month in a row that tax
collections have been over projections.<span style='mso-spacerun:yes'>
</span>By July 1<sup>st</sup> 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.<span style='mso-spacerun:yes'>
</span>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.<span style='mso-spacerun:yes'> </span>The coming fiscal year will be
tight but the two following fiscal years will be extremely tight unless some
additional revenues are found.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'>4.<span
style='mso-spacerun:yes'> </span>Tax Reform--Idaho has not undergone major tax
reform since 1965 when we added sales tax to fund education.<span
style='mso-spacerun:yes'> </span>Since that time we have approved over 70
exemptions.<span style='mso-spacerun:yes'> </span>These exemptions total about
$1.5 billion as compared to $1 billion in sales tax.<span
style='mso-spacerun:yes'> </span>Every exemption<span
style='mso-spacerun:yes'> </span>favors a particular interest group and
taxpayers in general pay the bill.<span style='mso-spacerun:yes'> </span>Those
who receive exemptions so far have not had to justify the exemption's benefit
to the state.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><span
style='mso-spacerun:yes'> </span>I will be introducing legislation this
next week which proposes to reduce the sales tax from 6% to 4%.<span
style='mso-spacerun:yes'> </span>I'm proposing that 10 major exemptions
(excluding production activities) be eliminated and that services be taxed
(excluding medical and health related activities).<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><span
style='mso-spacerun:yes'> </span><span style='mso-spacerun:yes'> </span>If
this legislation were enacted, the Tax Commission estimates that about $60
million more would be realized than under the current tax system.<span
style='mso-spacerun:yes'> </span>I'm hoping that this proposal will at least
get the debate about tax reform started in Idaho.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'>5.<span
style='mso-spacerun:yes'> </span>Highway Construction<span
style='mso-spacerun:yes'> </span>--<span style='mso-spacerun:yes'> </span>The
Governor proposed to fund $1.6 billion<span style='mso-spacerun:yes'> </span>for
highway through the use of <span class=SpellE>GARVEE</span> bonds.<span
style='mso-spacerun:yes'> </span>Under Grant Anticipation Revenue Vehicle (<span
class=SpellE>GARVEE</span>) bonding, states borrow money to build road projects
immediately, instead of waiting for money under the current pay-as-you go
basis.<span style='mso-spacerun:yes'> </span>States pay back the money with
part of their federal highway gas tax revenues.<span style='mso-spacerun:yes'>
</span>This approach is used in 14 other states.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><span
style='mso-spacerun:yes'> </span>Many ask the question, "Can We Afford
It?"<span style='mso-spacerun:yes'> </span>While <span class=SpellE>GARVEE</span>
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.<span style='mso-spacerun:yes'> </span>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.<span
style='mso-spacerun:yes'> </span><o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><span
style='mso-spacerun:yes'> </span>The <span class=SpellE>GARVEE</span>
system has potential risks.<span style='mso-spacerun:yes'> </span>To counter
them, Idaho should obtain bonding insurance.<span style='mso-spacerun:yes'>
</span>This will protect taxpayer in against the possibility of the federal
government not giving the state it's highway fund appropriation.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'>Rep.
Tom Trail<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><span
style='mso-spacerun:yes'> </span><o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'>These
are just a few of the issues outlined in the Governor's State of the State
address.<span style='mso-spacerun:yes'> </span>Constituents can reach me via e
mail at ttrail@house.state.id.us<span style='mso-spacerun:yes'> </span><o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'>I
appreciate your comments and concerns.<span style='mso-spacerun:yes'>
</span>You can reach me via e-mail at <a href="mailto:ttrail@house.state.id.us">ttrail@house.state.id.us</a>
or at my desk phone: (208)332-1260.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'>Rep.
Tom Trail<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-layout-grid-align:none;text-autospace:none'><font
size=2 face="Courier New"><span style='font-size:10.0pt;font-family:"Courier New"'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
</div>
</body>
</html>