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<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">Constituents:<?xml:namespace
prefix = o ns = "urn:schemas-microsoft-com:office:office"
/><o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">This past week Bob
Huntley and I held a press conference in <?xml:namespace prefix = st1 ns =
"urn:schemas-microsoft-com:office:smarttags" /><st1:place w:st="on"><st1:City
w:st="on">Boise</st1:City></st1:place> concerning the deteriorating conditions
of funding<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">for K12 and Higher
Education in <st1:place w:st="on"><st1:State
w:st="on">Idaho</st1:State></st1:place>. Representation from the
<st1:State w:st="on">Idaho</st1:State> Education ‘Association, <st1:place
w:st="on"><st1:State w:st="on">Idaho</st1:State></st1:place> Labor
Unions,<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">business interests, and
the community attended. I’ve decided to share the comments that I
made at the press conference<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">in this
newsletter. Several weeks ago, Rep. Dennis Lake,
Chairman of the House Rev and Tax Committee came to
my<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">office and asked me for
a copy of a tax proposal that Bob Huntley and I had developed several years
ago. Rep. Lake<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">said that he liked many
components of the proposal. He also stated that the major theme of
the 2011 legislative session<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">will be tax
reform. I consider Rep. Lake’s comments to strongly indicate what the
major thrust will be of the next session.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">I’ve also included a
summary report of sales tax exemptions which are at the heart of an unequal and
unfair part of the <st1:place w:st="on"><st1:State
w:st="on">Idaho</st1:State></st1:place><o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">Tax System.
Sen. Schroeder and I as well as several other legislators had legislative
proposals to sunset and review<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">all of the 75 tax
exemptions that we have on the books in this state. Actually <st1:place
w:st="on"><st1:PlaceName w:st="on">Washington</st1:PlaceName> <st1:PlaceType
w:st="on">State</st1:PlaceType></st1:place> is far ahead of us
with<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">more than 500 tax
exemptions, but my favorite is their tax exemption on bull
semen.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">During the election
cycle the word is that one should not talk about tax reform because it might
damage your credibility<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">at the
polls. My take is that since it will obviously be the ISSUE for the
coming session (beside jobs and economic<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">development) that now
is the time to begin the debate.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">Rep. Tom
Trail<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">
<st1:place w:st="on"><st1:State w:st="on">IDAHO</st1:State></st1:place>
EDUCATION AT THE CROSSROADS<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><st1:place w:st="on"><st1:State w:st="on"><FONT size=2
face=Calibri><SPAN
style="FONT-SIZE: 11pt">IDAHO</SPAN></FONT></st1:State></st1:place> PUBLIC AND
HIGHER EDUCATION ARE AT A CROSS ROADS. OUR EDUCATIONAL
INFRASTRUCTURE HAS SUFFERED<o:p></o:p></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">FROM
THE CUTBACKS OF THE PAST FEW YEARS, AND IT IS LIKELY SUFFER MORE IN THE COMING
FEW YEARS UNLESS A<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt">DRAMATIC<FONT color=navy><SPAN style="COLOR: navy">
</SPAN></FONT> TURNAROUND OCCURS. THE <st1:place
w:st="on"><st1:State w:st="on">IDAHO</st1:State></st1:place> CONSTITUTION
CLEARLY OUTLINES THAT WE HAVE A CONSTITUTIONAL<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt">OBLIGATION TO PROVIDE A THOROUGH AND UNIFORM EDUCATION
FOR OUR CHILDREN. THIS OBLIGATION
CLEARLY<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt">SIGNIFIES THAT WE NEED TO PROVIDE THE RESOURCES BOTH TO
K12 STUDENTS BUT ALSO FOR STUDENTS IN HIGHER<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt">EDUCATION. THIS YEAR’S BUDGET
FOR K12 IS DOWN ABOUT 7 PERCENT, AND HIGHER EDUCATION HAS
SUFFERED<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Calibri><SPAN
style="COLOR: navy; FONT-SIZE: 11pt">A 22 PERCENT LOSS DURING THE PAST TWO
YEARS.</SPAN></FONT><o:p></o:p></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><st1:place w:st="on"><st1:State w:st="on"><FONT size=2
face=Calibri><SPAN
style="FONT-SIZE: 11pt">IDAHO</SPAN></FONT></st1:State></st1:place> ELECTED
OFFICIALS ARE STRONG SUPPORTERS OF PUBLIC EDUCATION, AND I’VE HEARD THE GOVERNOR
<o:p></o:p></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">NOTE
THAT WE MUST DO OUR BEST TO PREPARE <st1:place w:st="on"><st1:State
w:st="on">IDAHO</st1:State></st1:place> STUDENTS TO COMPETE IN THE WORLD
ECONOMY. BUT<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">WHEN
WE HAVE SCHOOLS THAT HAVE GONE TO FOUR DAY SCHOOL DAYS, INCREASES IN
CLASS SIZE, AND<FONT color=navy><SPAN style="COLOR: navy"> A
</SPAN></FONT> DECLINE<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">IN
SUPPORT FOR SCHOOL RESOURCES---THIS RAISES THE QUESTION OF WHETHER OR NOT WE ARE
MEETING OUR<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt">CONSTITUTIONAL OBLIGATION TO PROVIDE A THOROUGH AND
UNIFORM EDUCATION FOR OUR K12 STUDENTS.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">IN
1985 HIGHER EDUCATION RECEIVED ALMOST 17 PERCENT OF THE STATE
BUDGET. THIS HAS DECLINED TO
ABOUT<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">8
PERCENT TODAY. PRIORITY PROGRAMS HAVE BEEN
ELIMINATED, CLASS SIZES HAVE INCREASED. TOP
RESEARCHERS<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">AND
TEACHERS ARE LEAVING FOR BETTER OPPORTUNITIES. FEES FOR
STUDENTS ARE INCREASING BY 10-12 PERCENT<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">PER
YEAR, AND THE AVERAGE FOUR YEAR GRADUATE LEAVES THEIR ALMA MATER WITH OVER
$20,000 IN DEBT.<FONT color=#1f497d><SPAN
style="COLOR: #1f497d">
THE</SPAN></FONT><o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=#1f497d size=2 face=Calibri><SPAN
style="COLOR: #1f497d; FONT-SIZE: 11pt"> </SPAN></FONT><o:p></o:p></P>
<P class=MsoNormal><FONT color=#1f497d size=2 face=Calibri><SPAN
style="COLOR: #1f497d; FONT-SIZE: 11pt">UNIVERSITIES PREPARE OUR WORKFORCE TO
MOVE OUR ECONOMY AHEAD</SPAN></FONT><FONT color=navy><SPAN style="COLOR: navy">,
AND BUSINESSES LOOKING TO LOCATE IN <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Calibri><SPAN
style="COLOR: navy; FONT-SIZE: 11pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><st1:Street w:st="on"><st1:address w:st="on"><FONT color=navy
size=2 face=Calibri><SPAN style="COLOR: navy; FONT-SIZE: 11pt">IDAHO
PLACE</SPAN></FONT></st1:address></st1:Street><FONT color=navy><SPAN
style="COLOR: navy"> A HIGH VALUE ON THE K12 AND HIGHER EDUCATION PROGRAMS IN
THE STATE AND HOW THEY ARE<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Calibri><SPAN
style="COLOR: navy; FONT-SIZE: 11pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Calibri><SPAN
style="COLOR: navy; FONT-SIZE: 11pt">SUPPORTED. </SPAN></FONT><FONT
color=#1f497d><SPAN style="COLOR: #1f497d"> WE NEED TO INVEST AND
MAINTAIN</SPAN></FONT><FONT color=navy><SPAN
style="COLOR: navy"><o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=#1f497d size=2 face=Calibri><SPAN
style="COLOR: #1f497d; FONT-SIZE: 11pt"> </SPAN></FONT><FONT
color=navy><SPAN style="COLOR: navy"><o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=#1f497d size=2 face=Calibri><SPAN
style="COLOR: #1f497d; FONT-SIZE: 11pt">THAT INVESTMENT IN THE
FUTURE.</SPAN></FONT><FONT color=navy><SPAN
style="COLOR: navy"><o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt">CONSTITUTIONALLY WE HAVE TO BALANCE THE
BUDGET. OUR GOVERNOR<FONT color=navy><SPAN
style="COLOR: navy"> </SPAN></FONT> AND LEGISLATORS ALL
SUPPORT<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">K12
AND HIGHER EDUCATION---NO ONE QUESTIONS THEIR COMMITMENT AND SETTING EDUCATION
AS ONE OF<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">THE
HIGHEST PRIORITIES IN THE STAT<FONT color=navy><SPAN style="COLOR: navy">E, BUT
CURRENT TIMES AND CONDITIONS INDICATE THAT WE
MUST<o:p></o:p></SPAN></FONT></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Calibri><SPAN
style="COLOR: navy; FONT-SIZE: 11pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Calibri><SPAN
style="COLOR: navy; FONT-SIZE: 11pt">DO A GREAT DEAL
MORE.</SPAN></FONT>.<o:p></o:p></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">MR.
HUNTLEY AND I ARE PROPOSING AN ALTERNATIVE TO THE GOVERNOR AND OTHERS THAT WE
FEEL COULD<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">HELP
US ADEQUATELY SUPPORT EDUCATION AND OTHER CRITICAL STATE
SERVICES. THE <st1:place w:st="on"><st1:State
w:st="on">IDAHO</st1:State></st1:place> ECONOMIC<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt">RECOVERY ACT WOULD REDUCE THE 6% SALES TAX TO
5%. THIS WOULD BENEFIT LOW INCOME
FAMILIES<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">AND
MAKE US MORE COMPETITIVE WITH OTHER STATES. ADDITIONALLY WE PROPOSE
THAT SERVICES BE<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">TAXED
AT THE 5% LEVEL AND CERTAIN EXEMPTIONS ELIMINATED. THE NET
RETURN TO THE STATE AS<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt">CALCULATED BY THE <st1:place w:st="on"><st1:PlaceName
w:st="on">IDAHO</st1:PlaceName> <st1:PlaceType
w:st="on">STATE</st1:PlaceType></st1:place> TAX COMMISSION WOULD BE
APPROXIMATELY $190 MILLION WHICH COULD<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">BE
USED FOR SUPPORTING OUR EDUCATIONAL INFRASTRUCTURE.
PRODUCTION/AGRICULTURAL EXEMPTIONS<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">WOULD
NOT BE TOUCHED NOR WOULD THERE BE TAX ON HEALTH
SERVICESL<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">WHY
PROPOSE THIS NOW INSTEAD OF AT THE START OF THE NEXT SESSION? WE
FEEL THAT EDUCATION IS AT THE<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt">CROSSROADS IN <st1:place w:st="on"><st1:State
w:st="on">IDAHO</st1:State></st1:place> AND THAT THIS PROPOSAL COULD HELP FILL
IN THE GAP. IN ADDITION WE WOULD
HAVE<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">A
FAIRER AND MORE EQUITABLE TAX SYSTEM.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">LEE
IACOCCA SAID, “IN A COMPLETELY RATIONAL SOCIETY, THE BEST OF US WOULD ASPIRE TO
BE TEACHERS AND THE<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">REST
OF US WOULD HAVE TO SETTLE FOR SOMETHING LESS, BECAUSE PASSING CIVILIZATION FROM
ONE TO THE<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">NEXT
OUT TO BE THE HIGHEST HONOR AND HIGHEST RESPONSIBILITY ANYONE COULD
HAVE.” OUR TEACHERS<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">PUT
IN OVER 10 HOURS A DAY FOR FIVE DAYS A WEEK AND DEVOTE MORE TIME ON
WEEKENDS. <st1:place w:st="on"><st1:State
w:st="on">IDAHO</st1:State></st1:place> RANKS<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt">41<SUP>ST</SUP> IN THE <st1:place
w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place> IN
TEACHERS SALARIES AND 47<SUP>TH</SUP> IN EXPENDITURES PER
STUDENT.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt">AGAIN, WE ARE OFFERING AN ALTERNATIVE
TO THE GOVERNOR AND LAW MAKERS OF THE STATE, AND
WOULD<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">HOPE
THAT THE PROPOSAL IS GIVEN ATTENTION. AS ABRAHAM LINCOLN ONCE
SAID, IF YOU THINK EDUCATION<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN style="FONT-SIZE: 11pt">IS
EXPENSIVE, TRY IGNORANCE.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT size=2 face=Calibri><SPAN
style="FONT-SIZE: 11pt"> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Calibri><SPAN
style="COLOR: navy; FONT-SIZE: 11pt">
SALES TAX EXEMPTIONS—THE SLEEPING GIANT IN <st1:place w:st="on"><st1:State
w:st="on">IDAHO</st1:State></st1:place>’S TAX
SYSTEM<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><st1:place w:st="on"><st1:State w:st="on"><FONT color=navy
size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">Idaho</SPAN></FONT></st1:State></st1:place><FONT
color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"> grants exemptions to
the sales tax that are worth more than the taxes it collects. Meanwhile
<st1:place w:st="on"><st1:State w:st="on">Idaho</st1:State></st1:place> can’t
pay for the schools<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">and services it
wants. This should be the issue for the 2011 Legislative Session and
candidates should start talking about it<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">now. <st1:State
w:st="on">Idaho</st1:State> has about 75 tax breaks, exceptions and exemptions
that have been debated, it seems, since <st1:place w:st="on"><st1:State
w:st="on">Idaho</st1:State></st1:place> first
passed<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">the sales tax in
1965. Past legislatures have studied the issue, making only token
changes.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">In 2010-11 <st1:place
w:st="on"><st1:State w:st="on">Idaho</st1:State></st1:place> is expected to
collect about $989 in sales taxes, while the exemptions are worth more than $1.7
billion. It<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">is time for serious
discussion in 2011. Most of the state’s vital services—including
education, universities, Medicaid and prisons<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">have sustained cuts of
historic magnitude. Everyday Idahoans are feeling the pain and the effects
will become even more<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">evident in the months
to come. The 2011 Legislature will be forced to budget without a
net. The state has drained its reserves<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">and used federal
stimulus dollars to limit cuts. This is beyond
dispute.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><st1:place w:st="on"><st1:State w:st="on"><FONT color=navy
size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">Idaho</SPAN></FONT></st1:State></st1:place><FONT
color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"> would have a budget
crisis under any circumstance: sales, personal and corporate income tax
collections all dropped by<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">more than 10 percent in
2008-09. But a narrow sales tax doesn’t help. Because the sales tax
exempts many purchases<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">and services, it
subject to the whims of the retail market. <st1:place w:st="on"><st1:State
w:st="on">Idaho</st1:State></st1:place>’s sales tax hinges on consumer
confidence, which has fallen<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">during the Great
Recession. If the sales tax is applied more broadly, even at a lower rate,
it would be a more resilient, reliable source<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">of funding. Gov.
Butch Otter and former Secretary of State, Pete Cenarrusa say it may be time to
examine exemptions written<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">for an economy that has
changed from a production to service oriented economy. Even leaders in the
<st1:place w:st="on"><st1:State w:st="on">Idaho</st1:State></st1:place> business
community<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">including Steven
Ahrens, former lobbyist for the Idaho Association of Commerce and Industry sees
sales tax change as part<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">of reforming the
<st1:place w:st="on"><st1:State w:st="on">Idaho</st1:State></st1:place> tax
system.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">We need to set up a
system to review exemptions. Exemptions are not a right, but a
privilege granted by the State in the<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">belief that the
exemption is for the greater good of the state. All exemptions
should be reviewed in a timely manner, and<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">those organizations who
are granted the exemption should be able to justify and prove their specific
exemption should be<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">continued.
It is a tough sell, for example, to repeal the exemption for medical services,
<st1:place w:st="on"><st1:State w:st="on">Idaho</st1:State></st1:place>’s
biggest tax break. In the<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">Trail and Huntley tax
proposal tax on medical services is left alone.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">The production
exemptions cover equipment and supplies used by manufacturers, farmers, loggers
and other businesses.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">These are politically
popular breaks. Supporters also have a good double taxation
argument. They say that it’s unfair<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">to tax the goods used
to create taxable products. Again, under the Trail/Huntley
proposal—production exemptions are<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">off the
table.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">Let’s take a look at
what makes up the $1.7 billion in <st1:place w:st="on"><st1:State
w:st="on">Idaho</st1:State></st1:place> tax exemptions. These include
$41,407,000 for prescriptions<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">and durable medical
equipment, $148,000 for newspaper equipment and supplies, $10,954,000 for
lottery tickets and pari-<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">mutual betting,
$93,964,000 for production exemptions for equipment, $1,359,000 for funeral
caskets, $396,929,000 for health<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">and medical services,
$600,000 for ski lifts, $181,208,000 for professional services, $200,000
for museums, $90,638,000 for<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">utility sales—exempts
natural gas, water, and electricity, $38,263,000 for educational services,
$480,000 for clean rooms<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">for semiconductor
manufacturer, $101,430,000 for construction, $560,000 for precious metal bullion
and coins, $71,131,000 for<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">production exemption
for supplies, $151,141,000 for motor fuels—exempts gas from the sales tax,
$84,217,000—information<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">services—local and long
distance telephone and cable services, $118,421,000 for business services,
$3,719,000 for school<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">lunches and senior
meals, and $2,550,000 for alternative energy
production.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">A discussion of the tax
breaks should be one the table, but more important is setting some
parameters. The sales tax<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">should be made more
fair and brought in line with a modern service oriented economy. We should
reduce our reliance<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">on a retail based sales
tax, and find a balance where <st1:place w:st="on"><st1:State
w:st="on">Idaho</st1:State></st1:place> can lower the overall sales tax rate for
everyone. It is our<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">hope that this will
lead to a system that will lead to stronger support of <st1:place
w:st="on"><st1:State w:st="on">Idaho</st1:State></st1:place>’s educational
system and other critical<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">state priorites.
In the end we must begin building a tax structure for <st1:place
w:st="on"><st1:State w:st="on">Idaho</st1:State></st1:place>’s
future.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">This is a long
newsletter but a critical one in my opinion. Please contact me at <A
href="mailto:ttrail@moscow.com">ttrail@moscow.com</A><o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT color=navy size=2 face=Arial><SPAN
style="FONT-FAMILY: Arial; COLOR: navy; FONT-SIZE: 10pt">Rep. Tom
Trail<o:p></o:p></SPAN></FONT></P></FONT></DIV></BODY></HTML>