No Money, No Honey

In stimulus rebound year, state retains revenue problems


Despite signs that stimulus spending has at least stabilized the national economy, Idaho still faces the aftermath of the recession squall and the prospect of balancing another smaller state budget.

Lawmakers say they're gearing up to get their 2010 business done quickly, despite the lingering aftertaste of the stimulus spending-fueled, weeks-long standoff that marked last year's 117-day-long session, the final in the cramped halls of the Capitol Annex.

But the state still has to deal with myriad financial issues, including the recent surge in public assistance and unemployment demands, the lack of funding for basic road maintenance and the ever-dwindling "catastrophic fund" for out-of-luck residents with health-care debt.

The upcoming session will focus on the dwindling state budget. Idaho's budget is still coming in short in the current fiscal year, even as budget writers assume further cutbacks for next year. Even Gov. C. L. "Butch" Otter has signaled, through his transportation task force, that he won't request revenue increases for roads during the upcoming legislative session. With $100 million in budget holdbacks for most state agencies already in place, Otter projects another $39 million to $51 million budget shortfall, according to Jon Hanian, spokesman for the Governor's Office.

But some members of the Legislature, particularly Boise lawmakers, are looking for creative ways to increase the state's revenue in certain areas. For example, Rep. Phylis King, a Boise Democrat, wants to change Idaho's seat belt statutes to benefit the catastrophic fund.

"Right now, you can't be stopped for not wearing your seat belt. If we can pass this primary seat belt law, we can receive $4.5 million in federal subsidies. Eighty-five percent of us are wearing our seat belts already," King said.

Speaker of the House Lawerence Denney sent out a memo echoing Otter's call to keep the legislative session short, and Rep. Grant Burgoyne, another Boise Democrat, plans to float a bill that would limit each session to 90 days to help the state save money--an estimated $35,000 a day to keep lawmakers in Boise.

But it's the looming fight over taxes in an election year that could shape Idaho's budgets for years to come. Boise Democrat Rep. Branden Durst wants counties and cities to be able to offer local exemptions.

"Jobs, jobs, jobs. That's the key. Any way that we can help our state become more competitive. I've got a bill that's intended to offer counties and cities a local option for tax exemption, with the express intent to create some jobs," Durst said.

Boise Democrat Sen. Nicole LeFavour also supports reform of tax-exemption statutes at a state level.

"Right now we have people come and give us a compelling story, or have a lobbyist inform us that they need tax exemption. It's far better if we create a consistent policy," she said.

House Majority Leader Mike Moyle of Star counters with a proposal for lowering taxes. He argues that part of the shortfall stems from Idaho's high income tax rates.

"We were the 13th highest tax burden in the nation last year. Thirteenth highest." Moyle, along with Republican Reps. Raul Labrador of Eagle and Marv Hagedorn of Meridian, propose lowering the interest rates on corporate and personal income taxes to a flat 4.9 percent, in hopes of luring businesses from cheaper neighboring states. They argue lower taxes will spur economic growth.

A recently released study from the Idaho State Tax Commission, that relies on Census data, makes a case that Idaho has the 46th highest tax burden in the nation, 24.8 percent below the national average tax burden.

The tax debate will be joined by a new look at local improvement districts, which Boise plans to use to help fund a downtown streetcar. Some legislators, including Moyle and Labrador, who is running for Congress, aren't happy about city councils' ability to create an LID without voter approval. Moyle suggested that the Legislature may present a bill to change that.

Moyle went on to say that a bill may be introduced that requires either a cap on the amount of money a council-initiated LID can raise, or a requirement that two-thirds of residents or 60 percent of landowners approve the project first.

Another hot-button issue for the legislators is health care, with state lawmakers unsure what the U.S. Congress may approve in terms of health-care reform. Part of the controversy in Idaho surrounds health-care benefits for state employees, who have seen drastic hikes in their health-insurance costs. Boise Sen. John Andreason, Republican chairman of the Commerce and Human Resources Committee, said the Legislature will be asked to ratify increases in health-insurance pricing, especially for part-time employees.

"This will be the second year that we won't be giving the state employees any consideration," Andreason said.

He said that this will be the second year that his committee, which normally considers cost-of-living increases for state workers, will not meet because of the governor's cuts.

"They're not working part-time for their convenience. They're working part-time for our convenience. There are many of them that won't be able to maintain their health insurance because of the drastic increase in costs," Andreason said.

Sen. Minority Leader Kate Kelly agreed the stimulus influx may have helped for this year, but adds it could continue to help in 2011.

"The stimulus helped us with this year's budget, but we're still coming up short. There's still stimulus funding that hasn't been spent. There's still money on the table," Kelly said.