TOP LEGISLATIVE ISSUES 2007

We will develop briefing materials on three issues that come before the Legislature in the upcoming session. Short descriptions of 25 of the most important issues likely to come before the Legislature are provided below. We ask that you rate how important it is for us to develop full briefing materials on each issue. The three issues with the highest average ratings will be those for which we develop briefing materials. Each member of The Common Interest will be randomly assigned to review the briefing materials for one of the three selected issues and then share their views.

We developed the list of issues by inviting the input of more than twenty legislators and members of the press. The issues are listed in order from the issue most frequently identified by these 20-plus individuals to the least frequently identified. If particular issues seem especially well or poorly-suited for The Common Interest, we note this in bold, italicized text at the conclusion of the description. For three issues (K-12 education, health care, and tax exemptions) we ask you to consider whether it would be advisable for us to take a longer-term, more proactive approach than what we've done in the past.

Note that you need to login in order to open the questionnaire where you will rate the importance of us briefing and polling each issue. You can login by clicking on the login link at the top of this page. Once you login, you have 90 minutes to complete the questionnaire before the website times you out. You should see a confirmation page once you submit your answers. You can come back to the questionnaire and change your answers as much as you like until the poll closes at midnight on Monday, January 22.

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Thank you for taking the time to help us pick our issues for the year. And now, here are the candidates:

Grocery Taxes

Wide consensus has emerged that something should be done to reduce or eliminate the sales tax on groceries. While this issue has come up previously, it has gained new momentum as a result of the recent increase in the sales tax from 5 cents to 6 cents. The sales tax increase was passed in a special legislative session convened in August by Governor Risch in order to replace revenues lost because the Legislature also voted in the special session to eliminate property taxes for schools (except for voter approved supplementary bond levies). One of the major arguments against eliminating the property tax for schools and raising the sales tax was that sales taxes fall disproportionately hard on lower income families because essential purchases, such as groceries, take up a greater share of their income. Elimination or reduction of the sales tax on groceries would address this issue.

While there is a broad consensus that something should be done about the sales tax on groceries, a wide variety of ideas have been mentioned about exactly what should be done. Some have called for the total elimination of the sales tax on groceries. Some have said grocery sales taxes should phased out over a several year process. Recognizing how much revenue is lost by a total elimination, some have said that sales tax should be reduced, perhaps to 3 cents, on groceries. Others have said that the state income tax credit for what individuals spend on groceries should be dramatically increased. Currently, the grocery income tax credit is $25 for individuals and $35 for senior citizens. And still others have said that the grocery tax credit should be increased only for those with lower incomes and for seniors on fixed incomes and that those who don't make enough to be required to pay state income taxes should also be able to file for a check equal to the amount of the income tax credit.

There are two reasons that may suggest this is a particularly good issue for The Common Interest. The first is simply that it was most frequently mentioned by Legislators and members of the press when we asked them what the most important issues were that would come before the Legislature this year. Clearly, it will be a major topic of discussion. Second, due to our work on property taxes last year, we have a particularly good reputation and considerable clout on tax issues. In some ways, this would simply be a continuation of our work on property taxes.

Community Colleges

Partly in reaction to the fact that Idaho has one of the lowest percentages in the country of high school graduates who go to college, some have suggested that the state should establish a state-wide community college system. Community colleges make higher education more accessible because people can attend them while living at home and because they are less expensive than four-year institutions. They also provide more vocational-technical education than the state’s four year institutions. Currently, the state has two community colleges—North Idaho College in Coeur d’Alene and the College of Southern Idaho in Twin Falls. The Boise and Idaho Falls areas are often mentioned as areas where it would be helpful to add a community college. The Boise area is one of the largest metropolitan areas in the country without a community college. This proposal has received strong support from the business community which says that community colleges are necessary for them to have the trained workforce that they need. Supporters also argue that such a system would provide a substantial boost to the state’s economy.

One of the challenges of adding community colleges is, obviously, the funding that would be required. North Idaho College and the College of Southern Idaho are substantially funded by local property taxes. If the state committed to funding additional community colleges, citizens in the Coeur d’ Alene and Twin Falls areas would likely request state funding for their campuses as a matter of fairness. One more modest proposal would simply lower the threshold for establishment of a community college taxing district and the property tax levies that would go with it from a two-thirds to a 60% majority. Another idea is to expand the offers of existing higher education institutions at satellite campuses around the state.

K-12 Education

K-12 education funding was near the top of the list of major issues identified by Legislators and members of the press in both of our previous years and again this year. Public schools funding is also the one issue that we've picked for both the previous legislative sessions. While the Legislators and members of the press we spoke with all mentioned K-12 funding, this year they also mentioned K-12 education policy issues besides funding, largely because Republican Tom Luna was elected Superintendent of Public Instruction this year to replace retiring Democrat Marilyn Howard. While many anticipate major new policy initiatives, at this point it is still unclear what those might be. Many believe that there will be a proposal regarding merit pay for teachers. In his unsuccessful campaign to become Superintendent in 2002, Luna emphasized the need for some sort of school voucher program that would compensate parents who send their children to private schools. In 2006, Luna avoided the controversial topic of vouchers, but when asked, seemed to imply that he would still be interested in pursuing the idea. Additionally, the State Board of Education plans to come back with a revised high school reform proposal that emphasizes increased requirements for science and math. Last year's proposal failed by the narrowest of margins in the Legislature. Others have suggested the state should look at defining what an "adequate" public K-12 school system is, since that is what is required by the Constitution.

Besides these kinds of policy questions, the question of funding levels for K-12 education will obviously still be an issue. This year's debate will likely be influenced by the decisive failure of ballot Proposition 1 in the November. Proposition 1 would have required the Legislature to increase state funding for K-12 education by roughly 20%. The Legislature's decisions on K-12 education funding this year will also be affected by the decision in the special session of the Legislature to eliminate the property tax for schools. The proportion of K-12 education that used to come from the school property tax must now come from the state's general funds. Some have suggested that the distribution formula that determines which districts get how much funding needs to be reexamined. The state's contribution to funding school buildings in local school districts may also again be an issue.  At this time, there is considerable uncertainty about the status of the lawsuit over this issue that has gone on for more than 15 years.

We've pursued four other issues besides K-12 funding since we started a little over two years ago.  Remarkably, we've prevailed on three of those four (open committee meetings, property taxes, and eminent domain) and on the fourth issue (Qwest's deregulation proposal) we came very close to defeating a measure that everyone thought would pass easily. K-12 education funding is the only issue on which we have had no visible influence. There may be several factors that explain this. One is that the legislative process for funding issues is quite different than for others and provides far less opportunity for public input. For example, the Joint Finance and Appropriations Committee (JFAC) does not take public testimony. A second factor may be the way the K-12 debate is currently framed. There are many who advocate for higher levels of funding generally. Others argue that higher funding alone won't improve education. We never seem to get to a thorough and practical discussion of what, if any, specific new investments in K-12 education would be worth making. The Common Interest may well be able to convene such as discussion, but not within the confines of the K-12 budget discussion that occurs within a single legislative session.

While this may argue against picking this issue for this legislative session, it may argue for working beyond this legislative session to develop a brief that explored the most promising improvements that could be made in Idaho's K-12 system and what their costs would be, including those improvements that few within the usual education policy making community are currently considering. We could then proactively work for the passage of any measures that received two-thirds or greater support from the members assigned to the issue.

Other considerations argue for picking this issue again this session. First, it is clearly simply a high priority issue. Second, this will be the first K-12 budget that will be passed since the elimination of the school property tax. Proponents of eliminating school property tax vowed that overall K-12 funding would not suffer as a result, but others have doubts. Third, there will likely be significant K-12 policy issues introduced that go beyond the question of funding levels.

In addition to asking you to rate the importance of briefing and polling on the major K-12 issues that may come up in the 2007 session, we also ask you if you would support a longer-term, proactive effort by The Common Interest to investigate what, if any, specific new investments in Idaho K-12 education would be worth making.

Highways and Transportation

Costs for road construction and maintenance have been rising rapidly in large part because of the increased costs of petroleum products. There is a concern that the federal government may not provide the same level of funding as it has in the past. In spite of the GARVEE bond mechanism that recently passed the Legislature, the Idaho Department of Transportation (IDOT) projects that it will fall far short of keeping up even with basic maintenance of Idaho's highways over the next several years, let alone complete new projects that are needed. Consequently, IDOT has proposed a significant increase in the fuel tax. Since gas and diesel prices are already so high for consumers, the idea of raising taxes on fuels is controversial. There is, however, a widespread sense that something needs to be done. Another idea that has been mentioned is to make local option sales taxes available to address some of these needs, including to fund mass transit systems like light rail in places like Boise to ease the pressure on Idaho's roads.

Southeastern Idaho Water Dispute

According to the prior appropriation doctrine, which governs water use in Idaho, those who have older water rights have priority over those who have younger water rights.  Some of the oldest and largest water rights in southeastern Idaho belong to the canal companies and irrigation districts that diverted water from the Snake River in the early decades of the twentieth century to create the vast irrigation systems that made settlement in southern Idaho for thousands of families possible. 

A few years ago, a number of canal companies formally requested that the state enforce the prior allocation doctrine by curtailing the water use of those who pump ground water out of the Eastern Snake Plain Aquifer in order for the canal companies with the more senior rights to get their full allocation of water. While it is now scientifically clear that pumping out of the aquifer diminishes spring flows into the Snake River, the specifics of these connections are complicated.  Accordingly, it is difficult to know with certainty the extent to which the water use by specific junior ground water users should be curtailed in order for particular senior Snake River water right holders to receive their full allocation of water.

Feeling that the state's response did not go far enough to protect their rights, the canal companies successfully challenged the legality and constitutionality of the state's process for making such decisions in Idaho's special water court.  That decision is now before the Idaho Supreme Court on appeal. While the case raises a number of legal issues, one of the central questions is how far the prior allocation doctrine extends. For example, the canal companies have argued that the prior allocation doctrine in the Idaho Constitution means that the state must curtail any infringement on their water rights, even at times when the canal companies do not need and are not using all of that water. Many have argued that the prior allocation doctrine has not, and should not be, taken to this extreme. The implications, they argue, of taking it to this extreme would be significant. Since the state and its economy rely so heavily on this water, such a strict interpretation would be economically devastating to many ground water pumpers, create significant challenges for a number of cities along the Snake, and would concentrate power in hands of the owners of the canal companies. Since the issues raised by the appeal are broad legal and constitutional issues, the results will have implications not only for the people in southeastern and southcentral Idaho who live along the Snake, but also for everyone in Idaho.

It is likely that some water bills will be pursued in this session, but it remains unclear just what those bills may try to do. Many think that the Supreme Court will not rule before the end of the legislative session and that little agreement can be reached until then.

This issue presents some challenges for The Common Interest because people's views about it tend to divide along regional lines. Accordingly, on this issue it may difficult to fulfill our aim of providing a voice for positions for which there is a broad consensus across partisan and regional divides.

Election Reform

In a system of government by the people, no issue is more fundamental than how the people choose who will represent them. This year several proposals would significantly change how we elect our representatives. First, Secretary of State Ben Ysursa and the county clerks in Idaho are unanimously supporting a "vote by mail" proposal. In a vote by mail system, like those used in Oregon and Washington, voters complete ballots that are been mailed to them and then return the ballot by mail. Increased voter turnout is a driving rationale for this proposal. In the 2006 primary election in Idaho, voter turnout was less than 26%, near an historic low. Oregon's turnout in its primary was 38%. The clerks also suggest that their proposal would decrease the costs of elections while also resolving problems with crowded polling places. In Meridian, for example, some voters had to wait in line for more than three hours before casting their vote.

Second, the Republican Party adopted as part of their 2006 platform a proposal to close Idaho's open primary system. In Idaho's current system, we do not declare a party affiliation and anyone can choose to vote in either the Republican or Democratic primary. Under the system proposed by Republicans, each voter would declare a party affiliation and or would declare him or herself an independent. Voters would then vote only in primary for the party they declared. Independents, who make up about 1/3 of Idaho voters, would not be allowed to vote in primary elections. These elections would still be paid for with state and local government tax revenues.

At least part of the impetus for the Republicans' closed primary proposal appears to be frustration with the result of the Republican primary election for the 1st Congressional District. Conservative state representative Bill Sali won this race even though there was wide opposition to him among Republicans as perhaps the most controversial legislator in Idaho. He won with 26% of the votes cast in the primary. Some Republicans suspect that many Democrats chose to vote in the open Republican primary in order to vote for Sali, thinking that he would be easier for Democratic candidate Larry Grant to defeat. These Republicans would like to avoid such an outcome in the future by closing the primary.

Third, Idaho could require runoff elections when no candidate gets a majority of the votes like other states do in order to ensure that the candidate who best represents the people of the state is elected. The Republican primary for the 1st Congressional District that Bill Sali won had six candidates. With no runoff election, a candidate could win in such a primary with support from less than 17% of the voters.

An interesting version of runoff elections is Instant Runoff Voting (IRV). In this kind of an election, everyone votes for their preferred candidate like in most elections. Unlike in most elections, everyone also votes for their second most preferred candidate, their third most preferred candidate, and so on. If no candidate wins a majority of the first preference votes, the candidate who received the fewest first preference votes is eliminated. Those who voted for this candidate then have their second preference votes counted. If that gives any candidate a majority, then that candidate wins. If still no candidate gets a majority, then the next lowest vote getter is eliminated. This process continues until one candidate gets a majority. This method thus provides the advantage that the candidate with the broadest support wins but without the expense and delay of a traditional run off. Instant Runoff Voting has been adopted to ensure that the most representative candidates are elected in a variety of places ranging from congressional Republican primary elections in Utah to San Francisco city elections.

Fourth, some of have suggested that Idaho's rules should be tightened for how signatures can by gathered for petitions to place initiative measures on the ballot. This proposal stems largely from frustration with how Proposition 2, which would have required government to compensate property owners when a regulation diminished their property's value, made it onto the 2006 ballot . The substantial funds for the signature campaign that put this measure on the ballot came almost entirely from out of state. Rather than relying on volunteer supporters to gather signatures, as has been typical in the past, the out-of-state funds were used mostly to signature gatherers who had been hired for pay.

The election reform proposals that will come before the Legislature this year go right to The Common Interest's core concern that special interest and extreme partisan politics hold too much sway in our political process. One of the most important factors explaining why we get too many elected officials who listen to special interests and extreme partisans more than to common citizens is declining voter turnout, particularly in primaries. When voter turnout is low, it is far easier for mobilization efforts by narrow special interests to make a difference. Research shows that when voter turnout is low, it is voters on the extreme left and right who turn out no matter what. By boosting voter turnout, the vote by mail system could result in more elected officials who put aside the clamor of special interests and extreme partisans to listen to practical solutions that work for all Idahoans. Runoff elections, particularly Instant Runoff Voting, could also help avoid candidates who win with only the narrow, but passionate, support of special interests and extreme partisans.

Because of our work to secure greater openness for legislative committee meetings and the reputation and clout it has given us on these kind of non-partisan good government issues, we are well positioned to make a significant impact by working on this issue. The election reform issue will have an even greater impact than open legislative committees. In fact, there may be no issue discussed this session that will have a more lasting impact than this one since it affects who will be making decisions on every other issue in the future.

Budget Surplus

The state has a budget surplus of about $200 million.  The question is what to do with the surplus.  Some argue that it should fund a tax cut and others argue that it should be used to fund high priority needs.  In terms of tax breaks, there have been suggestions to do something about sales tax on groceries (as mentioned above), to roll back the 1 cent increase in the sales tax, and to provide further property tax relief. Ideas on spending priorities that could be addressed with the surplus include community colleges, K-12 education, and transportation needs mentioned above, as well as overcrowded prisons.

Ideas about what to do with the surplus also vary in terms of whether they should be of long or short duration, which stems from different views about how permanent or temporary the surplus is. Some argue that the surplus reveals a long-term or structural surplus, meaning that the state government is simply taxing more than it needs to. Some argue that much of the surplus is temporary in nature, stemming from a short-term improvement in the economy that may well become sluggish again. If all or part of the surplus is used to fund either a tax cut or a new spending priority, many argue they should be short-term, not permanent, measures.  Those arguing this point out that permanent tax cuts were passed the last time we had a surplus, which led to several years of shortfalls and the need for a temporary increase in the sales tax.  Some argue that the surplus should be put in a rainy day fund to protect against such downturns in the future.

Treatment for Drug Abuse and Mental Health

There has been a growing consensus that the treatment services the state provides for drug abuse and mental health issues are inadequate, particularly following the quite negative conclusions of an Office of Performance Assessment's evaluation of state services. Several changes have already been undertaken, including a significant reorganization and change in staff at the Department of Health & Welfare and the creation of state drug czar position and an interagency committee to coordinate the state's drug abuse efforts. Many still believe that more needs to be done. There may be a number of important proposals come forward in this session of the Legislature to deal with these issues. One significant idea that may be discussed is creating a separate agency to address these issues. If the recommendations of an interim committee of the Legislature are followed, however, the most comprehensive efforts at dealing with this may be postponed until the 2008 legislative session after a review and recommendations from an independent contractor.

Energy

A number of energy related concerns may come before the legislature this session. In Idaho, there is a general interest in maintaining what has been some of the most affordable electricity in the nation. Much of our affordable electricity comes from hydroelectric power that uses water which is increasingly in demand for other needs. Above we mentioned the water dispute between Snake River water users and those who pump out of the aquifer north of the Snake. Protection of salmon as an endangered species places demands on flows in the state's rivers that are often in tension with the production of cheap electricity. The federal relicensing process for many hydroelectric dams in and near Idaho may require expensive new environmental mitigation measures. Other concerns surround Idaho’s reliance on fossil fuels. While the company that had proposed building a coal-fired electricity generating plant near Jerome has now abandoned its proposal, there is still a concern about the state's lack of regulations governing the siting of such plants. There are also concerns regarding the fact that Idaho gas and diesel prices have not come down as much as in other areas of the country. Some individuals have suggested giving the Attorney General greater authority to investigate these issues. There are also proposals to further invest in and encourage reliance on ethanol and other bio fuels. Finally, an interim committee was charged with developing a comprehensive state energy plan, though it appears it will not have completed its work. Consequently the major energy issues may be deferred for another year.

Elk Farming and Shooter-Bull Operations

As many as nine bills may come before the legislature to further regulate or ban elk farming operations, particularly "shooter-bull" operations where people can pay to go and shoot a domestically raised elk. Long viewed with scorn by some, the issue has gained greater urgency after 160 domestic elk escaped from a shooter-bull operation in Ashton, less than forty miles from Yellowstone National Park. Aside from the scorn many hunters and others feel for the unsportsmanlike idea of paying to shoot a domestic elk on a farm, there is a concern that domestic elk could infect wild elk with disease. Although none of the regular testing of domestic elk herds by Idaho's Agriculture Department have yet revealed positive results for feared diseases such as brucellosis or chronic wasting disease, some domestic elk in Montana did test positive for chronic wasting disease several years ago and Montana banned domestic elk operations as result. Wyoming has also banned these operations because of this concern. The governor of Montana has recently called on Idaho to do the same.

Health Care Accessibility and Affordability

Health care costs continue to increase dramatically, putting substantial financial pressure on individuals and families, businesses, and county and state governments.  Many are suggesting that the state needs to address this problem.  A wide variety of measures has been discussed with no detailed alternatives clearly emerging as yet.  Some ideas draw on the ability of the state to purchase at high volume and get discounts as a result.  For example, the state might establish a discount prescription drug program through its ability to by in bulk or offer lower cost health insurance alternatives.  Drawing on what has been done in some other states, one idea is to have the state certify safe sources of prescription drugs from other countries, such as Canada, with lower prices and then provide ways for people to purchase drugs from those sources.  Other ideas emphasize finding ways to increase the access to and the use of preventive and early care which tends to be more cost effective than treating illness later on.

One particular aspect of the accessibility and affordability question is the federal Medicaid program. It combines federal and state funds to pay for healthcare for low income, elderly, and disabled individuals.  The state's financial contribution to the Medicaid program has been growing at an alarming rate of more than 15% per year since 1997.  The state currently contributes over $300 million annually to the program.  Last year, Governor Kempthorne successfully won approval from the Legislature and received waivers from the federal government to try some new approaches.   His plan splits those who receive Medicaid into three different groups: (1) elderly, (2) disabled and special needs, (3) low income healthy children and adults and then serves each of these populations in different ways to provide reasonable health care more cost effectively.  For example, a low income but healthy family may be required to make low co-payments for prescription drugs to encourage them to use generic drugs or co-payments may be required for emergency room visits to encourage going to a more cost-effective primary care provider.  It is too early to tell how much savings this program will create, but many believe that there are other changes, and refinements to those changes already undertaken, that should be tried.

Health care is an enormously complex issue that really exceeds our capacity to do much on within the confines of a single legislative session, but on which we might make a substantial contribution if we took a longer-term, proactive approach in which we examined a range of approaches that have not received much attention in Idaho. For example, Republican Massachussetts Governor Mitt Romney worked with the large Democratic majority in the Massachussetts Legislature to enact a measure that requires everyone to have a basic level of health insurance, much like most states require car insurance. The state then provides some assistance to those who couldn't otherwise afford this coverage. While the program was recently implemented and it is too early to tell how well it is working, it has been praised from across the political spectrum as a common sense way to rein in costs while boosting access. This is just one example of a number of practical, non-partisan solutions that may be worth examination.

The questionnaire will ask you both how important it is that we brief the health care measures proposed in the 2007 session as well as whether you would support The Common Interest pursuing a longer-term, proactive approach to this issue. We may be well advised to work on this in a long-term, proactive way but probably not well advised to choose it as one of our issues for this session since it simply exceeds our capacity to do substantial work on in such a short time frame.

Local Option Taxes

Various proposals to give local governments the option, with voter approval, of levying their own taxes are likely to come before the Legislature. Most of these proposals involve a local option to levy a sales tax. The rationale for making this option available is often either to give local governments a way of addressing the costs of fast paced growth and/or to deal with costs associated with services for tourists who don't pay property tax, the only kind of tax local governments can typically levy.

A couple of measures along these lines were proposed as part of the property tax debate in the last session. A majority of our members who reviewed this issue supported those measures but less than the two-thirds majority required for us to have taken an official position of support.

Greater Limits on Abortion

As in past years, proposals to create greater limits on abortion are likely to come before the legislature.  The most likely proposal would require parental consent for minors seeking an abortion.  Proponents argue that parents have a right and a responsibility to consult with and support their daughters in such a weighty and difficult matter.  Opponents argue that a parental consent requirement can create undue and inappropriate strain on young women who are already in a very difficult situation.  They argue that this is particularly true in cases in which a young woman has become pregnant through incest or rape, especially if the offender is the young women's father or other member of her family.

Property Taxes

Property taxes were the central issue in the Legislature last year, and we ended up playing a pivotal role in that debate. While several major changes have now passed into law, some individuals, especially from Kootenai and Bonner County in northern Idaho, are suggesting that additional steps need to be taken. Governor Otter supports freezing the assessed value of homes at the purchase price until it is sold. Another idea is to require disclosure of sales prices on real estate that has been sold so that the state and counties have better data with which to assess the market value of property. Representative Dennis Lake, the new chairman of House Revenue and Taxation Committee, has said that it may be wise for the Legislature to not consider any new property tax measures this year. Before making further changes, he has suggested, it would be helpful to let the changes already taken be in effect for some time to judge how well they are working.

Higher Education Funding

Higher education in Idaho has faced three simultaneous funding challenges in recent years.  First, enrollment in the state's public colleges and universities has increased.  Second, the costs of higher education have been rising faster than inflation.  Third, the state's funding of higher education has been limited by the tight budgets of the last several years.  Consequently, the costs borne by students for education have risen dramatically, over 100% over the last ten years.  These costs have increased faster than higher education costs in any other western state.  Although we used to have the lowest higher education costs for students of any of the western states, we are now more expensive than Nevada, Utah, and Wyoming.  We are still cheaper than Washington, Oregon, and Montana.  Some are suggesting that it is time to invest more heavily in Idaho higher education generally.  Partly because Idaho ranks 45^th of the 50 states in terms of the percentage of its high school graduates going to college, one proposal by the state board of education would increase the need-based scholarships available.

Minimum Wage Increases

The minimum wage of $5.15 an hour established by the federal government has not been raised in almost 10 years. The new Democratic majority in Congress has committed to raising the minimum wage to $7.25 an hour early in the new session. Many states also establish minimum wage standards and 27 states have established minimum wages above the current $5.15 federal minimum wage. Idaho's is currently the same as the federal minimum wage. Idaho Democrats are proposing to raise the Idaho level if Congress fails to do so.

Since it appears almost certain that Congress will increase the minimum wage to $7.25 very soon, making a minimum wage raise in the Idaho Legislature a moot point, we're probably well advised not to choose this as one of our three issues to work on in the Idaho Legislature this year.

Sales Tax Exemptions

Proposals will likely come before the Legislature that would seek to limit sales tax exemptions. A 2004 interim legislative committee examined current exemptions to the sales tax and whether some or all exemptions should be eliminated and the overall sales tax rate reduced. The committee identified 72 categories of sales tax exemptions or exclusions. If those were eliminated over $1.2 billion in additional revenue would be generated and the sales tax could be reduced from 6 cents to between 3 or 4 cents and still generate the same sales tax revenue.

The single biggest sales tax exemption is the exemption for services. In 2004, the Division of Financial Management estimated that if services were taxed at the 6 cent rate in 2004 it would generate over $865 million in revenue. Many have pointed out that when the Idaho sales tax was implemented in 1965, about 60% of consumer spending was on goods and 40% was on services. The service sector of the economy has grown in the intervening years and those percentages have flipped, with about 40% of consumer spending going to purchase goods and about 60% to purchase services. Many have argued that it is out-dated and ill-advised to place all of the sales tax burden on a diminishing portion of the economy. Furthermore, they argue that even that aspect of the sales tax has an increasing number of holes in it as the number of exemptions proliferate. The 72 categories of exemptions and exclusions the interim committee found in 2004 had grown from the 17 established when the sales tax was first implemented in 1965. Others point out, however, that taxing services raises a number of serious logistical challenges that are not present when taxing goods.

There has been no significant movement towards eliminating sales tax exemptions and lowering the base sales tax rate since the interim committee report. In fact, the interim committee report included no recommendations because the interim committee itself was split over what to do, if anything. Similarly, a measure proposed by Senator Corder in the last session to review 10% of all sales, income, and property tax exemptions each year for the next ten years to investigate whether they were still justified failed to even get a hearing in committee. However, the Common Interest briefed Senator Corder’s proposal as part of our property tax brief and it was supported by 91% of our members who reviewed this issue.

Little has been done to eliminate sales tax exemptions largely because of the same political dynamic that has led to such a proliferation of exemptions in the first place. Most sales tax exemptions benefit a relatively small number of people who will receive the exemption. The impact would be substantial for those few who would receive it. The recipients are thus motivated to mobilize politically in support of the exemption. Several new sales tax exemptions were approved in the last session. On the other hand, any given exemption typically places a relatively small burden on all of those who do not receive it and who carry the burden of making up for the lost revenue. Because their broad effect on all of us is small, proposed exemptions typically don't stimulate much political opposition. Accordingly, when a proposed tax exemption comes before the Legislature it has many avid supporters and few or no opponents. While the impact of this classic special interest political dynamic is small for most individual exemptions, the cumulative effect is enormous, as the interim committee documented.

The issue of exemptions for sales taxes, as well as for income and property taxes, is another issue on which it may be advisable for The Common Interest to take a longer-term, more proactive approach. We could develop a comprehensive brief(s) on all the exemptions and the arguments for and against each. We could then propose a comprehensive package that would eliminate all tax exemptions which two-thirds of our members assigned to this issue opposed. By bundling the elimination of many tax exemptions together for which there was strong opposition, we may be able to bring enough public attention to the issue to overcome the usual special interest dynamics that protect unwarrented tax exemptions. Accordingly, the questionnaire asks you how important you think it would be for The Common Interest to brief and poll on the proposals on this issue that come before the 2007 session, as well as whether you would support The Common Interest taking a longer-term, proactive approach to this issue. This is probably another issue on which it would be difficult for us to do much on in the short term, so we may be well-advised to not choose it as one of our three issues for this session.

Nursing Shortage

There is a nursing shortage nationally that is expected to get worse. In Idaho, the shortage is even more pronounced and is projected to increase even more rapidly than is the case nationally. Accordingly, several proposals will likely come before the Legislature to address this situation. Several of the proposals aim to increase the state's capacity to train new nurses. Last year, 1,200 students were enrolled in nursing programs in Idaho and 800 were turned away. Lt. Governor, and former Governor, Jim Risch has a proposal that includes major funding to boost the nursing programs at Lewis-Clark State College in Lewiston and at the College of Southern Idaho in Twin Falls.

Homosexual Adoption

Following the passage in the 2006 election of the amendment to the Idaho Constitution that bans gay marriage, proposals are likely to come before the Legislature that would prohibit homosexuals from adopting children.

Government Ethics and Lobbying Reform

Some significant ethics and lobbying reforms were approved in the last session of the Legislature.   First, there are increased restrictions governing the use of campaign funds, particularly on expending campaign funds for personal uses and for expenses connected with holding office after a candidate has been elected.  Second, people who lobby the executive branch for contracts and other policies or actions favorable to them are now required to register and submit reports just as lobbyists in the Legislature are required to do.

Additional reform suggestions will likely come before the Legislature this session. Some would like to ban former state government employees from representing a new employer before an agency for which they formerly worked, at least for some period of time, or from disclosing confidential information to the new employer gained while working for the state. Some would like to require greater personal financial disclosure by public officials in order to make conflicts of interest more apparent. Most of these ideas have come before the Legislature before but have gained little traction, though support may be increasing in the wake of the many political scandals nationally.

Since reducing the influence of special interests in government is one of our aims, this may be an interesting issue for us to consider. 

Growth Paying for Itself

As the third fastest growing state in the nation, Idaho faces considerable growing pains. Some of the most acute are the pressures on local governments to accommodate the increased demands created by growth. Many contend that that growth does not pay for the costs it imposes and argue that it should. Several proposals to ensure that growth will pay for itself are likely to come before the Legislature. One plan would be to increase the extent of impact fees that local governments can assess and to increase the ease with which local governments can establish such fees. A plan along these lines was proposed in the last session as part of the property tax debate. 82% of our members who reviewed this proposal supported it, but it was opposed by powerful special interests and did not pass. Another idea, mentioned above, is to give local governments the option, with voter approval, to impose their own sales tax. Again, a majority of our members supported a couple of measures along these lines last year, but less than the two-thirds majority required for us to have taken an official position of support.

The most substantial proposal likely to be given serious consideration is the enhanced impact fee law that was considered last year. Since we have already briefed and taken an official position in favor of this proposal, we will be working to secure its passage even without choosing it as an issue this year. We may be well advised to choose other issues to brief and poll on this year, while still working on this issue this year based on the homework we did last year.

Childcare and Daycare Licensing

Proposals to increase the standards and oversight required to obtain and maintain a license to offer childcare or operate a daycare will likely be considered in this session of the Legislature.

Air Quality

As Idaho continues to grow at a rapid rate, concerns about the impact of growth on air quality also are growing, particularly in the Boise area. The state created the Treasure Valley Air Quality Management Council, but some say that they need to be given more teeth to implement and not just recommend changes.

Since the proposals that will be discussed affect only the Boise area, this would be a problematic issue for us—an organization that works on behalf of common citizens across the entire state—to work on.

Statehouse Restoration

Some feel that the State Capitol building is too small and too old to serve its purposes effectively. The aged electrical and plumbing systems present increasing problems, including fire hazard, while the building itself presents space constraints. For example, the rooms in which many legislative committee hearings are held often cannot accommodate all the members of the public who wish to participate.  Technological upgrades are needed in many respects.

Consequently, last year the Legislature and Governor Kempthorne approved an ambitious restoration and expansion plan, including the construction of two new underground wings. Governor Otter made his opposition to this plan a centerpiece of his campaign and even ran television ads regarding the issue. The new Speaker of the House, Lawrence Denny voted against the plan last year. It is not clear how the Governor and/or the Speaker could stop the plans at this point, particularly since the bonds to fund the project have already been issued. Nevertheless, this may come up as an issue this session.

Requirements for Trucks to Cover Their Loads

A proposal to tighten the requirements on when trucks must cover their loads (particularly when carrying sand, gravel, or dirt) is likely to come before the Legislature.

Overcrowded Prisons

Overcrowded prisons were mentioned by many of the Legislators and members of the press with whom we spoke. We are not asking you to rate the importance of this issue this year since we chose this as an issue last year. We did not end up briefing and polling on this issue last year partly because several of the more ambitious proposals to deal with this problem were postponed and partly because we were swamped in dealing with the very complicated other issues we worked on last year. We have been working on the brief for this issue since the legislative session and hope to have it completed within the next several weeks. Those who were assigned to this issue will receive e-mails letting them know as soon as the brief is posted.