Idaho Gov. Butch Otter faces a major leadership test when Idaho lawmakers convene their session on Monday: convincing many from his own party that it’s in the state’s best interest to run its own health exchange, when many want no part of the Affordable Care Act.

Otter has tried before to persuade recalcitrant fellow Republicans to do something they didn’t want to do, notably failing in 2009 to get them to raise state taxes to fund major road improvements. He tried vetoes. He tried arm-twisting. But his own party didn’t budge.

“I think he’s learned from that,” said Jim Weatherby, professor emeritus at Boise State University and a longtime Idaho political observer. “He’s certainly more cautious. Even though he’s stepped up and said we will go forward pursuing an exchange, he’s left his options open.”

Still, Weatherby said, “As far as I’m concerned it’s a courageous stance. He’s in a distinct minority of Republican governors who did not rule it out in the first place and is now on board to look at putting together an exchange.”

Otter said Friday that he’s committed to creating the exchange, which would provide Idahoans an online place to shop for insurance plans and access government subsidies, only with legislative support.

“I think it is a states rights issue, that we should be at the table,” the governor declared. “I thought that with the wolves or the grizzly bears, I thought that with the caribou, I thought that with the sage hen and almost every other issue that has come up. If we stay at the table, I think we can make a difference. We did make a difference in most of those negotiations.”

A huge coalition of business and trade groups is behind Otter on the exchange issue. Among their arguments: Idaho has some of the lowest health insurance rates in the country. If the state is forced into a federally run exchange in which Idaho is pooled with other states, Idahoans could pay much more for the same coverage.

Otter convened a working group that studied the issue for months before overwhelmingly recommending that Idaho operate its own health insurance exchange; if it doesn’t, the federal government will run it.

But he also pitched the state exchange idea before last year’s legislative session; when lawmakers pushed back, he backed off. No bill ever was introduced, as lawmakers gambled first that the U.S. Supreme Court would overturn the health care reform law — instead, the court upheld it — and then that Republican Mitt Romney would defeat President Barack Obama and repeal the law.

“There are a lot of conservatives who say, ‘You cooperate at all, allowing any remnant of Obamacare in Idaho, that’s a federal intrusion,’” Weatherby said. “I’m not sure that argument makes a lot of sense, but we’re hearing it from legislators and lobbyists.”

Otter’s framing of the issue as one that goes to the heart of the political philosophy he’s espoused throughout his long public career: that Idahoans should be the “architects of their own destiny.”

“How he does it and works with this overwhelmingly Republican Legislature is the question of the session,” Weatherby said.

It’s not the only issue on which Otter’s leadership will be tested this year.

The second-term governor faces challenges on much of his legislative agenda, even though his party holds 80 percent of the Legislature’s seats.

EDUCATION POLICY

Otter announced in late December that he was convening a collaborative group of stakeholders, overseen by the State Board of Education, to look at school reform issues in the wake of the voters’ solid rejection in November of the Students Come First laws, which Otter had championed in backing Superintendent of Public Instruction Tom Luna.

The governor said he wasn’t looking for any legislation this year, but perhaps in 2014.

But many lawmakers want to push ahead with some elements of the failed package, from rolling back teachers’ collective bargaining rights to boosting technology in schools.

Otter said Friday that he’d only want to move forward with changes if there is consensus, saying the process that led to the voter-rejected laws was badly flawed.

“It’s pretty hard to establish consensus if you’re only talking to yourself on a matter of public policy,” the governor said.

BUSINESS TAXES

Idaho’s biggest businesses are pushing hard for a $141 million-a-year tax break through repeal of the personal property tax on business equipment, though that would mean either a huge hit to local governments and school districts or increased taxes for others to make up the lost revenue.

Otter says that he’ll have “a lot to say” about the idea in his State of the State message to lawmakers on Monday, and that he supports some type of gradual repeal of the unpopular tax, but only if it will “do no harm” to local governments.

BUDGET

After years of budget cuts, including historic cuts to school funding, Idaho is seeing growth, but it’s slow. “The budget and the economy continue to be challenges,” said Sen. Shawn Keough, R-Sandpoint, vice chair of the Legislature’s joint budget committee and co-chair of its economic outlook and revenue projection committee. “Our growth is not occurring at the level we’d hoped for.”

ETHICS

New ethics rules are in the works in the House, including a possible standing committee rather than just one appointed each time a complaint is taken up. Minority Democrats still are pushing for an independent ethics commission, which Idaho lacks. And lawmakers will undergo an unprecedented “Ethics 101” training session next week. Otter backs the moves.

“I think sometimes we cross an ethical barrier because we simply don’t know the rules,” he said, “so I see great advantage for leadership to step up.”