Idaho Gov. Brad Little proposes $455M in tax relief, $250M for public health during COVID

Idaho Gov. Brad Little on Monday unveiled a $4.2 billion state budget that increases spending while also promising to provide the state’s residents with $455 million in tax relief.

Little delivered his annual State of the State address Monday virtually from a Statehouse auditorium, at a time when the coronavirus has killed more than 1,500 and slowed down the economy.

Little’s budget includes $250 million in public health infrastructure to continue to respond to the pandemic, including vaccine rollouts, testing and contact tracing.

Little praised hospitals and health workers for their response to the coronavirus. The coronavirus has “divided Americans in our individual views on the severity of the disease and how we should respond to it,” Little said.

“But the pandemic also reminds us that in troubled times, we have choices. We can choose compassion over conflict, listening over lecturing, humanity over hostility.”

Little’s budget proposal would increase the general fund budget by about 3.8% but includes $295 million in one-time tax relief and another $160 million in ongoing tax reductions.

Little’s budget proposes that some of that tax relief come from the internet sales tax, which is set aside in the state budget separate from other sales taxes. A percentage of most sales taxes, such as those that come from brick-and-mortar stores, goes to local governments.

House Minority Leader Rep. Ilana Rubel, D-Boise, criticized sequestering those revenues and then claiming that practice as tax relief. She said it’s further “creating a property tax crisis,” as it essentially withholds some of those revenues from cities, counties and schools, which then rely on increasing property taxes to meet their financial obligations. As online sales tax soars during the pandemic, brick-and-mortar stores lose some of those sales.

“The internet sales are totally cannibalizing brick and mortar sales,” Rubel said. “It’s sort of ironic that they’re calling this a property tax relief plan.”

What about transportation and infrastructure?

The executive’s budget would also dedicate more than $400 million to infrastructure projects — namely roads, bridges, rail, water and broadband internet.

About $332 million of that will come directly from the state’s general fund. Alex Adams, head of Little’s Division of Financial Management, said it’s a shift from previous administrations that historically didn’t use general fund dollars for transportation funding.

The investment would include $126 million in state and local highway projects, $80 million in ongoing transportation funding, and $35 million to broadband internet for underserved rural areas.

“In all parts of the state, major transportation projects continue to get pushed out further and further,” Little said. “We must address the transportation needs for this generation and the next. We must act now.”

Legislation could curb Idaho governor’s powers

Little’s speech comes as state lawmakers consider curbing the governor’s emergency powers and his ability to place state restrictions.

Alex Adams, head of Little’s Division of Financial Management, said legislation to curb some of those powers could potentially place FEMA funding at risk, depending on how the bills are written. Adams estimated the state would lose about $25 million in future aid. That excludes the FEMA aid local governments would receive. FEMA has provided about three-fourths of the funding associated with emergency declarations in the pandemic.

House Speaker Scott Bedke on Monday said House Republicans’ first priority is to ensure “checks and balances” to the balance of power in the Legislature. He said the legislation would not put FEMA money at risk.

“You have these laws that have been set for decades, and they’ve never been stress-tested until this year,” Bedke said. “We found them to be lacking.”

Violence at the U.S. Capitol

Little’s State of the State address on Monday touched on the violence in Washington, D.C., last week, when hundreds of President Donald Trump’s supporters stormed through the U.S. Capitol as lawmakers certified Electoral College votes.

Little said the “violence of some overshadowed the peaceful acts of many.”

“Hostility and violence are not an expression of your rights — they are a violation of everyone else’s,” Little said.

State police funding will grow by $4.8 million this year, or 16.6%. Most of that increase will be due to previous legislation to fund ISP through the general fund instead of highway distribution funds, which legislators want to preserve for infrastructure needs.

The governor’s proposed budget calls for a 3.7% increase in the K-12 budget compared to Superintendent of Public Instruction Sherri Ybarra’s proposed 2.5% increase for K-12 schools. Little’s budget also implements the “career-ladder build-out,” which significantly increases educators’ salaries over time.

The state has a budget surplus of $630 million, according to the governor’s office. The budget proposal would leave a $180 surplus at the end of this year, and $130 million after next year, according to the governor’s office.

“Simply put, fiscal conservatism and the collaboration between executive and legislative branches have positioned Idaho to emerge from the pandemic stronger than ever,” Little said.

The governor’s proposed budget is a only recommendation to the Legislature, which has the ultimate appropriations authority to decide the state’s budget through the legislative process.

Bedke said the governor’s priorities were largely aligned with House Republicans.

Rubel and Senate Minority Leader Sen. Michelle Stennett, D-Ketchum, emphasized their fears over security and the need for more coronavirus protocols at the Capitol.

“It is also our responsibility to protect our colleagues, staff and the general public,” Stennett said Monday.

The Democratic leaders said they’re most focused on a tax system less burdensome to lower-income residents, criminal justice reform, housing affordability and improving access to health care and child care.

“Our Democratic Caucus remains strong and committed to advocating on behalf of all Idahoans, not only those at the top of the economic ladder,” Stennett said.

This story was originally published January 11, 2021 at 1:46 PM.