State Politics

The Legislature enters the postseason, when the real contest starts

When lawmakers return to the Capitol on Monday, here’s where things stand.

• Education is signed, sealed, delivered — amid much rejoicing.

• The Senate has a House road-funding bill to tinker with. And tinker it will.

• The House still wants tax reform. Let it go? Members won’t.

• The governor, who declared the session “historic” for action to finally boost school funding and teacher pay, also wants to see new money for road maintenance before lawmakers go home.

The Idaho legislative session is now looking like most professional sports, with the real competition starting when the regular season ends.

The March 27 adjournment target set in January was like that outfit you wore to the prom: Just the thing at the time, but looking back, what were you thinking?

It’s now likely that the Legislature will run all the way through this week and perhaps into the next before heading home. Here’s why.

Transportation: a must

To review: The state has a $262 million annual backlog to keep roads and bridges maintained in their current state, never mind improved. Collectively, the various measures proposed barely add up to half of that.

“There are a couple of issues that are hanging fire,” Gov. Butch Otter said Thursday after signing the pay-raise package for teachers, “and transportation is the big one, and I would even say maybe the going-home bill.”

The governor went on to stress his position that no general fund dollars be put toward road and bridge maintenance, so that funding doesn’t compete for school dollars at some point down the road — especially after lawmakers increased school spending 7.4 percent.

The governor also emphasized that he wants transportation funding to remain “user pay.” That essentially means: gas tax, registration fee increase, a surcharge on auto insurance premiums, or some more novel approach.

The Senate on Wednesday killed the House’s latest best option for transportation funding because the bill had a few extras in it — namely, an overhaul of the state income tax and an end to the sales tax on groceries and the grocery tax credit. At least right now, it looks as though the Senate wants to deal with transportation funding and call it a session.

“The action you saw from the Senate the other day indicates that the type of logrolling that occurred out of the House, where you bundle a whole bunch of ideas in one bill and hope to gather enough votes along the way... that’s not where we want to go,” said Senate Majority Leader Bart Davis, R-Idaho Falls.

But transportation funding, Davis said, is “still a very high priority in the Senate.”

So here’s how the transportation endgame might look: A Senate committee has moved one of the House’s lesser transportation bills to the full Senate for amendments. The bill proposes an increase in registration fees; Senate amendments might take those fees higher, add a gas tax increase resurrected from another bill, or propose other “user pay” options. What’s certain, though, is that it will be strictly a transportation bill — no monkeying with other taxes or putting the hurt on the general fund.

If the Senate approves a bill with amendments, it will go back to the House, where it might get killed, a substitute bill might emerge or the two bodies might set up a conference committee to work out their differences. This process could happen quickly, but it’s more likely to last the week.

Tax reform

“Tax reform is going to be a little tougher this year,” Otter said Thursday. “I don’t want to see them shrinking that general fund.”

The tax proposals floated by the House did just that. The impact of cutting the grocery sales tax and tax credit had a projected multimillion-dollar hit on the general fund in future years. That’s OK if you equate “smaller general fund” with “less spending” and “lower taxes,” but not so much if you see it potentially as “unfunded teacher pay increases.”

That’s why ending the sales tax on groceries looks dead this session. Proponents said all along that eliminating the tax would help Idaho’s border communities, where shoppers can drive across the state line to buy tax-free food — and, while there, anything else they might need.

But tax reform remains one of the House leadership’s three priorities for this session and the House has not given up. All along the argument has been that lower income taxes will make the state more competitive with its neighbors.

Speaker Scott Bedke, pressing with House Majority Leader Mike Moyle for flattening the top income tax brackets and reducing the top rate to 6.7 percent, continues to make the case for some version of that. He argues that four out of five businesses in the state are created as limited partnerships or similar legal status, and pay taxes on the personal, not corporate, side.

The House tax bill shot down by the Senate last week still lives in committee. The House would like to see it resurrected across the Rotunda as a tax-reform-only bill.

“I’m optimistic that we’ll still be able to realize some meaningful change in Idaho’s tax policy that positions Idaho for the future, with particular regard to small businesses,” Bedke said. “When we talk about positioning Idaho to be more competitive economically in the future, I don’t think anybody’s going to have a problem with that. They just haven’t seen something that they feel can fly yet.”