An economic study by Idaho 2020, the new policy group comprising some of Idaho’s leading business executives, finds high barriers to municipal financing in Idaho that are “critical to necessary investment in public infrastructure” and commonly in use by neighboring states.
The report’s comparison of state-by-state borrowing practices also notes “stiff competition” with other states generally, with Idaho ranking in the bottom half on most measures of overall business and tax climate, despite ranking high on measures of relative business freedom.
Polling done as part of the study showed widespread voter preference in Idaho for public borrowing, as opposed to tax increases, to finance significant infrastructure projects, as well as strong concern for improving education as a means toward creating better jobs and a stronger economy.
Tommy Ahlquist, chief operating officer for commercial developer Gardner Co. and head of the policy group, presented the findings publicly at a meeting of the statewide Idaho Chamber Alliance on Tuesday.
Idaho 2020’s data-supported push comes as state lawmakers are considering reining in the activities of urban renewal agencies, one of the few public financing tools available in a state where public borrowing typically requires a two-thirds supermajority of voters for approval.
Besides seeking to preserve the ability of such agencies to finance a wide range of projects, Idaho 2020 is making the case that modernizing how Idaho finances public investment in infrastructure and economic development is essential to growth, and a prerequisite to other initiatives to make the state more competitive, such as reducing taxes.
Noting that a recent study by the United Way found 37 percent of Idahoans among the working poor or in poverty, Ahlquist said the changes Idaho 2020 supports would benefit people at all economic levels.
“The effort of Idaho 2020 this year and going forward will be to keep our eye and focus on how we modernize our investment tools so we can keep taxes low and stay competitive, so we can stimulate the economy, because Idaho needs it,” Ahlquist told attendees. “If anyone says they don’t, they’re blind to the data of what families and small businesses need in this state. And that ultimately is what we’re all about.”
Idaho 2020 contracted with Stanford University’s Hoover Institution, a right-of-center think tank, to produce the state economic and policy data. The polling was done by Boise-based GS Strategy Group.
The effort of Idaho 2020 this year and going forward will be to keep our eye and focus on how we modernize our investment tools so we can keep taxes low and stay competitive, so we can stimulate the economy, because Idaho needs it. If anyone says they don’t, they’re blind to the data of what families and small businesses need in this state.
The report includes these findings:
▪ On public finance, surrounding states have more tools available for municipalities to initiate projects on their own, without a public referendum. They have lower barriers to obtaining funding and more flexibility for urban renewal.
▪ In Idaho, infrastructure development options are limited or harder to enact. The state would benefit by “loosening funding restrictions in smart, targeted ways in order to respond to the unmet demand for infrastructure investment.”
▪ Education and economic concerns are uppermost in the minds of Idahoans, and they “believe improving education would be the best way to improve the state’s economy.”
▪ Idahoans “strongly support” public incentives to spur private job growth but are “unaware of where Idaho is positioned” on tax and economic policies relative to other states.
▪ Idahoans see public infrastructure borrowing as “an essential responsibility of government” and prefer it to raising property taxes as a method of financing.
▪ There is “strong support” for urban renewal districts “as a way to create economic growth and fund construction of public buildings.”
The report recommends the expansion of public financing methods such as general obligation and revenue bonds, tax-increment-financing methods such as urban renewal, and local improvement districts. Specifically, it calls for protecting the oft-maligned urban renewal process “as the only real current economic development Idaho has.”
Idaho 2020 does not intend to lobby, Ahlquist said, but wants its data to support grass-roots efforts to shape legislative agendas. He noted that polling data show that even the most conservative Idahoans support more “left-of-center” policy objectives around financing, taxes, economic incentives and education.
Findings of Idaho 2020’s inaugural study include a report on public financing practices by Idaho and seven comparable states: Washington, Oregon, Utah, Nevada, Arizona, Colorado and New Mexico. The group ran a statewide a poll.
Public Finance report
General obligation bonds: Idaho has the strictest requirements for authorization, a two-thirds majority vote. Utah, Colorado, New Mexico, Nevada and Oregon go by majority vote. Washington is 60 percent. Arizona limits such bonding and relies more on revenue bonds and lease-purchase financing.
Revenue bonds: In all states except Idaho, authority for this type of borrowing resides with administrative agencies or legislative bodies, though Washington and Oregon provide for ratification by voters in some cases. Idaho requires approval by a majority of voters.
Tax increment financing: Urban renewal districts are one method of tax increment financing. All states allow local governing bodies to create them.
Special assessments: Most states allow local governing bodies to create. Idaho requires 60 percent of property owners or a city council super-majority.
Boise-based GS Strategy Group surveyed 500 people identified as likely voters in November. The margin of error is plus or minus 4.4 percentage points. Select findings below (not all responses total 100 percent):
Political makeup: 45 percent Republican, 32 percent independent, 20 percent Democrat; 55 percent conservative, 24 percent moderate, 15 percent liberal.
Top 5 issues, in order: Quality of education; jobs and unemployment; the economy; health care and insurance; and education funding.
Bottom 5 issues, in order: Guns and gun control; government and politics; environmental and global warming; wages; and roads and infrastructure.
K-12 schools: 45 percent think Idaho’s schools are below average compared to other states, 33 percent say average, 15 percent say above average.
State economy: 62 percent say fair or poor; 37 percent say good or excellent; 51 percent predict no change over next two years, 30 percent think it will improve,13 percent think it will get worse.
Economic priorities: 57 percent say the focus should be on encouraging innovation and entrepreneurism, 36 percent favor historical strengths such as agriculture, timber and mining.
Economic growth: 47 percent say K-12 education is most important factor; 21 percent cite tax policy, 14 percent say infrastructure, and 13 percent say small business incentives.
Tax climate: 60 percent say taxes are “about right,” 29 percent sat they are high, 9 percent say they are low. Additional questions on taxes suggest that most people aren’t sure how Idaho taxes compare to other states.
Incentives: 69 percent say lower taxes are critical to attracting business, while 28 percent say no. Regarding incentives, 61 percent support tax incentives to attract new business from out of state, 32 percent oppose them.
Business climate: 60 percent think Utah has a more competitive business climate, 12 percent don’t, and 28 percent don’t know.
Capital finance: 80 percent support municipal borrowing for infrastructure including roads, schools, sewers; 16 percent do not. Two-thirds support borrowing for infrastructure that supports business development. Less than one-third do not.
Bonding vs. taxes: 71 percent prefer bonding for infrastructure projects, while 17 percent prefer raising taxes property or income taxes.
Authorization: Respondents were closely split on how capital borrowing should be authorized, with 49 percent in favor of allowing local governments to decide but 48 percent wanting a public vote.
Urban renewal: 65 percent favor rebating a portion of a company’s future property taxes to promote development within an urban renewal district and stimulate the economy, while 31 percent oppose the practice. The survey’s questions regarding urban renewal present favorable scenarios for urban renewal without describing all negatives cited by detractors.