Posts tagged: Idaho Economy
Idaho state tax revenues in July came in slightly below the state’s newly revised forecasts, but 3.8 percent above July of the previous year. Revenues were 1.4 percent below the revised forecast of $244.3 million for the month. The forecast for fiscal year 2015, which began July 1, was revised downward $17 million by the state Division of Financial Management from the January forecast because of changing economic conditions suggesting lower anticipated sales tax growth in the coming year, now forecast at 5.9 percent, down from the previous 7.7 percent. You can see the state Division of Financial Management’s full monthly General Fund Revenue Report here.
Idaho’s economic performance is declining on the heels of a “dramatic erosion in resources” due to tax policy changes and falling investments in K-12 and higher education, according to a new report from the Idaho Center for Fiscal Policy. The report notes that Idaho’s per-capita income is lower than all but one state, Mississippi; its low- and moderate-income residents pay a larger share of their incomes in taxes than do higher earners; per-student school funding is down 16 percent since 2008 in inflation-adjusted figures, while higher-ed funding per student is down 37 percent; and Idaho ranks 31 percent below the national average for tax collections and 41st in the nation for tax collections relative to income levels.
“While Idaho has never been a high-income state, our sharp downward trend in economic performance is alarming,” said Lauren Necochea, director of the center.
Jasper LiCalzi, chairman of the Department of Political Economy at the College of Idaho, said, “Reduced funding for education, both primary and secondary, depresses per capita income, which, along with a regressive system of taxation, reduces tax receipts for the state. These problems cannot be resolved in isolation but only together.” You can read the full report here.
The Idaho Center for Fiscal Policy is funded by the Northwest Area Foundation and was opened by former longtime state chief economist Mike Ferguson in 2011; Ferguson retired from the center June 30, and Necochea, who also heads Idaho KIDSCOUNT, took over. Necochea said the latest report, headed, “Six Key Facts About Idaho’s Revenue Shortage and Our Declining Economic Performance,” was designed to sum up information examined in larger reports by the center “in a way that was concise and easy to digest.”
Both the Idaho Center for Fiscal Policy and Idaho KIDSCOUNT are programs housed at Mountain States Group Inc., a 501c3 nonprofit. Necochea is a native Idahoan who studied economics at Pomona College and earned her master’s degree in public affairs at Princeton. Ferguson called her “ideally suited” to taking over the center. Though Ferguson no longer has an official role with the center, Necochea said, “Mike is a dear friend and we’re still talking to him frequently.”
Catching up from the past week’s news while I was gone:
There was a major development in the race for state Superintendent of Schools, as the Idaho Association of School Administrators invited both candidates to speak and answer questions at a high-profile forum at its annual conference in Boise last Monday. Democratic nominee Jana Jones spoke and answered questions from the 460 school administrators in attendance, but GOP nominee Sherri Ybarra declined the invitation. During the conference, Idaho EdNews reporter Clark Corbin spotted Ybarra in the same downtown Boise neighborhood having coffee; she told Corbin she was waiting to meet with a Republican legislator and her schedule was too busy to attend the IASA conference; you can read his Monday report here, which includes reporting on Jones’ call at the conference for building a new education coalition.
Two days later, Ybarra issued a press release criticizing the Idaho EdNews story, saying she planned to attend the IASA conference as a participant later in the week. She also met with reporters and said a doctor’s appointment was among her schedule conflicts on Monday, and announced that 10 GOP lawmakers and a group of educators had endorsed her but said she wouldn’t immediately name them. There’s more on that here, here and here.
Meanwhile, this year’s Idaho Superintendent of the Year Chuck Shackett, a high-profile supporter of the voter-rejected “Students Come First” school reform laws - which Jones strongly opposed - and prominent Republican, endorsed Jones. “I trust Jana completely,” Shackett said Tuesday, hours after he was honored as superintendent of the year; he noted that when Jones, former chief deputy state superintendent, left the State Department of Education, he tried to hire her to head the Bonneville School District’s special education programs.
In other news last week, data released Thursday by the U.S. Bureau of Economic Analysis showed that Idaho residents have among the lowest personal incomes in the nation but spend a higher percentage of their money on food, housing and other essentials. AP reporter Rebecca Boone reported that Idahoans had to spend more than 43 percent of their income on the basics; only Mississippi was higher. You can read her full report here.
Former longtime Idaho Statesman political columnist and reporter Dan Popkey talked with Boise State Public Radio on why he made the switch to become 1st District GOP Rep. Raul Labrador's new press secretary; his interview with BSPR's Scott Graf is online here.
Severe thunderstorms on Wednesday caused large amounts of sediment to flow into the South Fork of the Salmon River, killing 1,200 adult Chinook salmon at an Idaho Fish & Game trapping facility and also killing some Chinook in the river; about 200 adult Chinook were saved and transferred to a hatchery near Riggins. Because summer Chinook run in a four-year cycle, the kill is expected to result in significantly fewer of the fish returning to the South Fork in 2018.
And the Idaho Transportation Department on Friday issued a permit to Bigge Crane for a giant megaload of equipment bound for a Great Falls, Mont. oil refinery to travel up Highway 95 and across the Long Bridge to Sandpoint in North Idaho; it’s expected to reach Sandpoint around the middle of this week. Originally, the load was proposed to be hauled along Coeur d’Alene Lake Drive en route to Montana by Mammoet, but the need for a federal environmental assessment derailed that plan; the equipment, already shipped to the Port of Wilma, then was cut into three parts, with two of them shipped by rail. The third, which is 21 feet wide, 16 feet 8 inches high and 311 feet long, weighs up to 1.086 million pounds; ITD says it will travel between 10 p.m. and 5:30 a.m.
Idaho state tax revenues came in strong in June, topping forecasts by 2.9 percent or $8.4 million. That put the state at $2.8154 billion in general fund tax collections for the fiscal year, which ended July 1; that’s 0.3 percent above the January 2014 forecast, or $7.2 million higher for the year.
Idaho’s general fund grew 2.4 percent from fiscal year 2013 to fiscal 2014, slightly faster than the predicted 2.1 percent. Individual income taxes were the strongest growth area, beating projections by $9.5 million, while sales taxes were slightly below forecasted growth, but still up 3.2 percent from the previous year. In 2013, sales tax collections grew 8 percent; the state Division of Financial Management noted that part of the reason for the slower growth in fiscal 2014 is that it’s the first year $18.9 million a year was diverted from sales tax collections to cover the cost of personal property tax relief legislation. Without that diversion, sales taxes would have shown 4.9 percent growth.
Gov. Butch Otter hailed the year-end figures, saying, “I’m proud that Idaho is committed to living within the taxpayers’ means, and I’m proud of the Legislature and our state employees for ensuring that commitment is met.” You can see the monthly General Fund Revenue Report here.
Idaho’s seasonally adjusted unemployment rate fell below 5 percent in May for the first time in nearly six years, the Idaho Department of Labor reports. More than 15,000 more Idahoans were working in May than in May of 2013, with the jobless rate at 4.9 percent. Ada County’s rate in May as 4.2 percent; Canyon, 5.6; Kootenai, 5.1; and Bonneville 4.1 percent. You can read Labor’s full announcement here.
Idaho’s gross state product showed the third highest percentage increase in the nation in 2013, up 6.9 percent from the year before, the Idaho Department of Labor reports. The figure rose on the strength of a surge in health care, finance, construction and natural resource economic activity in 2013, according to Labor spokesman and analyst Bob Fick. The estimate of Idaho’s gross state product – the value of all goods and services produced in the state – rose to $62.25 billion in 2013, according to the latest estimates from the U.S. Bureau of Economic Analysis. In inflation-adjusted figures, it rose just over 4 percent, the fifth highest increase nationally, to more than $57 billion, while the comparable national increase was just 1.8 percent. See Labor’s full announcement here, including breakdowns by industry and comparisons to all states.
May state tax revenues came in 1.6 percent above forecasts, leaving the state pretty much at the forecast year-to-date; you can see the state Division of Financial Management’s General Fund Revenue Report here. Meanwhile, the Legislature’s monthly Budget & Revenue Monitor shows that the $2.7 million in extra revenues in May puts the state on track for an expected ending cash balance at the end of the fiscal year, July 1, of $26 million, even after $34.5 million is transferred into reserve funds.
A two-year effort to try to make sure Idaho doesn’t discourage high-tech businesses through its sales tax laws has now swung the state to the opposite extreme, with multimillion-dollar software package installations set to switch from taxable to tax-free on July 1.
It all stemmed from efforts by the Idaho Technology Council and businesses to get lawmakers to remove sales taxes from “cloud” services – where people remotely use software that’s located far away, without ever actually purchasing the software and installing it on their own computers. Legislation that passed and was signed into law in 2013 granted a sales tax exemption for those uses of software over the internet cloud, after Idaho tech businesses told lawmakers that without an exemption, some likely would leave Idaho.
That new law didn’t exempt the three other ways of delivering software that people or businesses buy: Buying a disk at an office supply store; downloading software online; or installations of major enterprise software systems at businesses that are done through the “load and leave” method, where the vendor comes to the business and installs the software, then leaves it.
This year, the Technology Council came back to the Legislature and said the first “cloud” exemption wasn’t working, and the state Tax Commission’s interpretation of it was too narrow. The council, joined by some of the state’s largest businesses, pushed legislation to exempt both downloaded and “load-and-leave” software sales, too. Though the discussion was all about accessing the cloud and the new high-tech options available to businesses, the state stands to lose as much as $40 million a year in sales taxes in the future – much of that from very large software system upgrades at big businesses.
Backers of the bill have touted it as clarifying the definition of “remotely accessed computer software” and treating cloud-based services like other tax-exempt services, from health care to haircuts. But the biggest beneficiaries may be banks, hospitals, and other large businesses when they upgrade their internal software systems, regardless of whether there’s any remote access involved. You can read my full story here at spokesman.com.
Idaho Tax Commission Chairman Rich Jackson said Idaho typically doesn’t apply its sales tax to services. But since 1986, when the state first examined the issue, Idaho has defined software as “tangible personal property,” which is subject to sales taxes. “We started saying, ‘This looks like, smells like tangible personal property, so we’re going to tax it as such,” he said.
Idaho’s new law makes the leap to declaring that software isn’t tangible personal property at all, unless it’s on a physical item like a disk. Now, the Tax Commission is in the midst of a series of negotiated rule-making sessions with industry representatives to figure out how to implement the new law.
The Technology Council insisted to lawmakers that it was talking about services that never should have been taxable, so the fiscal impact on the state would be negligible. Mike Chakarun, tax policy manager for the commission, said, “I don’t know if they fully understood the types of transactions that we see that were held taxable previously.”
The new bill, HB 598, excludes entertainment items, like e-books or video games, from the tax exemption. But it also adds the two other delivery categories to the exemption, giving Idaho one of the nation’s broadest tax exemptions for software sales; only six other states go as far. As of July 1, when the law takes effect, the only software sales that will be taxable in Idaho will be those where the purchaser buys the software on a physical storage item, like a TurboTax disk. The same TurboTax program downloaded online will be tax-free.
Here’s an example of how sought-after software engineers are in Boise: Several years after German software industry giant SAP bought out Sybase, another large firm with a Boise office, it's now decided to consolidate elsewhere and shut down the Boise location that employs 30 software engineers. Those workers won’t be out of a job ‘til the end of July, but last night, 23 other Treasure Valley tech firms came to a session organized by the Idaho Technology Council to pitch their current job openings to the soon-to-be-former SAP Sybase engineers.
“We added it up and there were 104 jobs that are available from those companies,” said Jay Larsen, technology council president. Each firm was given three minutes to give its pitch, and then they all mingled at an open house. “There’s just such a big demand for computer science software professionals,” Larsen said. Sybase, based in Dublin, Calif., acquired Boise-based Extended Systems in 2005, a firm that was launched by former Hewlett-Packard employees in 1984. SAP bought Sybase in 2010 for $5.8 billion.
The Budget & Policy Analysis division of the state’s Legislative Services office has come out with its monthly General Fund Budget Monitor, which looks at the latest state tax revenue receipts and shows how that compares to the amounts lawmakers have budgeted. With the April shortfall compared to projections, the monitor shows that the projected balance at the end of the current fiscal year on July 1 drops from $26.9 million to $26 million, and the projected year-end balance at the end of fiscal year 2015 – the amount left unspent in the budget approved by lawmakers and the governor – falls from $79.4 million to $78.6 million. That's aside from deposits into state rainy-day accounts. You can read the report here.
Idaho state tax revenues came in 4.1 percent below projections for April, the biggest month of the year; because they’d been running ahead prior to that, the result is that year-to-date state tax revenues are just 0.2 percent below forecasts, almost right on the mark. The April shortfall of $18.6 million was largely due to lower than expected individual income tax receipts, which were 7.1 percent below the forecast; corporate taxes also missed forecasts, falling 5.1 percent below expectations. Sales taxes slightly beat the forecast; you can read the full Idaho General Fund Revenue Report here.
Idaho Gov. Butch Otter has been pushing his “Project 60” – designed to raise Idaho’s gross domestic product from its $51.7 billion a year level when Otter took office in 2007 to at least $60 billion – for the past five years. Now, he says, that goal has been met and surpassed. “This last year, third quarter, we hit Project 60, a little bit ahead of where I thought we would be, but I’m very happy – we’re not going back,” Otter said today. Now, he said, he’s announcing “the next step,” a plan he dubbed “Accelerate Idaho.”
Instead of a numerical goal, Otter said the new push will be to “elevate the state’s foundation for growth,” from enhancing education to reducing regulation to addressing infrastructure. Otter said the success of this new venture will be measured both in GDP growth and in improving Idaho’s wages, which now rank near the bottom in the nation. Otter said he’d like to see “our individual income grow to at least on par with the national average,” and said, “I think it has to do with what’s our unemployment rate going to be then and what’s the average wage in the state of Idaho.”
State Commerce Director Jeff Sayer said “K-through-career” education is key to the plan. When he talks with businesses, he said, “The single biggest limiting factor in their ability to grow is they need skilled talent.” What’s needed, he said, is “creating those talent pipelines that Idaho industries need, and the essence of that … comes down to linking our higher education institutions with our industry needs in fixing that gap. … That is the single most important thing we need to do to move our economy forward, is fixing that gap. And the encouraging part in all of this is this is already happening. We have examples all around the state of universities and community colleges who have figured this out,” establishing education programs that address specific local industry needs.
Sayer said the idea of “Accelerate Idaho” is to speed up the pace of improvements already in the works; he also announced new “tools” the state will provide for businesses looking to expand or move to the state, including a “Governor’s Rapid Response Team” and a new web platform for site selectors. Click below for Otter’s full announcement.
“Almost five years ago, we established a specific benchmark for creating jobs and growing the state’s economy, and I’m thrilled that we’ve achieved that goal despite weathering some of the toughest economic times in memory,” the governor said. “Accelerate Idaho is our strategy for ensuring that Idaho is the right place for employers to expand or relocate. The goal is more career opportunities for Idahoans.”
Unemployment in Idaho fell to 5.2 percent in March, the lowest rate in five and a half years, the Idaho Department of Labor reports. That seasonally adjusted rate was the eighth straight month to show a decline; nationally, the rate was 6.7 percent in March, the same as it was in February. You can read Labor’s full announcement here.
County breakdowns showed Kootenai County’s jobless rate was 6.3 percent in March, down from 6.5 percent in February and 7.7 percent in March of 2013. Bonner County was at 7.6 percent, unchanged from February but well below the 9.3 percent from a year earlier. Shoshone County saw a small rise in unemployment from February to March, from 10.5 percent to 10.7 percent, though it, too, had improved from its March 2013 level of 11.3 percent. The city of Coeur d’Alene showed a 5.8 percent unemployment rate in March, down from 7.3 percent a year earlier.
Idaho’s state tax revenues in March came in $11.1 million over projections – 7.7 percent – and 12 percent higher than March of 2013. That puts year-to-date tax revenue at $1.9217 billion, which is 0.8 percent ahead of forecasts and 4.7 percent higher than at this point last year. You can see the full General Fund Revenue Report here for March from the governor’s Division of Financial Management.
The proportion of Idaho workers who are working just part-time because they can’t find full-time jobs dropped below the national average in 2013 for the first time in six years, the Idaho Department of Labor reports. The figures, from the U.S. Bureau of Labor Statistics, show that Idaho had about 39,100 workers in that category in 2013, 5.4 percent of its workers. The national average in 2013 was 5.5 percent. Idaho’s rate has dropped from 6.2 percent in 2012 and a high of 7.6 percent in 2009; the state now ranks 16th on that measure, down from fifth in 2009. There’s more info here.
Idaho’s average hourly wage slipped as a percentage of the national average in 2013, the Idaho Department of Labor reports, but the decline was less than the state saw in 2011 and 2012. According to estimates from the U.S. Bureau of Labor Statistics, Idaho’s average hourly wage for all occupations in 2013 was $18.67, 83.6 percent of the national average wage. That’s up slightly from $18.48 in 2012, but it’s down four-tenths of a percent as a percentage of the national average wage – meaning Idaho’s wages aren’t growing as fast as other states as the economy recovers. Idaho’s median wage was $14.68 an hour, which was 87 percent of the national average, a decline of three-tenths of a percentage point from 2012. That was up 10 cents from the $14.58 rate in 2012.
Overall, Idaho’s average wage ranked 47th among the states, down from 46th in 2012, and its median wage ranked 45th, down from 43rd a year earlier. There’s more info here, including a breakdown by occupations.
Lots of news has happened over the past week while I’ve been off work. Here’s some catch-up:
Gov. Butch Otter signed 112 bills into law on Wednesday (the list he published looked much longer, but nearly every bill was listed twice); and 48 on Friday – and still hadn’t vetoed a single one of the more than 400 bills passed this year. Among those signed on Wednesday: HB 462, the ski area liability bill; three pieces of the public school budget, which overall shows a 5.1 percent increase in state funding; SB 1314, the controversial payday loan bill; SB 1354a, on bad-faith patent infringements; SB 1372, the school student data security bill; SB 1374a, allowing the state Board of Corrections to contract out inmates for farm labor; and HB 470a, the $400,000 wolf control bill, which had an emergency clause and took effect immediately upon signing. You can read a full report here on that bill from AP reporter Nick Geranios.
Among those signed on Friday: HB 518a, modifying last year’s bill to regulate scrap metal businesses in an effort to crack down on metal theft; the remaining pieces of the public school budget; SB 1394, raising Idaho judges’ salaries; SB 1417, the higher ed budget, which reflects a 6.2 percent increase in state general funds; SB 1421, the state prisons budget, which reflects an 11 percent increase; and numerous other agency budget bills.
Reporter Clark Corbin of Idaho Education News analyzed the legislative session’s progress on the 20 recommendations of the governor’s education improvement task force; you can read his report here. And Idaho EdNews reporter Kevin Richert queried the five candidates for state superintendent of schools on how they grade the 2014 legislative session, and if elected, what their priorities would be for next year; his full report is online here.
The Idaho Department of Labor reported that Idaho personal income jumped 3.7 percent in 2013, a full percentage point more than the nation and third-highest among the states in percentage increase; you can read more here. The department also reported Idaho’s population shift from rural to urban counties slowed in 2013 as the 33 rural counties saw their combined population increase for the first time in three years; there’s more on that here. And Boise State Public Radio reported that a new study shows an Idaho worker earning minimum wage would need to work 73 hours a week in order to afford to rent a modest two-bedroom apartment; see their report here.
The University of Idaho named Mark Adams, former vice dean at Valparaiso University Law School, as the new dean of its College of Law. The Oregonian reported that state Sen. Curt McKenzie’s ex-wife, Renee, has sued the state of Oregon for blocking her plans to marry a convicted murderer serving two life sentences in an Oregon prison. Meanwhile, Idaho Reports on Idaho Public TV took a look Friday at how lawmakers’ attention is turning to primary elections, talked with lobbyists about the 2014 legislative session, and more; you can watch here.
The general fund revenue report is out for February, and the numbers are positive – state tax revenues came in 28.6 percent ahead of forecasts. February’s $27.5 million surplus is enough to offset the previous month’s $25.9 million shortfall; year to date, general fund receipts are now $3.6 million more than forecast. You can read the full report here. Individual income tax collections were the strongest category, coming in more than three times higher than expected, according to the governor's Division of Financial Management.
Idaho’s latest monthly general fund revenue report is out, and January state tax revenues came in 8.7 percent below the revised forecast, for a year-to-date shortfall of 1.4 percent. However, year-to-date receipts are still 4.1 percent higher than the same period in fiscal year 2013. Corporate income tax collections were significantly down for the month, partly because a few large payments pushed refunds for the month to twice the expected level. Individual income taxes for the month were below forecast by $14.9 million, or 8.8 percent, but year-to-date, they’re just 1.7 percent below forecast. Sales taxes came in 4.2 percent below the forecast for January, but are still close to on target for the year to date, at 0.7 percent below forecast. You can see the full report here.
Idaho Department of Water Resources' director Gary Spackman signed an order Wednesday telling 2,300 water-right holders they'll have to shut down irrigation if they can't reach a compromise with Rangen Inc, a Hagerman-based fish farm and feed producer, AP reporter Katie Terhune reports. The water call could put growers of sugar beets and potatoes in eight counties along southern Idaho's Snake River in jeopardy. This shut-off call for farmers who pump water from deep beneath the earth comes amid a disastrous year of snowfall, at least so far, that portends a parched summer — and scant water to sustain the rich agricultural region's demands. Rangen's water right has priority, giving it first dibs on water over the pumpers; click below for Terhune's full report.