Latest from The Spokesman-Review
OLYMPIA – With most legislators away from the Capitol and any budget talks going on behind closed doors, Democrats invited people from around the state to a hearing to support a capital gains tax and several other budget items they’d like to get in the current special session.
The “People's Hearing” – which had the veneer of an official legislative hearing but none of the authority – was an indictment of the state's tax system and a plea for more money for schools and state services. One speaker from each of the state's 49 legislative districts got two minutes to explain something he or she thought lawmakers should do.
The most common theme was to ease the tax burden on the poor and increase it on the wealthy through a capital gains tax. The Legislature has two different proposals for taxing investment income, a House proposal for a 5 percent on gains above $5,000 for an individual taxpayer, and a Senate proposal for 7 percent on gains above $50,000.
“We are united in the call for a fair solution to unfair taxes,” Janie Hauff, a home health care worker from the Spokane Valley, told legislators.
Cheryl Steele, of Spokane, said central Spokane’s 3rd District is the poorest in the state and needs the state’s social programs for children, seniors and other vulnerable citizens. State workers also deserve a raise after years in which their wages were frozen or reduced in the recession.
“I stood proud by the state during tough times and I would appreciate the allegiance in return,” said Steele, who drove to Olympia with fellow Airway Heights Correctional Center worker Connie Kanehailua on their day off., two workers at the Airway Heights Correctional Center, drove over on their day off. They made several trips to the Capitol to lobby during the regular session and think tax changes will gain some traction in the current special session called to finish work on state budgets.
“I feel confident because they’re running out of options,” Steele said.
But while the speakers at the hearing included Democrats, Republicans and independents, their suggestions were mostly an exercise in preaching to a choir of Democratic representatives and senators. There were no Republicans from either chamber at the desks on the dais.
OLYMPIA — Only 11 days left in the regular session, but that doesn't mean there are no new ideas floating around. Senate Democrats unveiled a trio of bills that would put more money into schools through a capital gains tax on the upper-upper income and rearrange the levy system. Senate Republicans may have a plan of their on in the afternoon.
The state treasurer and the superintendent of public instruction may announce still another plan on Thursday.
Gov. Jay Inslee has said he expects any budget deal would have some new revenue (which is to say, a tax increase). Senate Republicans are so far sticking to their guns that it isn't needed.
And the flags are at half-staff … not because it's the deadline for filing your federal income tax, but to mark the 150th anniversary of President Lincoln's death.
For the first time in seven years, voters have a top issue for the Legislature to address that's not "the economy." This year, the top issue is education, a survey of voting households told The Elway Poll.
Maybe the fact that the state Supreme Court has been after the Legislature for a couple years to live up to the constitutional responsibility to public schools has pushed education to the top. Or the fact that last year the court ordered legislators to come up with a plan to meet that responsibility, and they responded with the legislative version of "the dog ate my homework." Or maybe its the fact that all of this is going to cost billions. That's right, with a "b".
Of those surveyed, 42 percent said education was the top issue, up from 19 percent in 2014, while 32 percent said the economy, down from 46 percent a year ago. Education had never been above 27 percent and the economy hit 59 percent in 2012 as the state was struggling to come out of the recession.
Also on the list of "most importants": 19 percent said taxes; 17 percent said education; 15 percent said the budget and spending. Putting taxes together with budget and spending, which might make sense because one leads to the other, which leads back to the first, would make that the number two priority.
Environment, health care, public safety, social services and energy were all in single digits.
Asked what they thought the Legislature should do with the extra $3 billion in tax revenue expected to come in during the next two years, about half said legislators should spread it around to make some improvements to education and restore some programs cut during the recession. One in four said the whole amount should go to education and about one in five said keep the budget at its current level and give the extra money back in tax cuts.
Pollsters also asked about some of Gov. Jay Inslee's suggested tax increases, and 77 percent said they'd favor or at least accept higher cigarette taxes, 71 percent gave the nod to a carbon tax; 57 percent had some support for a capital gains tax and 56 percent were at least OK with putting the sales tax on bottled water.
WASHINGTON – Tax filing season will start on time this year despite a last-minute tax law passed by Congress, the IRS said Monday.
Taxpayers can start filing their 2014 tax returns on Jan. 20.
Earlier this month, Congress passed a bill extending more than 50 tax breaks that had expired at the start of the year. The new law extends the tax breaks through the end of the year, allowing taxpayers to claim them when they file their 2014 returns.
What's the earliest you've filed your taxes?
PUBLIC LANDS — A task force appointed by the governor has recommended bringing back two unpopular taxes to help fund Washington state parks and boost the outdoor recreation industry.
The report from the Blue Ribbon Task Force on Parks and Outdoor Recreation recommends a sales tax on bottled water and an excise tax on motor homes and travel trailers.
They could collect $100 million in the next two-year budget, the task force reported.
Gov. Jay Inslee did not endorse the taxes in a statement last week, but they could become part of his budget proposal in December.
According to an Associated Press report:
The Legislature approved a tax on bottled water in 2010 only to see it repealed the same year by voters. The state ended an excise tax on motor homes and travel trailers after voters passed an initiative in 2000.
In addition to the taxes, the task force also proposes creating a position in the Department of Commerce to focus on the needs of the outdoor recreation industry. And a coordinating council should be set up to improve access to local, state and federal lands. Those could cost $750,000-a-year, the report estimates.
The task force concluded that people using parks and public lands managed by the Department of Natural Resources and Department of Fish and Wildlife are required to cover too much of the cost. The current Discover Pass, which costs $30 a year or $10 for a day pass, is unpopular and a barrier to some people, the task force said.
Inslee directed the task force to come up with ideas for stabilizing state park funding and marketing the industry to tourists. The 29-member panel began work in April. It held five public meetings and received 3,000 comments online.
Providing opportunities for outdoor recreation should be treated as an essential government service, the task force said.
“Outdoor recreation is not just fun and games,” the report said.
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.
Washington voters might be willing to approve higher taxes for some public projects, a new survey by The Elway Poll suggests.
Asked whether they would support or oppose a tax increase for seven different things local governments spend money on, a majority of the 501 voters surveyed to six of them.
75 percent would support tax increase for fire
74 percent for roads
73 percent for schools
64 percent for libraries
61 percent for parks and recreation
60 percent for public transportation.
Only 39 percent said they's support higher taxes for jails.
Elway pollsters were quick to point out that voters were differentiated between the different services, and on average only support tax increases for four of the seven. And, they said, "it's easier to tell a pollster you favor a tax increase than it is to raise your own taxes." So local governments should be careful about loading up a ballot with a pile of tax plans.
OLYMPIA — Legal marijuana growers in Washington will not get any of the tax breaks other farmers get, under a bill passed today by the Legislature.
The House gave final passage to a bill that makes marijuana farming different from any other agricultural product, and not eligible for various exemptions or credits for business and occupation, sales or utility taxes.
Thousands of would-be pot growers have applied for licenses and the Liquor Control Board, which regulates recreational marijuana under Initiative 502, began awarding licenses last week. They'll have to make their new operations work without the kind of tax help the state gives many other new industries.
House Finance Committee Chairman Reuven Carlyle, D-Seattle, said other agricultural producers get help to keep them competitive with farmers in other states, which also offer tax breaks. But marijuana farmers won't have that kind of competition, because growing marijuana remains illegal in most other states, he said.
If the marijuana industry needs help down the road, the Legislature can always consider tax breaks in a future session, Carlyle said.
But legal marijuana growers do have competition, Rep. Cary Condotta, R-East Wenatchee, said, from illegal growers who pay no taxes or fees to the state. Without tax breaks, legal recreational marijuana might be so expensive that people won't switch from the black market, and the system the state sets up will be "destined for failure."
Legal growers will get no breaks from the state or federal government and pay a 25 percent excise tax on sales to processors, who will pay a 25 percent tax on sales to retail stores. The stores will add another 25 percent excise tax, plus a sales tax, to consumers.
An estimate by the Office of Financial Management said will collect some $25 million over 10 years on the taxes that marijuana businesses will pay, that many other businesses don't.
The bill passed on a 55-42 vote, Speaker Pro Tem Jim Moeller ruled it didn't need a two-thirds supermajority because it didn't change any provision of I-502.
OLYMPIA – There is so much talk in legislative debates of the need to level the playing field that one wonders if an army of bulldozers should be dispatched to sporting facilities around the state.
Such leveling is almost always a major part of any call for tax breaks, whether it's for server farms or border-community retail stores. But the playing fields for alcohol sales are apparently the most cattywampus, judging from efforts to “tweak” Initiative 1183.
You remember I-1183, the initiative that was going to lower the price of hooch and make everyone happy by getting government out of the liquor business and letting the marketplace take control?. . .
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OLYMPIA — A unanimous Senate voted to bar tax breaks for the state's fledgling marijuana businesses.
On a 47-0 vote, it passed SB 6505, which says the state's new marijuana entrepreneurs who have filed for licenses to grow, process and sell recreational marijuana won't be eligible for various tax preferences that other businesses might enjoy.
Marijuana is not an agricultural commodity, and growers won't get certain tax breaks farmers who grow other crops receive. The bill excludes marijuana and marijuana-infused products from which eliminates the ability for persons in that industry to take advantage of tax breaks for agriculture. Marijuana businesses will also be ineligible for eight B&O tax preferences; 16 sales and use tax preferences; four additional excise tax preferences; and four property tax preferences, two for real property and two for personal property.
The bill was sent to the House.
OLYMPIA — A bill to give all businesses in Washington the same low Business and Occupation Tax rate, cutting some $1.8 billion out of state coffers next year, is a bad idea several people told the House Finance Committee.
Including the bill's sponsor, Rep. Larry Haler, R-Richland.
Haler said he proposed HB 2110 after last fall's special session to extend tax preferences to Boeing in an effort to land the production facilities for a new jetliner. "A lot of people are saying 'Why can't we have the Boeing deal?'" Haler told the committee.
Among those wondering most were farmers, who Haler said were "just scraping by" and who some members of the Legislature "are trying to get at" because they think farmers are wealthy.
Haler's bill would make almost every business's B&O tax rate .29 percent of gross receipts. The state currently has 12 different rates across 51 business classifications with many paying between .47 percent and 1.5 percent.
But Haler's bill would more than double the rate of .13 percent that farmers currently pay, Committee Chairman Reuven Carlyle, D-Seattle, said.
Rep. Cary Condotta, R-East Wenatchee, asked if Haler had any ideas on how the state would replace an estimated $1.8 billion in revenue in fiscal 2015 and $4.1 billion in the following two years.
No, said Haler. "I Would never advocate an income tax. There are probably other options out there."
The proposal also doesn't address all the tax exemptions and breaks the state has written into its tax code, Rep. Gerry Pollet, R-Seattle, said.
Haler agreed: "The state shouldn't be in the business of picking winners and losers."
Such a major change in tax policy probably can't be done in a short 60-day session, he said, but the Legislature should at least consider a special study of equalizing the B&O tax rate.
Washington state has the sixth best structure for business taxes in the country, the Tax Foundation said.
In its annual report on state tax “climates”, the foundation gave Washington high marks…as it usually does.
This may surprise people who have heard the business community complain about the state’s tax structure or notice that pro-business groups often give campaign money to candidates who vow to change it. . .
Here's a news item from the Associated Press: BOISE, Idaho (AP) — A state lawmaker contends Idaho's tax collectors risk violating the U.S. Constitution by requiring same-sex couples who are legally married elsewhere to do extra work when filing state income taxes. Boise Democratic Rep. John Gannon, a lawyer, says litigation in Ohio suggests Idaho's new rules requiring married gay couples to recalculate state taxes as singles after filing joint federal returns could be vulnerable. Recently, an Ohio federal judge ordered the state to recognize a gay couple's marriage in New York despite Ohio's constitutional ban. The judge's rationale was Ohio recognizes opposite-sex marriages contracted elsewhere but otherwise illegal in Ohio. Idaho follows a similar policy, Gannon says, making it potentially discriminatory now to single out gay couples on their taxes returns. The Idaho Tax Commission contends its new rules are legal.
What legislators do with that knowledge is pretty much up to them, because the taxes are already law, and the election itself won’t change that. . .
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A new survey suggests Washington voters would rather the Legislature cut spending than raise taxes, the folks at Moore Information say.
Wow. Bet you didn't see that coming. (Next week, Moore will poll people on whether they'd rather have rain or sunshine tomorrow.)
As with most polls, it's not just the overall results that matter, but what questions were asked, and how strongly people feel about them. . .
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Washington beer drinkers pay a higher tax than any state west of the Mississippi in the continental U.S.
So says the Tax Foundation in its weekly map feature that shows various tax rates.
The rate in Washington is 76 cents per gallon, which is eighth highest in the nation. Alaska and Hawaii are higher, but all the states around Washington are significantly lower.
The listed rate includes the temporary tax set to expire on June 30. Some folks in the Legislature were considering making that tax permanent, but the beer tax extension was pulled from the most recent tax proposal in the House of Representatives.
If that tax goes away, the beer tax will go down to about 26 cents per gallon, which would still make Washington the highest in the region, but bring it down to about 25th in the nation.
OLYMPIA — Democrats in the House pushed through a $900 million package of tax changes they say is designed to improve public schools, but Republicans insisted were job-killers.
On a 50-47 vote, it passed and sent to the Senate a bill that repeals or narrows nine tax preferences and extends a business tax increase on some professional services. The Senate has already passed a general operating budget with no new taxes, so this sets the stage for full-blown budget negotiations over the next four days, and possibly longer.
The 105-day legislative session ends Sunday. If a budget compromise is not reached and passed in both houses by then, a special session will be needed.
Under orders from the state Supreme Court to improve the public schools, House Democrats said they should expand education programs in part by closing or shrinking some tax preferences, credits or exemptions.
"I don't like the business and occupation tax, but what I like even less is is an uneducated work force," Rep. Larry Springer, D-Kirkland, said.
But the state expects to collect some $2 billion more in revenue from existing taxes in 2013-15 than it did over the last two years, Republicans said. It doesn't need new taxes to spend more on schools. But some businesses that rely on those tax breaks are existing on thin margins and may close.
"The best thing we can do for children who are at risk… is make sure their parents have jobs that support them," Rep. Maureen Walsh, R-Walla Walla, said.
The money raised by the changes in tax exemptions and an extension of what was instituted in 2010 as a temporary tax would go into a trust fund for education programs. The Legislature should have the courage to vote yes for the state's children, Rep. Laurie Jinkins, D-Tacoma, said.
"We could have solved this entire thing if we had funded education first… or if we live within our means," Rep. Matt Shea, R-Spokane Valley said.
OLYMPIA — The House is debating a package of tax changes that would raise about $900 million over the next two years by closing or reducing some tax exemptions, credits and preferences.
There are only a few amendments. The first, by Democrats, to give non-residents a change to file for a refund of the sales taxes they pay when shopping in Washington, passed on a voice vote.
The second, by Republicans, to place any taxes on the November ballot through a referendum and remove the emergency clause failed on a 46-51 vote.
The third, also by Republicans, would just remove the emergency clause so that the taxes wouldn't kick in on July 1, when the new budget starts, but 90 days after the session ends (whenever that might be). It failed 47-50.
OLYMPIA — Democrats on the House Finance Committee approved a $900 million package of tax increases this morning designed to pay for increases in public school programs. Republicans voted no, saying the state should increase money for schools without raising taxes.
On an 8-5 vote, the committee approved House Bill 2038, which ends some business tax exemptions, shrinks others and extends some taxes passed in 2010 as temporary.But first they pared back some of the increases they originally proposed, dropping new or extended taxes on beer, insurance agents, stevedores and janitors.
Money raised from those tax changes would go into a trust fund to pay for changes in the state's public education system, which the state Supreme Court has said must be improved.
"We have tough, difficult choices," Chairman Reuven Carlyle, D-Seattle, said. "We're asking everyone to contribute to our quality of life."
But Rep. Terry Nealy, R-Dayton, said the committee was "taking a butcher knife to these businesses, rather than a scalpel. We're picking winners and losers among our businesses."
He and other Republicans also noted the Senate budget spends an extra $1 billion on public schools without raising taxes.
"We don't need new taxes to balance our budget," Rep. Ed Orcutt, R-Kalama, said. "It's the courage to fund education first and say no to some other people that we need."
Republicans also tried unsuccessfully to add a clause requiring the tax increases to be sent to voters in November. Carlyle argued it was the role of the Legislature to close tax exemptions it has approved over the years that may no longer be working as they were initially intended.
The bill now goes to the House for a vote sometime later this week.
Joe Korbuszewski addresses the group protesting a new tax on microbreweries Friday on the Capitol steps.
OLYMPIA – The Legislature looked at raising a wide array of taxes Friday — on beer, gasoline or bottled water, on doctors, lawyers or janitors or on nonresidents who come to Washington to shop.
Some people told legislators it was the right thing to do, either to help schools or protect jobs. Others told them it was the wrong thing to do, because it will hurt businesses and destroy jobs.
Legislators didn't vote Friday on any of the proposals to close exemptions, end special rates, extend surcharges or make temporary taxes permanent. Their fate hinges on upcoming budget negotiations between the House, where the tax increase bills now reside, and the Senate, where a coalition that controls the chamber has vowed not to raise taxes. . .
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The Rainier bottles "graze" in front of the Capitol during a protest against the extension of the state's temporary beer surcharge.
OLYMPIA — There's never a giant opener around when I need one.
A pair of the Rainier bottles made famous in the beer's off-beat commercials, with their "wrangler" in tow, showed up at the Capitol for the protest against continuing the temporary beer surtax and extending it to microbreweries.
A couple of things you may not know about the iconic beer-creatures. In their costumes, they are blind as bats, and were not allowed to go up and down the Capitol steps in costume. The costumes don't handle the rain well — making one wonder what would happen to them in a giant ice chest.
OLYMPIA — The House omnibus tax bill gets a hearing this morning in the Finance Committee, playing to a full room of folks explaining why a tax increase on their particular industry is a bad idea, and folks explaining why more taxes in general is a good idea.
One of the industries in the tax bill, the beer industry, will sponsor a Defend Washington Beer rally on the North Capitol steps at noon. Large breweries are facing an extension of what was supposed to be a temporary tax, albeit at a smaller rate while microbreweries, which were exempted from the surtax in 2011, would have one levied on them.
A children's steel drum Calypso band will be playing just inside in the Capitol Rotunda, so it should be a festive time.
This afternoon the House Transportation Committee will hold a hearing on an $8 billion-plus tax package for new road projects and improved maintenance. It would raise the gasoline tax as well as give local governments the ability to raise license tabs.
With tax day looming, career criminals should take note.
The IRS is advising that all earnings, including those obtained illegally, must be reported as income for tax purposes. Additionally, criminal enterprises are ineligible for the types of business deductions enjoyed by companies engaged in lawful activities.
Before simply dismissing this as a bunch of bureaucratic nonsense, keep in mind that uber gangster Al Capone was taken down not for extortion or murder but on tax evasion for failing to report his ill-gotten gains to the IRS.
Here's how the advisory appears on the IRS website:
Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.
Potential benefits for disclosing illegal income include the possibility of being able to deduct it from future tax returns if you're ever convicted later and ordered to pay restitution.
Remember, don't shoot the messenger.
Gov. Jay Inslee explains his budget as students from Seattle's Cleveland High School look on.
OLYMPIA — The state should make temporary tax increases on beer and some business services permanent, cancel a variety of other tax breaks and spend an extra $1.2 billion on public schools, Gov. Jay Inslee said Thursday.
Standing in front of a group of Seattle high school students involved in a program to boost science and math skills, the governor released his first budget proposal. It’s a plan for expanded programs from pre-kindergarten to high school, designed to satisfy a state Supreme Court order to adequately fund public schools.
“We must do hard things. It’s the right thing to choose education over these tax breaks,” he said at a press conference to announce his spending plan for the 2013-15 budget cycle.
The proposal met quick resistance from Senate Republicans, who will likely release the first full budget in the Legislature next week. It will not propose tax increases or ending the tax exemptions Inslee proposed, Sen. Mark Schoesler of Ritzville, the Senate Republican leader, said. . .
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WILDLIFE – Idaho residents have a rare chance to support the state’s wildlife when they file state income tax returns.
Check the square to donate any amount of your refund to the Nongame Wildlife Conservation Fund. State wildlife management for fish and animals is funded by license sales to hunters and anglers. No general taxes go to wildlife programs for fish, game or nongame.
The only two ways to support animals that are not hunted, fished or trapped is by donating on your Idaho income tax form or buying an Idaho wildlife license plate.
Govenor-elect Inslee addresses a legislative preview session.
OLYMPIA – The Legislature should consider a wide range of options in a search to increase gun safety and reduce the threat of violence, Governor-elect Jay Inslee said Thursday.
“There is no panacea, no one solution,” Inslee said at a press conference during a preview of the upcoming legislative session sponsored by the Associated Press. “But that’s not a reason for inaction.”
On other topics, Inslee – who takes the oath of office Wednesday – repeated campaign promises to try closing the state’s budget gap through government efficiencies and an improved economy but without new taxes. He called for a thorough review of plans to increase coal train traffic in the state, and said immediate changes to the new state law on legalizing marijuana for adult recreational use were unlikely.
As a congressman, Inslee voted for a ban . . .
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Click below for a report from AP reporter John Miller on the potential repeal of the personal property tax on business property. Gov. Butch Otter said Friday that he'll promote a repeal plan in his State of the State address to lawmakers on Monday, provided it can be accomplished without harming local government in Idaho. But there are wide-ranging implications, including tax shifts.
Unless Congress can negotiate with the Obama administration's opposition to outdoor industry duty suspension bills, the cost of footgear for hiking, biking and other outdoor activities that are manufactured overseas will increase prices nearly 38 percent, according to Outdoor Industry Association President Frank Hugelmeyer.
—Boulder Daily Camera;Nov. 29