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Eye on Boise: Tree falls in the forest, so does revenue

BOISE – Lawmakers noted a surprising fact in the budget presentation this year from Idaho Department of Lands Director Tom Schultz: The state is reaping record timber harvests, but its timber revenue has dropped.

Schultz responded that the department sells standing trees in its timber sales, and prices have dropped.

Prices in 2008 were about $380 per thousand board-feet, Schultz said. Now, they’re only about $200. “So our price for our commodity almost dropped in half. … We still haven’t seen that recovery in prices yet.”

A chart that Schultz showed the Legislature’s joint budget committee showed the volume of timber harvests rising sharply each year from 2009 to 2012, but revenues falling from ’09 to ’10, coming up in ’11, and dropping again in 2012 to just over $50 million gross and just over $30 million net.

Timber revenues from state lands hit a high in 2007 of well over $60 million gross and just under $50 million net.

Possible tax shift …

The Senate Education Committee heard a presentation last week from Alan Dornfest, property tax policy supervisor for the Idaho State Tax Commission, on the impact of a possible repeal of the personal property tax on business equipment. The upshot: In most cases, there would be an automatic tax shift to real property to make up the $38.6 million a year that’s now going to school districts. That’s unless lawmakers opted to provide replacement funds from the state.

“Generally, the default is tax shifting,” Dornfest explained to the committee. That means while businesses got a break from the removal of the tax on equipment, everyone else in the district would make up the difference in their regular property tax bills, except for two charter school districts in Lewiston and Boise with rate-based and capped levies. In those cases, the schools would get less money.

Senate Education Chairman John Goedde, R-Coeur d’Alene, told Dornfest, “If I’m hearing you right, in the case of school districts, if the personal property tax base was eliminated, the taxes collected would just be collected on a reduced base, so the rate would go up and it would be basically the real property?” Dornfest responded, “In a nutshell, yes.”

Woolf confirmed

Idaho State Controller Brandon Woolf has been unanimously confirmed by the state Senate. He was appointed to the post after elected Controller Donna Jones stepped down to focus on recovering from injuries suffered in an auto accident.

“It’s not often that we have a vacancy in one of the statewide elected offices,” Sen. Curtis McKenzie, R-Nampa, told the Senate. “We had one here in our controller’s office.” He noted that many legislators know Jones, a former lawmaker herself. “We’re saddened by the tragedy that struck her, the accident that she was in which left her unable to continue in that role. One of the important things that came out of that was a need to have continuity within that office.”

Jones asked Gov. Butch Otter to appoint Woolf, her chief deputy, to succeed her; Woolf plans to seek election in his own right after serving out her term.

State worker pay lags

Idaho state law requires a study and report to the governor and Legislature each year on how Idaho’s state employee compensation stacks up compared to the market. The result this year: Idaho’s classified employee salaries are 18.9 percent below market. That’s compared to comparable jobs in both the public and private sector. Furthermore, Idaho’s state employee pay is 10.7 percent below eight surrounding states, Arizona, Colorado, Montana, New Mexico, Nevada, Utah, Washington and Wyoming.

The report found Idaho had a 12.9 percent turnover rate among classified employees in 2012, up from 12.1 percent in 2011. The top reason employees left in 2012 was to retire, followed by moves to another job for better pay. The majority of those who left for another job went to the private sector.

Analysts for the Hay Group who addressed lawmakers about the study reported that Idaho’s benefits are at or above the market, largely due to health care and retirement benefits. But total compensation, including both pay and benefits, is well below the market average for both the public and private sectors.

“These positives on the benefit side don’t offset all of the deficits on the salary side,” said Malinda Riley of the Hay Group. “This is really important in attracting your workforce of the future.”

She recommended “strategic” pay increases, saying a 3 percent boost would be a good place to start. Gov. Butch Otter hasn’t recommended any state employee pay boost in his budget proposal for next year; last year, state workers got 2 percent merit raises, their first increases since fiscal year 2009.