Transportation, tax cuts advance at Idaho Statehouse

BOISE – On what proved to be a long day for the Senate but a short one for the House, Idaho lawmakers on Thursday advanced major legislation on transportation funding and tax cuts, passed an array of bills on everything from dam-breaching to “strong beer,” and failed to override the governor’s first veto of the session.

A Senate committee sent HB 332, the $389.4 million House-passed income tax cut and rebate bill, out for amendments, and senators mentioned several they have in mind.

Senators opened their day by voting on a possible override of Gov. Brad Little’s veto of HB 214, the bill on the powers of the tax commission chairman on which the House a day earlier overwhelmingly voted for an override. The Senate’s vote was 21-14 in favor of overriding the veto, falling three votes short of the required two-thirds margin. Little’s veto stands.

In the House, which adjourned for the day by lunch time, the highlight was HB 362, the latest version of the transportation bonding bill, which passed 59-11 and headed to the Senate. It would shift 4.5% of Idaho’s state sales tax proceeds each year, up from 1%, from the state general fund to roads, with $80 million of that amount going to the Idaho Transportation Department for bonding for big road and bridge projects; up to $1.6 billion in bonded projects could be funded.

“I guess this is a case of good, better, best,” Rep. Joe Palmer, R-Meridian, told the House; he’s the House Transportation Committee chair and the lead sponsor of the bill. He earlier proposed two other versions, one of which, HB 342, passed the House 63-4 on March 17.

Rep. Ron Nate, R-Rexburg, spoke out fervently against the bill, saying he believed any type of borrowing was unconstitutional. Rep. Heather Scott, R-Blanchard, also decried bonding and said her constituents have “a problem with taking out debt on future generations to fund our roads.”

Palmer told the House, “I guess there’s some confusion.”

He noted that all the representatives who decried the idea of bonding, including Nate and Scott, voted for HB 342, and the new version is “basically the same bill, it’s just the split is different.”

Under HB 342, the funds would have been split roughly 70-30 between ITD and local highway jurisdictions. Under HB 362, a fixed $80 million of the funds shifted would go to ITD for bonding, with the remainder and any future growth going to local highway jurisdictions. That’s the amount Little insisted was needed.

The bill’s fiscal note estimates locals would get $4 million the first year, but that amount will grow over time.

“It should be a really good bill for all transportation, including the locals,” Palmer said. “It will be a little bit later for the locals, but it will grow at a faster rate for them.

“The only way you take care of big projects is to do this.”

On the Senate side, HB 332, the $389.4 million House-passed income tax cut and rebate bill, had its committee hearing, and then the Senate Local Government & Taxation Committee voted unanimously to forward it to the Senate’s 14th Order for amendments. There, any senator may offer amendments.

Sen. Todd Lakey, R-Nampa, said he’s concerned about a provision in the bill that would remove a “sunset clause” that temporarily prevented Idaho local governments from getting their usual revenue sharing funds, which they get as an 11.5% share of the state’s sales tax revenues after refunds, from a “tax relief fund” that lawmakers set up in 2019 to hold all proceeds from sales taxes on internet sales. That account, which around the Statehouse is nicknamed the “Wayfair” account after the 2018 court case that led to internet sales tax collections, South Dakota v. Wayfair, has since accumulated a huge balance, estimated to hit $180 million by July 1.

HB 332 takes most of that money, permanently into the future, to fund income tax cuts, and it removes the 2024 expiration date exempting those sales tax proceeds from revenue sharing. If cities and counties were getting their 11.5% share of that $180 million, they’d receive $20.7 million.

“That was a very specific understanding in the Senate, that was an amendment that I was part of, among others, to, at the end of the day, treat sales tax as sales tax,” Lakey said. “And the compromise there was to include that sunset. … That sunset needs to remain in place.”

Harris told the senators, “You remember earlier this bill was tied at the hip with the transportation funding bill, which provides a good deal more funding to locals than that distribution did, so we did that that way on the House side.”

The transportation funding bill has since changed, and the money it allocates is for road or bridge projects undertaken by local highway jurisdictions; it provides no funds to local governments in general.

Sen. Steve Vick, R-Dalton Gardens, said, “I have had for a long time an interest in reducing the number of brackets that we have, and it would be my intent to maybe include that in some amendment, so I just want people to know that up front.”

Sen. Ali Rabe, D-Boise, said, “I am still concerned about our ongoing ability to afford this, especially considering that we are still underfunding critical needs like public education, which is being funded on the backs of residential taxpayers and property tax.”

There was public testimony both for and against the bill. Testifying remotely, Kathy Dawes of Moscow, representing the League of Women Voters of Idaho, strongly opposed the bill.

“The League believes the tax cuts and rebates are not appropriate at a time when 80% of Idaho’s school districts have to depend on supplemental levies of more than $200 million every year just to maintain adequate educational programs, leaving Idaho last in per-pupil spending again,” she told the committee.

Alex LaBeau, president of the Idaho Association of Commerce & Industry, strongly supported the bill.

“We think this is affordable, we think it’s smart, we think it’s the right way to go,” he told the senators.

Sen. Jim Rice, R-Caldwell, the committee chairman, said the bill likely will be amended sometime this week.

House members also debated SJM 103, a nonbinding memorial stating the Legislature’s opposition to dam-breaching and backing the Port of Lewiston, which passed 58-12.

Rep. Aaron von Ehlinger, R-Lewiston, said he believes the idea of breaching the four lower Snake River dams is a ploy by environmentalists who will then come back and want to breach all dams in the Columbia River system; the most recent call for exploring the idea comes from Congressman Mike Simpson, R-Idaho.

“We’ve gotta fight tooth and nail to make sure that our dams stay in place,” von Ehlinger told the House.

Rep. Ilana Rubel, D-Boise, said the memorial as written contains “verifiable misstatements of fact,” and said, “This memorial presents a very one-sided view of the question. When this came up in committee, we certainly heard from many, as well, on the other side whose livelihoods are at stake.”

Rep. Mike Kinglsey, R-Lewiston, declared, “This will devastate the Lewis-Clark Valley. … We have to stop this. … This is a damn bad idea for Idaho.” Kingsley was cautioned by House Speaker Scott Bedke of the House’s rules on inappropriate language.Rep. Chris Mathias, D-Boise, said he was concerned about lawmakers suggesting that if it weren’t for one group of people, everything would be fine.

“How can we do a better job of sitting down with people with whom we disagree?” he asked.

The House’s closest vote of the morning was on a bill that received no debate at all, SB 1181, the budget bill for the “other programs” division of the Idaho Department of Health & Welfare for next year, which Rep. Matt Bundy, R-Mountain Home, explained covers indirect support services, licensing and certification, the Domestic Violence Council and the Developmental Disabilities Council. The budget showed a 0.8% increase in state general funds to $22 million, and a 3.1% decrease in total funds. It had earlier sailed through the Senate on a 29-2 vote. It squeaked through the House, 35-34, and will head to the governor.

The Senate worked through the afternoon, finally clearing its calendar and adjourning for the day just before 5:30 p.m. It passed numerous bills, including HB 309, Sen. C. Scott Grow’s bill to expand an existing but unused property tax deferral program. It would essentially launch a state-paid reverse mortgage program, in which the state would pay all of a qualifying senior homeowner’s property taxes until they die or sell the home, then be paid back with interest from the sale proceeds. The measure passed the Senate on a 25-9 vote and heads to the governor’s desk.

Sen. Melissa Wintrow, D-Boise, said, “I would hope we don’t see this as the end-all, be-all on property tax. I don’t want it to be the only tool. … I think we need to do more for property tax relief.”

Grow responded, “We’re working on the circuit breaker as well.”

The Senate also passed an array of other bills on everything from a memorial highway to cloud seeding to altering the distribution of excise tax on “strong beer.” The beer bill, HB 232, changes the distribution of tax on high-alcohol-content beer from the state wine commission to the state hop growers commission, with a three-year phase-in, settling a longstanding dispute.