Notes From the Floor

Idahoans See Alternatives to Deep School Cuts

I thought I would share this set of results to a survey I have conducted over the past month to see how people feel about deep cuts to funding for state services, especially public schools. 

As you will see below, people from all over the state, a majority from outside Boise, answered the survey. The survey was sent to a list containing more democrats than republicans and was available for all to forward to friends. It was also posted on my web site as well as on facebook and twitter where I have quite a large number of friends and followers from all over the political spectrum.

In the week ahead the Budget Committee will vote on school budgets. Currently Republicans have refused to discuss tax increases or changes in Idaho tax exemptions to protect education, but instead propose cutting public school funding for next school year by 7.5% or $128 million. Some extreme factions propose even deeper cuts. Either way schools now face policies that will eliminate more tutoring for struggling students, increase class sizes, eliminate teacher training, further reduce access to textbooks, decimate funding for science and other academic materials, all while making many academic and after school programs more expensive for Idaho families and their kids.

Below, for your information, is a rough breakdown on where survey respondents came from.

The survey is still available if you'd like to take it. In the coming week I will share results with my legislative colleagues.

Generosity

I went on Nate Shelman's show on KBOI on Friday. Forty Five minutes of people angry at me for talking about taxes.

Do I blame them for being angry? No. The idea of some amorphous tax increase frightens people who already struggle to pay their taxes. As someone whose small business some years earned as little as $5,000 to $10,000, I struggled one year to put food on the table. The tax bill I faced in April seemed staggering, impossible and frankly unjust.

So House Republican leader Mike Moyle and I agree on one thing, the income tax rates on the lowest of income earners in Idaho are way to high. The rates step up so quickly that people earning just over $25,000 pay the state's highest rate of 7.8%. People who make $100,000 pay that same percentage.

To me it defeats the purpose of tax brackets if the only real steps and reductions come to people earning $1,000 as opposed to $3,000 — incomes that are all staggeringly low. But some people earn money from investments and stocks and inheritance and I wonder why we tax the hard labor of someone who has no other income so much more intensely than money people may make with little or no effort of their own. 

I think Idaho could have more income tax brackets above $25,000. I think once the economy improves we could even use the revenue from upper brackets to pay to lower the rate on the lowest brackets. In 2000 the highest rate was 8.1% but it and all income tax rates were cut. I would propose we return to this rate for those with taxable incomes of $50,000 or more. Until the economy improves I think we should add two other higher rates at $100,000 and $250,000.

But the sales tax, not the income tax, will likely be the tax my republican colleagues will eventually choose to get us through this economic crisis and keep the wheels from falling off the basic services like education and health and safety now that Idaho has far more people in need and suddenly far less to offer them.

If I had my way for now I'd only offer the grocery tax credit to individuals earning less than $15,000. Right now the state absolutely should not be spending millions to send $40 checks to families like mine, that are doing ok still. The money should go to schools.

But all my rational for our generosity in having higher income people pay more taxes would not convince many of the callers to Nate Shelman's show. I like Nate a lot. Clearly though there is a fundamental difference in philosophy and maybe even a different sense of morality at play with some of his audience here. Caller after caller seemed mad at the very idea of paying taxes that might benefit someone besides themselves. To a few of the callers the idea of helping people who have less or who have fallen on hard times seemed repugnant. Clearly some feel no obligation to ensure that our neighbors are getting medical care, food or shelter from the cold. It is a set of values I can not answer to.

Yes, I'm used to my colleagues saying that churches, not governments should provide help to the poor. But what church can run Idaho's medicaid program providing medical and health care to thousands of people living with disabilities? What food bank could feed the never ending lines of people needing foodstamps now for the first time in their lives? What church could extend mental health treatment and support to all of Idaho's unemployed at a time when suicide rates are climbing from what was already one of the highest rates in the nation?

Our population has grown too big and too complex. While many may not trust government not to waste their money, the alternative is grim. And funny that it is the Constitution, the very document which some value above all else, which helps guarantee that we do not let people with cancer die in the streets.

People are suffering and scared, yes. But where is our compassion? The economy is thawing but not in time to save this budget, our schools and state. Where is our generosity now when we need each other most — when it will take our collective effort to get us all through this short difficult year ahead.

Who is Doing the Math?

Senseless policy passed in Health & Welfare rules hearing just now. In the Katie Becket Program we will take $1 million out of the pockets of families with disabled
children just to save $200,000 in the budget. This is only the beginning of what I
fear is going to be weeks or months of brutal senseless cuts. 

Look at some of this. $54 million cut from a set of Health and Welfare programs where the recipients of the state funds are all in the private sector. We took $54 million out of Idaho's economy and saved only $11 million in general fund state dollars. And we hurt people with disabilities, cut mental health treatment and left many families desperate. How many jobs were lost? How much expensive state crisis care did we create a need for?

Is someone taking out a calculator to look at what negative impacts some of these cuts will have on the economy? I'm going to be a broken record. A cut that eliminates jobs and dollars, wages, consumer spending and small business income has far more negative impact on the economy than raising income taxes on upper income earners. 

Who is asking the people of Idaho if cuts this deep are the best plan? I have a list of tax exemptions we can do away with. It might be more palatable than cutting our schools 10% to 15%. At some point you cut so deep that the wheels come off and things break. Kids fall behind.

With this seemingly blind frenzy to dismantle state government, who is figuring out where that line of diminishing returns is going to be? How long will it take and how much will it cost us, our kids, our economy, and our state to undo the damage that will be done if Republican leaders' only answers are to lead by severing limbs and cutting it all to the bone.

Dumb Ideas

With some certainty I can now say that sometimes, with repeated attempts, legislation gets worse, not better. The recent idea of spending general fund dollars on roads is about as bad as it gets. Proposing to increase budgets for roads out of the money we would be
spending on schools, when we have cut budgets for every part of state
government, including schools, is beyond unbelievable.

Rep. Marv Hagedorn has a great break down of ITD/road funding on his blog. He estimates that, counting stimulus and GARVEE and all the dedicated and carry over funds, almost twice as much money is available for roads in the 2010 budget as there was in the 2009 budget we passed last year.

But if someone thinks that I and others are going to vote for a gas tax increase this year, just to avoid a really stupid idea like taking from schools to build roads, they need to have their heads examined.

I don't hate gas taxes. I live in an urban area where things are not
all that far away. I am guessing that my friends in Challis and other
very remote rural areas might like them less. But if you want to charge
people for how much they impact roads, gas taxes are still pretty fair.
Fuel efficient cars tend to be lighter, less impact. Driving more means
more roads impacted. Pretty fair.

But it is true, voters don't want their taxes raised this year. Conservative voters especially. And they will probably never, not in any year, like the idea. Some voters, and it is no small number, are more concerned about the economy and see it as the reason we need to go home now and stop pretending we want to accommodate Otter's urgent desire to pass $80 million in tax and fee increases now in the depths of the most severe depression in modern history. Still others are bothered by the priorities demonstrated by cutting education budgets while raising taxes for roads. They might accept some kind of tax increase when the economy and state budget is in trouble, but not for roads.

Perhaps those many Republicans in the house who don't care about public schools are thinking this spending general funds is a great idea because it gives more funds to roads without raising taxes. Brilliant. Except that again and again, polling in Idaho shows that Idahoans care A LOT about public schools and education. It consistently ranks number one in spending priorities. If Republicans want to do this, and I hope they don't, voters are suddenly going to have uncanny insight into what really matters and doesn't matter to the Idaho Republican party. I suspect such a revelation might be a great gift to Democrats in the 2010 elections.

If having Idaho stuck down in the lower third in the nation on many indicators for the quality of our public schools was not enough, maybe we want to ensure we are at dead bottom in the years to come and that our kids have no option but to stay here to work in Walmart and all the chain stores that will represent the last of Idaho's increasingly narrow and stunted economy. 

But I hope this dumb idea fails and that we all look around and find ourselves at the end of our ropes very soon. I hope we get annoyed and finally vote to
override the Governor's frenzied vetoes tomorrow or Monday so we can stop wasting millions and go home.

Deducting Property Taxes

If you own a home and you've already done your state taxes, you might want to look into
getting a form to file an amended return… you may be able to subtract more from the
the amount of income the state taxed you on this year.

Over the last few weeks, we amended a House bill one way and
then back the other way in an attempt to decide what was better for tax
payers. We call it "going to the 14th order" here in the Senate when we
amend a bill. Senator Hill as chairman of the Senate tax committee
patiently spoke first for and then against letting more people NOT pay
income taxes on the money they spend on property taxes.

Obviously
this is good for modest income homeowners who might not be able to deduct a
bunch of charitable donations on top of big mortgage interest, medical
bills and the like. What it does though is take $2 million out of
budgets that will mean deeper cuts in state employee pay, lost jobs or
larger class sizes in schools or college classrooms.

Not a fun
choice for any of us to make. As a property tax payer who does not have
enough spending to itemize, I might have benefited from a yes vote. As
a member of the budget committee who has watched the knives fall into
place, slicing through parts of state budgets that Idahoans depend on
for jobs and medical care… I was one of ten Democrats and Republicans who couldn't vote yes.

I'm still torn. Most the time it is clear as the desk in front of you, on occasion though some people gain while others clearly lose. But as you sit there on the Senate floor and the Senate secretary calls your name, you have to choose one word: yes or no.

Asking More Than Grit

On the first day of the legislative session, the gavel falls on the wooden disk and we answer roll call, one by one, in thirty five different voices. We don't press a button on our computers as we did in the House. We pledge allegiance and then are expected to pray in the name of Christ before breaking for lunch and then loading buses to BSU for the Governor's state of the state address.

We waited in on of the Spec Center's Green Rooms like badly dressed, super boring rock stars and then filed into the auditorium in order of seniority. Unlike the house, we filed in in seniority that ignores party affiliation. To my surprise on my first day in the Senate I had three Democrats and four Republicans behind me in line.

The Governor seemed a bit off in my mind. Perhaps he was choking on his own proposal to raise taxes and increase budgets for roads of all things, while, in the same breath, proposing to cut budgets for schools. Odd priorities in my mind. Not many words of hope or sympathy for all those sitting at home on weekdays or out shopping resumes after decades at jobs or after moving families recently to Idaho hoping to call our mountains and rivers and sage brush deserts home.

I knocked on a lot of doors in Ada County, all over Ada County this past year and I know people were struggling to pay bills before the economy began to falter for real. I can not imagine the decisions being made in small businesses and over kitchen tables tonight. If we as a state are not careful, there will be no soon end to this time. We need to do more than ask for grace in girt. Idahoans have more to give than grace. We have generosity and sweat to lend to others, we have unpaid hours we are already giving at work. Some are giving up hours that make health insurance for the family possible, hours that make the mortgage payment, that were counted on to pay for a child's college education, heating bills, food.

For those of us who make more than enough to pay for basics, I think the governor, and we as a legislature, can ask for more. For those living close to the bone we have to be careful. Many are one step away form needing public assistance now and our actions could leave them desperate or needing our help in ways that will cost taxpayers and businesses more than the saving we intend. Keeping Idahoans employed, and Idaho-owned businesses working, keeping the most vulnerable families fed and strong was not a note the Governor hit. It is however a tone you will hear from me and from many others in here.

Raising taxes for roads but cutting schools, schools that already struggle to keep kids from getting lost in the crowds, the tests and the growing crises at home. Those are not the order of my priorities. I am sorry to see that they are the Governor's.

Agreeing to Disagree

…
We use the term "holding harmless" to talk about making changes of law have as little adverse impact as possible on those we do not intend harm. It is an attempt to minimize collateral damage.

So interesting watching Reps Clark and Lake sit with Rep Killen and Sens Hill, Langhorst, and Stegner trying to pick apart the Senate personal property tax bill. The more that Senator Hill talks, the more clear it becomes that Senate has come back with an elegant, well crafted piece of compromise legislation. It looks much like Bill Killen’s proposed draft from earlier this year.

A conference committee is an odd creature that is born out of Mason’s rules and legislative history. It has unusual characteristics. The three house members vote and the majority within that three is counted separately from the three Senate members vote. One can imagine the house and senate being split again as Clark & Lake try to knock holes in this bill to give cover for killing what is now a simple $75,000 exemption from personal property tax for every business in the state. It now is kind of like the homeowners exemption except that the $15 million this now costs will be paid by the sales tax rather than by other property tax payers.

The question is then since small business benefits from a greater share of this version of the bill and is the class of business most likely to invest the benefit back in the community, wages and health benefits and thus the economy, is this then wise and equitable tax policy. I’d say yes. Far more so than the huge $120 million tax shift IACI almost forced through.

What is yet to be seen is whether IACI still has any hand on the reigns. From Alex LaBeau’s face there at the other end of the row from me, I suspect not. Unlike some Lobbyists in here, he works hard for a client that the small business focused House might love to hate. He and Rep. Clark turned a big industry dream bill into a bill about tracking staplers and tape and about mom and pop and the lady selling hot dogs from a cart in front of the statehouse. You’ve got to give them an A for effort and strategy.

Some Numbers

Some numbers:

• Percent of Idaho businesses that are small businesses employing less than 50 people:  96%
• Percent of Idaho employees working in small businesses with fewer than 100 employees:  66%
• Percent of Idaho sales tax paid by businesses:  about 33%
• Percent of the sales tax paid by families and individuals:  about 66%
• Percent of the corporate and individual income tax paid by businesses:  .00015%
• Percent paid by families and individuals:  99%
• Cost of IACI’s HB599 tax exemption:  $120 million every year after the bill is fully phased in.
• Where would more than 80% or $103 million of the IACI $120 million go:  To the 15% of Idaho’s largest businesses.
• Tax exemptions these businesses already get and thus taxes they already do not have to pay on the personal property they buy:
  • –Idaho’s sales tax production exemption
  • –Investment Tax Credits
  • –179 Income Tax Deduction
• Cost of a smaller $50,000 personal property tax exemption for all businesses:  $9  million
• Percent of businesses which have less than $50,000 in personal property anyway :  aprox. 85%
• Percent of all Idaho businesses that would benefit from a $50,000 exemption:  100%
• Percent of benefit of $50,000 exemption going to small business:  44%
• Percent of benefit of $120 million IACI proposal going to small businesses:  less than 20%
• Estimated tax shift from businesses to families and individuals if IACI bill passes:  roughly $80 million
• IACI proposals which included a way for business to pay for this
  tax exemption through extension of another business tax which their
  members feel would be less onerous than the personal property tax:  0

Values

I started out as a community organizer, helping people use their own voices to change policy on the issues they care about. I come from a perspective which asks:
"How will this policy impact ordinary people?"
"Who will benefit?"
"Who might be harmed?"
"Will it allow one group of people to have yet more power over a less powerful group of people?"

I don’t believe in trickle down. I try to look at business issues from the point of view of ordinary people, the consumer, the individual tax payer, wage earner or small business. And where companies are owned by shareholders or large out of state entities, I know the bulk of their dollars are going out of state, so I’m going to be most watchful about how they compete with local businesses owned by Idahoans and whether they will cost Idaho taxpayers more to serve than they will produce in state tax revenue, wages and in state purchases of goods and services from Idaho businesses.

This set of values makes me fairly predictable. This may be a surprise to some but it means on a some issues I actually vote like a conservative, with Lenore Barrett, Mike Moyle or Phil Hart. Yesterday is a good example.

When it comes to letting voters choose to lower their own taxes, I support local control by local residents and where there are safeguards and accountability, I think we have good policy. That’s why I voted with Republicans on the Revenue & Taxation Committee to allow 2/3 of Idaho voters to lower a taxing district’s budget by a limited amount, if the budget is higher than what that 2/3 of voters believe is necessary. Of course, unlike Rep. Moyle, I feel I am consistent in that I also believe that local voters should be able to raise their own sales taxes to fund Public Transportation for example, if that is an urgent local problem they want to fund and solve for themselves.

And while a bill to bring in big companies, even a cool film studio to the desert outside town is a wonderful idea, what happens if the county gives tax breaks and then builds roads and extends fire and sewer and other services and then finds that the facility is built and only employs five people, all of whom are existing residents, being paid wages no higher than they were before elsewhere. Or worse what if the company finds after a year that they can’t make a go there south of town? What happens to the money that local tax payers shelled out to extend county or city services out there if the building sits empty? Where is the accountability? The job targets? The wage targets? The clawbacks to ensure the company has to pay back the tax incentives they were given if they leave before the state and neighboring taxpayers recover the cost of serving the project?

And for repeal of the business equipment personal property tax… Who benefits and who pays? Over 80% of the $120 million tax break goes to a small group of some of the largest companies in the state. Many are owned by out of state entities and are publicly traded so that any tax benefit is likely to go into CEO pockets or to shareholders as profit, not back into wages or benefits or new jobs in the community. A smaller portion of this does go to help small businesses but they together with families will also bear much of the burden of paying for this huge tax break with their sales tax payments and business or individual income taxes. Small businesses are the vast majority of the employers operating in our state. They are the backbone of the economy and collectively the state’s biggest employer. When we shift burdens to them, we put our economy at risk.

Democrats have a proposal to exempt the first $50,000 of value from the personal property tax. This would benefit all businesses equally and we have even proposed paying for it with the reduction of another business tax break so that the cost of the tax cut does not shift and fall on families.

Two thirds of the economy is consumer spending so when we hurt families and individuals by shifting tax burdents to them, we hurt our economy, particularly when we hurt modest income families becasue they are more prone to needing to curb spending when their incomes fall or expenses or taxes rise. When tax policy shifts burdens in this way, I will oppose it. Those are my values. Pretty simple.

Radiation

This morning the House Revenue and Taxation Committee took the cake and put lots of green icing on it for a French manufacture of nuclear reactor fuel. Forget that this deal comes with as yet unspecified quantities of radioactive waste landing in Idaho to be buried as "low level waste" in pits and trenches and yet more to be stored in some sort of container awaiting final disposal with the bi-products of so many other projects which have kept the desert busy for decades north of Pocatello.
    The Idaho National Lab is a leading research facility in military nuclear fuel production, disposal and clean up. I say clean up because not only has the production of nuclear fuel for military submarines left volumes of often highly radioactive materials in the desert over the Snake River Plain Aquifer but wastes were brought to Idaho from weapons plants and reactors including the Three Mile Island power plant after its nuclear accident those decades ago.
    The DOE’s track record on promising to remove or find disposal or neutralization technology for radioactive wastes it brings to INL is poor to say the least. Some long lived less "hot" TRU wastes have left the state but highly radioactive spent fuels have remained here along with acre after acre of "low level" wastes which keep mounting in the desert with each additional research project which graces our sage brush and cactus deserts.
    Some of this we might evaluate as worthwhile. We might say that some of this research has advanced science and produced progress in our ability to deal with the deadly wastes we continue to produce. But at what point do we stop and ask whether continuing to produce more wastes with no final location or process for disposition, at what point do we note that our state might be digging itself into a hole and asking for greater harm than good from these deals? Are we to quietly become the nation’s defacto disposal site?
    By locating Ariva here and producing fuel for nuclear power plants on our own soil do we not simply fall back into a trap of paying all the cost and getting so little benefit in this deal. Even worse how do we put a price tag on the risk that these wastes will stay in Idaho forever? And why would we break what is very well understood principles of tax policy to incentivize and attract a company with a questionable track record in other nations?
    We have no promise in the text of house bill 562 that we will have any jobs after construction of the plant is complete. We have no guarantee that after the city and county extend services to the facility  that it will not close down or leave town because the nuclear industry in the US does not reach a state of revival because communities do not trust that they will not be left to live with radioactive  wastes indefinitely. There are no clawbacks, no job or wage or benefit targets in this legislation.
    In house bill 561 we extending to one company an exemption which was designed for a production process which produces a taxable product like food, fishing poles or widgets. The production exemption was designed to avoid duplicate taxation but nuclear materials are likely never going to be "sold" to any entity in Idaho. In fact these nuclear materials are technically not owned by Arevia, the manufacturer, but by the Department of Energy, which, by locating the plant here agrees to take the radioactive wastes the plant produces while we, the tax payers, foot the bill through our federal taxes and any impacts to our air water or local health from the toxic gases and byproducts of this production process.
    Is this reasonable and consistent tax policy? Is this even an industry or company we want to work to bring into the state?
    Why is it that again and again our tax principles fly so quickly out the window when huge dollar amounts are tossed before us?

Low Wage Jobs

The first term I was in office, we passed some huge multi-million dollar tax exemptions. One for Micron which we were told would keep the critical Idaho Tech Manufacturer from leaving the state. Micron has layed of thousands anyway and soon will likely be gone from the state. The other incentive we passed that year was for Idaho based Albertsons headquarters, who also threatened to leave the state if we did not pass their legislation. They too have sold and now belong to an out of state entity, SuperValue.   
    I actually helped create some of the "tax accountability" provisions in the Albertson’s bill. With the help of a tax commissioner, Judy Brown from The Idaho Center on Budget & Tax Policy, and a few republican colleagues we created a wage floor and beefed up requirements for employers to offer health insurance benefits because we wanted to create an incentive which guaranteed a return to Idaho’s economy in exchange for the cost of the tax incentives, which ultimately the taxpayers of Idaho would have to fund.
    Understandably some rural law makers were concerned that the incentive would apply to giant corporations whose headquarters would be located only in urban areas. Mike Moyle and others crafted the Small Employer Incentive act which mirrored many of the tax accountability provisions of the Albertson’s bill. A little group of small business oriented members of Rev & Tax worked to ensure we did not give away tax dollars to entice a company to come into the state and create low wage jobs which do not benefit but may actually be a drag on the economy as they provide no benefits employees can afford and may leave families in need of food assistance, indigent health care and other state funded services. In essence employers are welcome to create low wage jobs, we simply should never in my opinion be giving tax incentives to companies who do so.
    So this week we saw a bill to remove some of the wage requirements of the Small Employer Incentive Act. The change will require a company to first create ten jobs with salaries of almost $20 and hour and then require that all remaining jobs average $15.50 an hour  (with no job over $48/hr being included in the averages.)  If you do the math an employer could create almost 8 jobs at minimum wage and only two at $47.90 and hour and qualify for major income tax, sales tax and property tax incentives under this bit of Idaho law.
    With this mix of wages, how can we be sure this incentive is worthwhile for the tax payers funding these breaks? How can we be sure that our economy and state of Idaho will see a net benefit from this incentive? How much tax revenue will the wages generate to offset the incentives or will this just be a shift to other tax payers?
    We better ask these questions. And, in my opinion, need to ask them of every tax incentive we offer.  Further, I think we should ask whether the company in question is spending its funds for goods and services in the state of Idaho or has contracts and purchasing agreements mostly out of state. The benefit to Idaho is hugely different in each case. It is time we ask. And with the failure of this summer’s interim committee on tax exemptions to produce any willingness to really examine the economics and costs to tax payers of some of our exemptions, I’d say it is well past time to ask.

Credit for Food

Monday is the day we start to delve into the issue of grocery taxes, asking whether or not you should pay a the full sales tax on the food you buy. Philosophically, food is an essential item which people have no choice but to buy, so it should be taxed minimally if at all.
    The only bill which the committee will hear on Monday is a grocery credit bill, not one to remove the tax on groceries or food. The grocery credit is that same $20 you get to take off your income taxes. Some of our Republican colleagues propose to increase that to $30 for all tax payers, except to $55 for all those over 65 or earning less than $1000 Idaho taxable income. They propose that the credit on your income taxes would increase in $10 increments over the years and so could eventually climb to $90 or so depending on how much food costs and what rate the sales tax is set at.
    As Democrats we have a bill to actually take the tax off of food at the cash register over six years, one penny at a time. The grocery tax brings in about $180 million dollars which we spend on education, prison programs and staff, health care, state employee salaries and other budget items. If we eliminated the tax on groceries all at once we would have to come up with $180 million in other money to fix this hole in the budget.
    I personally am curious if many people out there would be willing to exchange paying a tax on services for not paying a tax on food. It probably depends largely on your income and spending habits but people living on modest incomes tend to spend more on food, in fact a huge portion of their incomes is spent on food. As more and more of our economy shifts from goods to services, we tax less and less of people’s purchases. Even in feeding themselves, people in higher income brackets may eat out more and spend far more on attorney fees, hair cuts, tax preparation and a whole host of other services, none of which come with a sales tax the way food and clothing and other items do.
    In what seems like a cruel twist on the idea of relieving the cost of the tax on food, the grocery tax credit bill we will hear on Monday doesn’t let people have any grocery tax credit for the months in which they get any food stamp assistance at all. Even someone getting $25 a month in food stamps will get no grocery credit. While there are some good provisions in the bill, like letting people donate their credit to our state heating assistance program, I believe the food stamp provision is a major flaw of the bill.
    If you pull away from the statehouse, up through the many snow covered trees into the sky, you look down and see in our three legged stool of a tax system — sales tax, property tax and income tax. You see that the income tax is the one place we try to take into account how much people earn and adjust the taxes to account for their ability to pay. To give away $30, $50 or $90 to all tax payers within the income tax part of our system is potentially irresponsible. This is the one place we are even able to consider people’s income when we tax them. It is the one place we can try to make up for the fact that lower income people pay a higher portion of their incomes in sales tax paid on taxable essential items like food.
    Philosophically I know I pay my income taxes hoping that my money will go to pay for urgent needs like education and providing health care or housing to those who can’t afford it. I don’t want my tax dollars given back to me or to someone driving a hum vee. Fifty dollars can be hugely meaningful to people in lower income tax brackets, but in the upper incomes, this expenditure of state funds will cost the state over a hundred million in a few years without making much of a difference in those lives. Should we choose not to charge the tax in the first place the debate is different. We can ask ourselves how would we rather pay that tax? What is a more fair way to raise that money other than taxing something which every one has to have in order to survive?

Taxing Mabel

………………..

Let’s say there is a woman named Mabel and she lives in Star. She is 80 years old, lives in a tiny house which she has paid off. She survives on social security. She has asthma, drives very little and buys her groceries once a week at a local store.    
    As a member of the House Revenue and Taxation committee I sit with a group of 18 people every day to decide how we should tax Mabel. Yesterday we debated when to let her choose to tax herself. This is a debate which has burned for a decade in the Idaho legislature.
    To understand the debate better, let’s say Mabel doesn’t like kids (in fact on Halloween she pus cans of green beans in a bowl on her front porch for trick or treaters.) When asked to vote for a plan that would put $20 more on her annual property tax to pay for vocational and technical programs for teens in four neighboring school districts, she votes no.
    Prevailing tax policy in Idaho says that, because a minority of tax payers in any taxing district may own a house or property, there should be a 2/3 super-majority vote to approve any property tax increase. This gives as few 1/3 of the voters in the district the option of rejecting the tax, denying the funds for a project and imposing their will on the district if they choose. To me that’s not generally unreasonable since those voting for the tax sometimes may not pay it themselves.
    However, yesterday the Rev & Tax committee went a bit deeper in. What if several school districts get together to do a cooperative project. They create a new taxing district which encompasses several school districts. Now lets say one of the school districts within this new bigger district does not get the required 66.6% while the other school districts get more than enough votes to pass the tax? Should the vote fail? Is there a fair floor we might want for the vote across all the distircts? Or shall we call a district a district if all those like Mabel living inside it have access to benefits from the services this district provides.
    The same issue is being raised almost daily here in the legislature in reference to the Community College election held here in the Treasure Valley this past May. Ada County voted over 70% in favor of the tax and the college while Canyon County voted only 61% in favor. Many law makers have characterized Canyon County’s vote as a rejection of the community college and the small property tax it imposed.   
    Is it accurate to say then that they (Canyon county as a whole) rejected the tax and the services the College will provide to the community? Actually a very healthy majority of the voters voted yes.
    In contrast we might note that every day Legislators (all of whom were elected by a simple majority) are empowered to raise or shift property taxes and change policy all across the state, again by a simple majority vote in both the House and Senate.   
    If we have given a taxing district very limited taxing authority (preferably to raise only very small amounts of tax which they must get voter approval for) should we arbitrarily be looking at how sub sections of the district vote, even though all the lines we draw in creating a taxing district follow random features of the land, latitude or longitudinal boarders or roads or fences built by local residents to navigate the land or pen animals in? Just because a school district line falls in one place does that mean that those people on opposite sides of the boarder have different interests or are not dependent on each other economically? Mabel may vote no but actually may benefit by having lower cost plumbing services because of the number of plumbers being turned out by the technical college. She may get her car fixed more quickly or inexpensively. She may have fewer kids wandering the streets board, unemployed, and causing trouble in her neighborhood. She may have to spend less to white-wash graffiti off her garage.
    Let’s say today that the tax we want to ask Mabel to approve is a sales tax to fund a new bus and rapid transportation system for the entire two county area. Mabel will pay this tax on her food, her annual trip to buy blue jeans and white cotton shirts and will pay it on the washing machine she has to buy this year when her old one breaks down. Mabel, because she doesn’t drive much and has never sat in a traffic jam in her life, votes no on the half penny sales tax. She is, at the time of the vote, unaware that the new frequent buses and trains will reduce traffic and improve the air quality which is aggravating her asthma. She is also is not able to predict that her failing eyesight will cost her her drivers license and that she will need a bus soon just to reach the grocery store. She doesn’t consider that she will soon be able to visit her grown nephew in Nampa without ever having to navigate another freeway interchange.
    Mabel’s nephew, looking forward to the day a few years off when he can walk the 1/2 mile to the train, get ten minutes exercise and avoid a 45 minute commute morning and evening, votes yes. He will pay this tax on his new car, his TV, his new fishing rod and hunting riffle.
    Because this is a sales tax the transit district is asking voters to approve, all the voters in the two county
area will pay the tax. Should we still then require a 66.6% vote at the time of the election?  Those voting yes will be the same ones paying the sales tax, unlike with the property tax where those who benefit most may at times be different from those who actually pay it.
    If Mabel and her neighbors in their local county, school district or mosquito abatement district should vote to approve the tax at only 60% should the entire two county area be denied the ability to address pollution, traffic jams, and access to local services for the disabled? Should the majority be allowed to solve their urgent local problems or should they not? 
    Maybe Mabel will vote yes on a half penny tax. Maybe she will vote no. But someday, depending on what we do in the House Revenue and Taxation Committee, all the way out in Star an older woman will ride a bus to the grocery store and breathe easier when the inversion sets in, or she won’t. 

A Killing Mood

The Idaho legislature is in a killing mood. Last week, happily the bill to close Idaho Republican Primaries to Independents and democratic leaning voters died in committee before even getting a bill number. Yesterday the House Revenue & Taxation Committee killed major legislation before it was even introduced. That bill would have let the state tax commission join an interstate compact just to LOOK AT collecting internet sales tax (we call it a "use tax" because the item actually isn’t sold in Idaho… only used here.) The bill would make sure that internet businesses compete on a level playing field with Idaho storefront retailers and small businesses. Roughly $50 to $75 million in taxes simply are not being collected, giving internet companies an advantage that potentially hurts Idaho’s local economies.
    Today, after a summer of work to craft criteria to re-examine the validity of Idaho’s many tax exemptions, Republicans on the Rev & Tax Committee killed draft after draft of legislation to consider actually holding hearings on these exemptions. The few of us who served on the interim summer committee were divided very much as we were this summer, with the exception of Chairman Lake, who a few times didn’t even vote to print his own bills.
    Rep.Lake is caught in the middle of the tension between the House and Senate’s philosophy of taxation. What looks like a party line divide is not entirely that, since it was largely the members of both parties in the Senate, working with Democrats in the House who pushed to look at how we approve tax exemptions in the first place.
    Today I put my legislation in two piles, "consistent" and "inconsistent," as we talked through seven randomly chosen tax exemptions and heard from the tax commission whether other similar entities were being taxed similarly or if the exemption we were considering stood out as an exception to an otherwise rational system of taxation.
    What does this killing spree today mean for average Idahoans? It means a continuation of arbitrary tax policy. It means we keep a system of tax exemptions passed largely on emotion and the power and influence of industry — rather than on the merits of each policy’s contribution to a predictable, fair and constructive system of taxation.
    So far this year we will consider only one of the over 100 tax
exemptions on the books in Idaho: a partial exemption to sales tax on items sold in vending
machines.

Rev & Tax

    The House Revenue and Taxation Committee met today in our little room that’s frankly not much smaller than the old one. We filed into the room and found our Committee Chair Rep, Dennis Lake chose to assign seating based on "seniority. " One can’t tell
if there is any indication of relationships to be gleaned from where
people are sitting. Rep. Clark and Rep. Bedke are at the little table
in the middle of the room. Rep. Clark expressed discomfort at having
Rep. Leon Smith sit behind him. Leon is a bold moderate whose served in
here for years. Smart, kind, well spoken, last year he was one of the
very few who spoke up and refused to let Denny’s Majority Republican
Leadership tell him how to vote. He was punished and his legislation
vanished. I’m watching to see how the dynamics go this year. Public
Transportation rests in the hands of those relationships on this
committee and how easily Leadership can lean on Canyon County
legislators when we vote on Local Option Taxing to fund buses, light
rail and local roads in the coming weeks.
    We are the committee where all tax legislation must originate. A mountain of legislation on tax exemptions is coming from this summer’s interim committee. We had a great bi-partisan alliance there and prevailed in several votes as a coalition of Senate Democrats, Senate Republicans and Bill Killen and I, the two Democrats from the House. We were not able to get a vote for a regular re-examination of ALL tax exemptions out of that committee. I made a motion to do so but a later motion passed and we never voted on mine. We will review a few. Not the ones I’d prefer us to assess for fairness and to ensure they are actually doing what they intended in stimulating the economy (rather than just shifting taxes from one payer to others.) Maybe with time. For now we will work toward greater accountability.
    I’d not want to be the Idaho Children’s Home which called this week hoping for an anniversary gift of a one time sales tax exemption to celebrate their 100th anniversary. How worthy I’m sure they are but in terms of creating a stable, predictable and just system of taxation, we really shouldn’t keep adding to this odd arbitary list of who gets our gifts today.

    Taxation and spending are reflections of our values: Who do we ask to pay for what we as a state government decide is worthy of our charity? Schools or more often prisons? Industry more often than health and environmental monitoring? Construction companies or mental health care providers? State employees or insurance companies? Under Otter you will find a lot of private corporations on the list and his shift from ongoing dollars to "one time" dollars means more brick and mortar and less service for our tax dollars.

Otter’s Shifts

Rep. Boe at the State of the State

Tonight I’m one of five legislators left. We’ve chosen seats, settled into our desks, played with our new on-screen voting machines, and finally proceeded to BSU to hold our annual, enormously formal greeting of the Governor and all the dignitaries.
    Watching from theater seats, Otter strode to the stage, hair long, less fussy, now going natural and gray. He read from his speech which some of us had acquired in advance… local option tax for roads not public transit, 5% for teachers but only based on merit, private prisons and what I’d been holding my breath for:  proposing again to shift all of big business’ personal property taxes onto small business and families. 
    For someone who says he cares about low income Idahoans and has a grocery tax proposal that benefits only those earning poverty wages, he sure has a funny idea of what makes a tax system fair.
    Tell me does this make sense? You have very big businesses, mines, manufacturers. Some are publicly traded entities, their profits go to shareholders far away and you propose to cut $100 million in taxes and pay for that cut with income and sales taxes paid largely by families, small businesses. This is a shift of taxes. Small businesses amount to less than $9 million of Otter’s tax cut. (And we could totally eliminate their personal property taxes and give the big businesses a break for about $10 million.) But instead we are going to again do battle over the whole $100 million, a huge portion of which will be a flat out shift from one class of tax payers to another.
    And don’t get me started on Otter’s enthusiastic endorsement of a Prop 13 style homeowner property tax proposal. That too is a huge shift. I hope Idahoans do the math. Two identical houses and yet the millionaire in one will eventually end up paying one tenth the taxes of the young family next door.
    These proposals are bad for families. Really bad. They make Risch’s big business and vacation homeowner tax shift of 2006 look like a warm up. I expect more of this Governor.
    Enough for the night. Time to head home through the snow. Tomorrow our committees meet and we really get down to work for 2008.