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Teachers vs tax cuts: ‘What weight do we put on those priorities?’

Idaho’s dueling legislative chambers remain at odds over competing priorities that include tax cuts, teacher salaries and rainy-day savings, with key bills bottled up in committees while behind-the-scenes talks linger on.

The House wants to cut state income taxes by $35 million. The Senate favors restoring teachers’ salaries.

Add to this mix Gov. C.L. “Butch” Otter’s to-do list from his Jan. 9 State of the State address, which included adding $60 million to Idaho’s recession-drained rainy day accounts.

What’s more, there are competing revenue forecasts: Otter’s economists say there’ll be more money in 2013 than forecast; some lawmakers say his projections rely on short-term reserves to justify tax cuts now, putting future budgets in jeopardy.

“All of those are priorities for both bodies,” said Senate President Pro Tem Brent Hill, R-Rexburg. “The differences are (in) what weight do we put on those priorities? That’s what we need to work out.”

Add to this a fresh ethics investigation into Sen. Monty Pearce’s alleged conflict of interest over oil and natural gas bills, and odds are the 2012 session won’t conclude until at least March 30, not March 23, as some had hoped.

And this doesn’t even take into account still-uncertain negotiations over whether Idaho will begin setting up an insurance exchange, as insurers such as Blue Cross of Idaho are frantically lobbying for in these waning days.

Weeks ago, senators voted 32-0 to reverse teacher salary funding cuts envisioned under public schools chief Tom Luna’s “Students Come First” reforms last year. The estimated cost over five years is nearly $35 million.

But that legislation is languishing in the desk of House Education Committee Chairman Bob Nonini.

“I’m just nervous about committing future legislators to the additional money,” said Nonini, R-Coeur d’Alene, last week.

But the House isn’t the only chamber holding hostages.

An individual income tax cut amounting to $35 million annually for top earners has Otter’s stamp of approval and has cleared the House, but it’s getting the silent treatment in the Senate Local Government and Taxation Committee, led by Sen. Tim Corder.

House Majority Leader Mike Moyle, R-Star, who has been helping lead negotiations for state representatives, said Otter has made his feelings clear behind closed doors: He’s willing to fight for the $35 million income tax cut.

“The governor was pretty adamant he’d like to have that tax break,” Moyle said. “The House has been pretty firm about that, also.”

Corder, R-Mountain Home, says he’s reluctant to give $35 million tax relief a hearing, on several counts.

For one, the bill provides only $71 in tax relief to a family of four earning $100,000, according to Otter’s finance department. It simply doesn’t provide much bang for the buck, Corder said.

And he fears that using $35 million for income tax relief might detract from momentum behind repealing personal property taxes on business equipment — and the Senate’s effort to restore teacher pay.

“Certainly, teacher salaries are a big deal to the Senate,” Corder said.

Complicating matters, there are competing revenue estimates for fiscal year 2013, starting July 1.

Otter’s more optimistic projections leave the state with $128 million to spare after 2013, according to a document released by the Division of Financial Management this week.

Alex LaBeau, head of the Idaho Association of Commerce and Industry business lobby, told The Associated Press that’s more than enough money to pay for the $35 million in income tax cuts, restore teacher salaries and put $60 million into rainy day funds.

LaBeau suggests there could be enough left over to eliminate the first $20 million of the personal property tax on business equipment, too.

Some legislators, however, are sticking by more-modest revenue forecasts.

Trying to do everything now, they contend, would exacerbate Idaho’s structurally unbalanced budget they say is being propped up by $100 million taken from budget reserves and Idaho’s share of the big nationwide tobacco settlement.

“That’s one-time money that we’re doing ongoing tax relief with,” said Rep. Dennis Lake, R-Blackfoot and chair of the House Revenue and Taxation Committee. “I don’t think it works.”

Lake was one of just a handful of House Republicans who opposed the income tax cuts, a dicey move in an election year. But he’s retiring.

Sen. Dean Cameron, co-chairman of the Joint Finance-Appropriations budget committee who is seeking re-election, also favors a more cautious approach that would pay for teachers and fill rainy day funds but dedicate less attention to tax cuts.

“There are several moving parts,” Cameron, R-Rupert said. “Our members would like to see (the education funding) bill come forward, as well as substantial revenue being put into guarding against another downturn.”

David Hensley, Otter’s chief of staff, declined to comment on this end-of-session calculus, given the sensitive nature of discussions.

Otter, who in 2009 apologized to the House for disclosing his stance on an issue still before the Legislature, doesn’t want to publicly wade into the process again before bills reach his desk.

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