As the 2018 legislative session came to a close, Idaho business people said they were pretty happy with the results.
“In my nine years here, this was the best legislative session in terms of our agenda and its efficiency,” said Bill Connors, president and CEO of the Boise Metro Chamber of Commerce. “There weren’t a lot of shenanigans.”
What made business people particularly happy?
Workforce Development Council (H432). That was the top priority for the Idaho Association of Commerce and Industry, Idaho’s business lobby, said Alex LaBeau, president. “It gave that council some authority to coordinate efforts for developing Idaho’s workforce.” Its new structure also has more private sector business industry leaders on it, which should help it develop skilled workforce more quickly, said Steve Wilson, chair of the Idaho Chamber Alliance and president and CEO of the Coeur d’Alene Chamber of Commerce.
H432 was also the top priority of the Idaho Associated General Contractors, said Wayne Hammon, chief executive officer. In fact, the organization had actually drafted legislation, which got rolled into the bill. “In the past, it was almost all job-specific training,” he said. “What this bill does is pre-employment training.” That means the AGC will be able to work with the six members of Idaho’s Workforce Training Network – the four community colleges, plus Idaho State University and Lewis-Clark State College – to develop a four-week introductory class to help people decide whether they want a job in the construction industry, he said.
Tax conformity bill (H463). While technically this bill’s purpose was to conform with changes in the federal tax code, the real meat of it to business was a 0.475 percent cut in the corporate tax rate, from 7.4 percent to 6.95 percent. “We’ve been pushing for that for nine years,” said Connors. “It’s an economic development issue. Above 7 percent, you fall off a lot of people’s radars if they’re looking for relocation and expansion.”
Unemployment insurance tax reduction (H335). One of the first bills passed this legislative session – the victim last year of intercameral warfare – it reduces the unemployment insurance tax employers pay by $115 million over three years. “That was a big one for us,” LaBeau said, saying it would save businesses $41 million in 2018 alone while still keeping the unemployment insurance fund solvent. Connors said it would save businesses about $120 per employee. “Even in my organization, with 20 employees, that’s $2,000 we can plow into salaries or the business,” he said.
Online sales tax collection (H578). When Idahoans buy products online, they typically don’t have to pay sales tax if the business doesn’t have a physical presence in the state. Instead, people are supposed to keep track of their online purchases and pay a use tax with their income tax, though in practice few do. Brick-and-mortar businesses say that puts them at a disadvantage. After several years, the Legislature passed a bill that requires Internet businesses of a certain size to collect the sales tax. “That’s a piece of legislation that levels the playing field for the brick-and-mortar Main Street businesses that represent so many Chambers of Commerce,” Wilson said.
Not all Idaho business people were happy about it. “We’ve had a policy for more than 20 years that opposes the collection of a use tax,” said Russ Hendricks, director of governmental affairs for the Idaho Farm Bureau Federation, a voluntary association of farmers and ranchers, based in Pocatello.
Fee rule of the Idaho Brand Board (Rule 11-02-1-1701). What do bankers and farmers have in common? They both liked this rule, which increased the money paid to the Idaho State Brand Board from 94 cents to $1.19 per head. This increased cost was related to the new slaughterhouse in Kuna, said Bob Naerebout, lead of government affairs for the Idaho Dairymen’s Association, based in Twin Falls. Seventy percent of the animals killed at that plant are dairy cattle, he said. “Prior to that plant being built, the closest place we could bring dairy to slaughter was Fresno or Arizona,” he said. “It saved our industry a lot of money.”
The funding helps ensure the Board is adequately funded, which is important for banks, said Trent Wright, president and CEO of the Idaho Bankers Association. “If the bank collateral is not adequately branded, there is a liability or risk problem,” he said. “It was paramount that this rule was adopted.”
What business people were less happy about
That said, business didn’t get everything it wanted in the 2018 legislative session.
“We still haven’t solved the Medicaid problem,” said Alex LaBeau, president of the Idaho Association for Commerce and Industry. “That’s something the Legislature has been failing to deal with over the past six years. Certainly, that is unfinished business, and we have a difference of opinion of what is the most fiscally responsible thing to do.”
Aside from the humanitarian aspect, Medicaid is a business issue because Idaho businesses are paying twice for the uninsured – both through higher premiums for unreimbursed hospital expenses, and what the state has to pay through the Idaho Catastrophic Health Care Program for indigent care, as well as the first $11,000 of such care that counties have to pay, LaBeau said. “It’s irresponsible for the state to continue to not deal with this particular issue from a policy as well as a fiscal standpoint,” he said. Instead, Idaho should expand Medicaid, he said. “We think they should take the match,” he said. And he was disappointed that the governor’s dual-waiver plan didn’t pass. “That legislation couldn’t even get traction to get out of committee,” he said, “At this point, we need a solution, and they haven’t dealt with it.”
Steve Wilson, chair of the Idaho Chamber Alliance as well as president and CEO of the Coeur d’Alene Chamber of Commerce, wished for more investment in infrastructure. “The movement of freight and goods is critical,” he said. “It’s absolutely critical that the state begin investing.” This is particularly true in North Idaho, which has suffered through some difficult winters. Businesses would even be willing to pay increased user fees and fuel taxes, he said. “The cost of not being able to get goods to market is significantly greater,” he said. “Every time you have a container truck sitting in traffic at half-speed, it’s costing somebody money.”
Wilson was also disappointed that the Legislature has not yet addressed the issue of granting cities and counties local option taxing authority, something that’s currently granted only to resort cities. Such authority allows residents in a particular region to vote to tax themselves to pay for projects such as roads, public transit, and jail expansion. “The best decisions are made at a local level,” he said. “We’ve advocated for that for years. The Legislature doesn’t believe so, and it wasn’t even a topic this year. It’s been on our agenda, and it will stay on our agenda.”
Post Falls, for example, used urban renewal funds to pay for a freeway overpass instead, Wilson said. Local option taxing authority would have been a more efficient method, and would have allowed travelers from Montana and Washington crossing through the 60-mile region to help contribute through sales tax, he said.
About the only disappointment the Boise Metro Chamber of Commerce had was a bill to exempt data center equipment from sales tax. While the bill stalled last year in the Senate after passing the House, it didn’t even get a print hearing this year. “We spent some resources trying to get people excited, and it didn’t happen,” said Bill Connors, president and CEO. “But the gains in tax relief and prioritized education spending more than made up for that. We’ll try again next year.”