How did business fare in the 2019 Idaho Legislature?

With both a bang – of a gavel – and with a whimper, both houses of the Idaho Legislature adjourned sine die at 4:20 p.m. on April 11, completing some business priorities but leaving others undone.

“This was a difficult session for us and the broader business community,” said Bill Connors, president and CEO of the Boise Metro Chamber. “We felt last year’s session was one of the best. Between lowered corporate and individual income tax rates and the lowered unemployment insurance rates, the 2018 session was great. This one, not so much.”

Here’s some areas where business leaders felt the Legislature fell short.

Urban renewal. A bill that required a vote of the people before urban renewal money could be spent on certain projects passed, which disappointed some cities with urban renewal agencies.

“I was disappointed in the passage of the urban renewal legislation that continues to chip away at this valuable tool for local communities to spur economic development and improvement of blighted areas,” said Shawn Barigar, president and CEO of the Twin Falls Chamber of Commerce.

Twin Falls has been a heavy user of its urban renewal agency to attract major employers such as Chobani, as well as redevelop its downtown.

Hemp. While bills that would have allowed farmers to grow hemp for industrial and medical purposes, and for companies to legally ship hemp products across Idaho, were presented, ultimately no such bills passed. Idaho is one of just three states where hemp remains illegal. Nebraska is still working to pass such a bill; South Dakota’s governor vetoed a hemp legalization bill.

Russ Hendricks, director of governmental affairs for the Idaho Farm Bureau Federation, based in Pocatello, was looking at the bright side. The organization has a policy to support legalizing industrial hemp as a crop.

“Although no bills actually made it across the finish line this session, it is clear there is strong support amongst legislators for allowing Idaho farmers to begin growing industrial hemp, just like 48 other states,” he said. “Over the past 20 years, no hemp bill has ever made it through either chamber. This year, the House and the Senate each passed two separate bills through their chamber with strong, bi-partisan support. Once USDA finalizes their rules this fall, we believe Idaho will be ready to move forward with a program allowing farmers to plant hemp next spring.”

Data centers.  A bill to exempt data center equipment from sales tax was introduced and had an informational hearing, but there wasn’t a vote on it. Business leaders have been trying for several years to pass such a bill, which they believe will bring more data centers to Idaho.

“For the past two years, our Chamber has led efforts to encourage data center legislation,” Connors said. “These complexes bring huge investments, jobs to non-urban areas, and result in statewide upgrades to our information infrastructure. We hope 2020 will be the year to put Idaho at the front of the line for this expanding industry.”

Liquor licenses. Several attempts at bills that would have made it easier for restaurants to get liquor licenses did not pass.

“Local governments welcomed the opportunity for a role in Idaho liquor law reform, and after many iterations of ideas for cities and counties to help license and manage liquor license reform, even a watered-down version leaving licensing power in the hands of the state did not survive,” said John Watts, a partner with Veritas Advisors and legislative advisor for the Idaho Chamber Alliance. “Liquor and spirits are not the base of economic development, but they serve as an important piece to restaurant and eatery establishments, which do form large economic development plans in communities across Idaho. We hope to work with interested parties on this issue in the interim and throughout next session.”

Administrative rules. Unlike any other Legislature, the Idaho Legislature approves the rules created by the various state agencies during the interim. Either branch of the Legislature can approve a rule. An effort was made this year, led by the House, to require both branches of the Legislature to vote before a rule could be approved. It died in the Senate, with the result that the traditional “drop dead” bill, which automatically continues all rules forward until the next year, didn’t pass either. Technically, that means all of the rules will expire effective July 1, but Gov. Brad Little can extent them temporarily until next legislative session, when they will all have to be approved again, unless some other solution is cobbled up in the meantime, said Alex LaBeau, president of the Idaho Association for Commerce and Industry (IACI).

He is also concerned about the movement toward requiring both branches of the Legislature to approve a rule, saying it interferes with checks and balances and the power of the executive branch. “That gives every committee chairman power over the governor’s office,” he said.

All that said, there was some good news for business during the legislative session.

Federal tax conformance. Idaho’s tax code now fully conforms with the federal one for multinational employers. The bill is expected to raise more revenue for the state, and also makes tax calculations simpler for Idaho’s multinational organizations.

“Getting that conformity through was a very high priority of our organization,” LaBeau said.

Internet sales taxes. Idahoans have always been supposed to pay use taxes on products they buy over the internet, but in practice few do. The Supreme Court, in its Wayfair decision, ruled that collecting such sales taxes was legal, and the Legislature passed a bill this session that creates the process for collecting such taxes and remitting them to the state.

“Getting that fixed up for the state was very important because the state will be collecting revenues that are due,” LaBeau said, noting that estimates for such taxes range from $5 million to $30 million a year. “All I know is, it’s going to be more. We’ll have to see.”

Career-technical education (CTE). Two bills provided more funding for CTE, including CTE instruction that is performed online. IACI’s annual meeting in June is intended to focus on workforce and education and how to deal with it, and the organization is likely to develop a new five-year plan on career pathways and lifelong education, LaBeau said.

“There are many rural areas of Idaho that do not have the equipment or instructional staff to allow for some specific skill training, and students in these rural areas and attending charter schools can now begin to learn CTE skills in select curriculum areas,” Watts agreed.

And what about next year?

Transportation. Road funding needs to be a major focus in next year’s legislative session, business leaders said.

“Many transportation bills came forward, but none seemed to find the coalition necessary to move forward,” Watts said. “Idaho chamber employers and employees are very dependent upon all modes of transportation including cars, trucks, shortline trains and vehicles. The legislature needs to make roads, rail, bridges, and freight and people movement a very high priority in 2020.”

That could mean finding additional funding for transportation out of the general fund, where it would be competing with areas such as education and human services.

“I suspect the new administration is more open to the idea of general funds,” said LaBeau. “We’re arguing over the best mechanism to make that happen.”

That may mean consideration of the late-session idea of Rep. Mike Moyle, R-Star, to have countywide highway districts like the Ada County Highway District across the state.

“There’s a lot to be said for the efficiencies of ACHD and their ordinance-making authority,” Le Beau said. “Making it more efficient and professionalizing it is not a bad call, but you have to be careful about the political aspects of it.”