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Tag: state of the state

Business community praises Little’s judicious investments in lean budget

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Gov. Brad Little is greeted by legislators as he enters the chamber to give his State of the State speech. Photo by Sharon Fisher

Business stakeholders approved Gov. Brad Little’s State of the State message and budget proposal, which featured a heavy emphasis on public education but was conservative to help the state prepare for a possible recession.

Presented on Jan. 6 in the Idaho Statehouse, the budget called for a 3.75% increase, which Little said was the smallest increase in a state budget since 2014. In October, he called on state agencies to cut their budgets this year by 1% and to identify a 2% base reduction for next year.

Little also proposed putting an additional $102 million in the state’s rainy-day funds, after a recommendation from Moody’s Analytics that states have between 18% and 23% of their annual budget in reserves. With the additional money, that will bring Idaho up to 15%, said Alex Adams, administrator of the division of financial management. That will also means lifting the current statutory cap of 10%, he added.

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Roy Eiguren

“From our clients’ perspectives, it was a five-star speech,” said Roy Eiguren, partner with Eiguren Ellis Public Policy, in an email message. “They are exceptionally pleased with his positions on matters that are of the highest concern to them: Education, workforce development, transportation, regulatory reduction, a conservative state budget and continued progress in environmental cleanup and enhanced research at the Idaho National Laboratory.”

“The Boise Chamber was pleased with the Governor’s State of the State address as it highlighted several Chamber priorities,” said Bill Connors, president and CEO of the Boise Metro Chamber, in an email message. “All of these issues have been a part of our legislative agenda, and we are pleased to see Gov. Little so engaged on all of them.”

Rules

Building on this summer’s reported 75% reduction in agency rules – an opportunity Little got when the Legislature was unable to confirm the “drop dead” bill that typically extends those rules to the next year – he called for a further reduction in state rules, including a zero-based initiative to look at 20% of the state’s rules annually.

Little also wants the Legislature to continue reducing occupational licensing requirements. In addition, he said his administration had prepared 30 pieces of legislation to repeal outdated statutes.

Investments

Despite the lean budget, Little did call for investments in some areas, most notably education, ranging from literacy funding on the K-3 level to increasing teacher pay to an ongoing $7 million in Opportunity Fund scholarships to support up to 2,400 students. In addition, he called for investments in career-technical education (CTE), such as $6 million in capital expenses to improve classrooms at the College of Eastern Idaho, Lewis-Clark State College and the Department of Juvenile Corrections.

While saying that he wished to wait for an updated report next spring on Idaho’s transportation backlog, Little proposed spending an additional $100 million this year on transportation infrastructure. The Idaho Transportation Board would determine how the money would be spent, he said.

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Alex LaBeau

“We could not be more pleased with the structure of investments in CTE, teacher pay, highways, broadband and Medicaid,” said Alex LaBeau, president of the Idaho Association for Commerce and Industry, in an email message.

Technology

Little praised the state’s IT modernization project, which he said would improve cybersecurity. And, following the recommendation of his Broadband Task Force, which issued its report in November, his budget included $113,000 to set up a state broadband office in the Department of Commerce. He also budgeted $75,000 for a state drone office intended to coordinate 90 programs across Idaho state agencies, and $1 million toward cybersecurity education.

However, Little did not include a tax exemption for equipment in data centers, which stakeholders in that industry have said would make it easier for Idaho to attract such businesses. He said during a Jan. 3 press conference that he was not in favor of tax exemptions. Neighboring states either have such a tax exemption or no sales tax at all.

Business cheers Little’s first State of the State

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Idaho Gov. Brad Little behind the podium on the Senate floor in the Idaho Legislature during the previous session. File photo.

Business leaders praised Gov. Brad Little’s first State of the State speech, specifically calling out improvements to education, Medicaid expansion and reducing government regulations.

“Gov. Little’s State of the State Address was a home run for Idaho’s business community,” said Roy Eiguren, partner with Eiguren Ellis Public Policy. “The governor is providing strong leadership in addressing many of the most crucial issues important to Idaho businesses.”

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Bill Connors

“There was really nothing in Gov. Little’s State of the State that we didn’t like,” said Bill Connors, president and CEO of the Boise Metro Chamber. “He struck all the right notes for driving Idaho’s continued economic growth and prosperity.”

Little – whose management style is characterized by House representatives as “policy wonk,” compared with previous governor C.L. “Butch” Otter’s “10,000-foot” approach – touched on a number of business areas in his speech, including previous areas of interest such as cybersecurity, occupational licenses and Medicaid expansion.

Business representatives praised Little’s emphasis on education, including completing the current five-year plan, starting another, and raising starting teacher salaries to $40,000, as well as implementing many programs.

“It’s critically important to our employers to have an educated workforce,” said Alex LaBeau, president of the Idaho Association of Commerce and Industry, which was involved in the first five-year plan. “We’re strongly supportive of that.”

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Trent Wright
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Roy Eiguren

In issues where budgets are involved, Little’s initiatives will require the cooperation of the Idaho Legislature, Eiguren noted. But several initiatives were set up through executive order, which last for, at most, four years. These include formalizing an opioid substance abuse plan, implementing sunrise and sundown provisions for new occupational licenses, and requiring state agencies to remove two regulations for every new one they wish to implement – greeted enthusiastically by Idaho’s business community.

“We are committed to working with Gov. Little’s administration and regulators on regulatory reductions to allow banks to better serve their customers and communities, without compromising safety and soundness,” said Trent Wright, president and CEO of the Idaho Bankers Association, in Boise.

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Jaclyn Kettler

Following a campaign promise, Little called for eliminating the tax on groceries for fiscal year 2021 – which begins July 1, 2020 – using the budget surplus. However, because the surplus varies from year to year, including not existing some years, it is not clear how that would work.

“It was not clear to me what exactly the plan is, beyond that the state probably won’t be fiscally ready for the grocery tax repeal until FY 2021,” said Jaclyn Kettler, assistant professor in the School of Public Service at Boise State University, noting that increased funding for education and corrections would probably make grocery tax repeal infeasible this year.

Following another campaign promise, Little called for expanding Medicaid to low-income people, funding the state’s $17.9 million share through budget savings in the Catastrophic Health Care Fund and from the Joint Millennium Fund, the state’s share of a multibillion-dollar class-action tobacco settlement. He did not mention sideboards such as work requirements, though he would like to ensure there is a pathway out of Medicaid, he said.

Some of Little’s proposals lacked details. For example, he asked the Tax Commission to “do all they can” to help ensure Idahoans know they might need to adjust withholding to keep from having large tax bills. He also wanted to “pursue all options to improve broadband connectivity” without saying what they might be.

Little’s budget also called for a 3 percent merit raise for state employees. A recent annual report on Idaho state employee salaries found they were 25.6 percent below the private sector in 2018, compared with 23.9 percent in 2017. While benefits were better, total compensation was still 12.4 percent below the private sector in 2018, down from 12.2 percent in 2017.

Little called out a number of Idaho businesses, including Woodgrain Millworks in Fruitland, Rohinni, an LED manufacturer in Coeur d’Alene, and BiologiQ, which makes plastic out of potato starch in Idaho Falls.

Otter: $115 million reduction in unemployment taxes is ‘job one’

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The Idaho Statehouse. Idaho Gov. C.L. “Butch” Otter said in his speech to the Legislature Jan. 8 that reducing the unemployment insurance tax will be a top priority for his administration. File photo.

A reduction in the unemployment insurance tax that could save Idaho businesses up to $115 million over the next three years will be ”job one,” said Gov. C.L. “Butch” Otter, giving his 12th and final State of the State speech to the Legislature on Jan. 8.

The Legislature had attempted a year ago to pass the unemployment insurance bill, which would have reduced the unemployment tax multiplier from 1.5 percent to 1.3 percent, but Rep. Mike Moyle, R-Star, had appended an income tax reduction amendment that the Senate previously refused, which led to the bill’s rejection by the Senate. Otter said at that time that he planned to resubmit the bill during the following legislative session, retroactive to the previous year.

“We have a responsibility to act quickly during this legislative session to ensure that Idaho employers don’t pay for last year’s failure to enact unemployment tax relief,” Otter said. While it may cost the Department of Labor $75,000 to process the legally required tax notices, “that’s a relatively small price compared with the $115 million in higher-than-necessary taxes that Idaho businesses will pay over the next three years if we don’t make the simple but necessary change,” he said. He also called for lower corporate and personal income tax rates but didn’t provide specifics.

The Idaho Association of Commerce and Industry (IACI) had said during the Associated Taxpayers of Idaho meeting last December that reducing the unemployment insurance tax was on its slate of proposed tax cuts.

In addition, Otter said he was moving the Workforce Development Council from the Department of Labor to the governor’s office. The 36-member council, which provides strategic direction and oversight of Idaho’s workforce development system, has a budget of $8,553,100 and five full-time equivalent positions. Wendi Sechrist, formerly director of business outreach at the State Division of Career-Technical Education, was named executive director last fall. The organization is slated to meet Jan. 11 to discuss its role, according to a published agenda. He also called for more than doubling the budget of each of the state’s six workforce training centers, from $80,500 to $205,500.

Otherwise, the speech was slight on business-oriented specifics, focusing instead on public and higher education and healthcare. Otter also said he was calling for a 3 percent merit-based salary increase to state employees. The Legislature learned last year that the gap between salaries in state government and those in private industry was widening, making it difficult for the state to hire and retain employees.

Otter also said he intended to consolidate the director of information security and the staff of the Division of Information Technology at the Department of Administration into the Office of Information Technology. “This will standardize and optimize cyber capabilities throughout state government,” according to the budget document. “Critical enhancements are recommended to provide support, increase security, storage capacity, and enhance the ability of the state to connect with citizens through online tools.” He also called for additional funding for the state controller’s office to replace the state’s 30-year-old payroll system, which after five years will raise the $102 million necessary to update the system.

All the programs mentioned in Otter’s speech are proposals; the Legislature must enable and fund them before they can be enacted. In past years, the Legislature has not been entirely cooperative, most notably in elimination of the grocery tax, which the Legislature passed last year before adjourning. Otter vetoed the bill after adjournment, which meant the Legislature couldn’t override the veto. That led to a court case with the upshot that all bills now must be submitted to the governor before adjournment. At a legislative preview Jan. 5, Otter said he was against eliminating the grocery tax, but some legislators have already said they intend to pass another grocery tax bill this year, early, and that they have the votes to override a veto.