Every year, important debates over tax policy dominate the legislative session. But outside of state agencies, do Idahoans know how their taxpayer dollars are being spent?
Jason Mercier, Vice President and Director of Research for Mountain States Policy Center, joined Melissa Davlin this week to outline some proposals aimed at making government spending more transparent.
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Jason Mercier, Mountain States Policy Center
Melissa Davlin
Jason, thank you so much for joining us this week. For those who aren’t familiar — Mountain States Policy Center is still fairly new — what do you do?
Jason Mercier
Well, thank you, Melissa, for having me today. We are a public policy group, so we deal in policy. We don’t deal in politics. And that means we are looking at the issues. Our coverage area is Idaho, Montana, Wyoming, and a little bit of Eastern Washington. And when you’re looking at a regional part of the country, you’re going to get into some of those federalism issues, the best practices, seeing what works and doesn’t work in different environments, economies. So, we’re looking at things from that policy prism of what are the ideas we can give state officials on fiscal policy, tax policy, governance, transparency, education. Our prism that we look through is on a free market. So, how do we empower entrepreneurs to grow their businesses? How do you empower individuals to take advantage of the economic opportunities of the area? And that’s how we’re going to be kind of approaching policy. So, you’re not going to be seeing us engaging in a political debate. We’re on an ideas basis on policies.
Davlin
You have some policy recommendations regarding government transparency this year, and before we get into those specifics. You know, we as journalists talk about government transparency and its importance all the time, but why is it important for the average citizen?
Mercier
You know, when Benjamin Franklin was asked, what has the Continental Congress created, it was a republic, if you can keep it. And to have a republic, to have that form of government, you maintain, you really need to have the citizens in the driver’s seat. And you cannot do that without access to the information about what public officials are doing and how they’re running the country. And if you look at the very beginning of Idaho’s Constitution, it wastes no time. All political power is inherent in the people. But the people can’t exercise that if they don’t have the information to what’s being done on their behalf. And when you look at Idaho’s public records laws and open meeting laws, they’re fairly good. We just need to make sure that they’re being followed. But at the same time, when you look at our legislative process here, that’s about to start, that really is supposed to be the opportunity for the citizens to be involved in their governance, to tell their elected legislators what policies they’d like to see advance. But if you don’t have access to the information about what’s being considered and when it’s being considered, it’s hard to testify. It’s hard to provide that valuable information. And sometimes policy will suffer if you don’t have that transparent process built in.
Davlin
You mentioned Idaho’s open meeting laws and the legislature. The legislature is allowed to make its own meeting rules and isn’t beholden to the same open meeting laws as other government entities in Idaho. One of your suggestions is requiring a three-day meeting notice for the legislature and for new bills. Can you walk me through what that would look like?
Mercier
Yeah. So, the legislature in Idaho is exempt from the open meetings law, but it does have its own legislative rules that they adopt as to how they’re going to govern their proceedings. And when you look across the country, a similar thing you’ll see in other legislative rules are these waiting periods. Now, if you have a longer legislative session, it might be a week, or five days. Because Idaho has shorter sessions, what we are advocating for is that when they come into session here in a few weeks, they amend their rules to require a three-day public notice of not only when a hearing is going to be held, but the details on the agenda, what bills and what are the text of the bills. Because we’re busy, you know, you’re running your business, you’re going to work, you’re in school. And if you don’t know what’s being considered and what the actual details of that are, it’s hard to rearrange your schedule, even if you’re doing remote testimony and you don’t want to drive to Boise to testify in person. So, this helps the citizens not only be more involved in the governance, but the legislature as well, because now they can have a more informed debate. When you think about the Idaho legislature, it’s a little bit unique in that they don’t have the staff for individual lawmakers. So that public hearing sometimes can be their first look at a concept. And that’s where providing this three-day notice with the actual bills, with the actual text, will allow them to better understand what they’re considering, and for citizens to participate in a more informed way.
Davlin
Especially considering the nature of Idaho and how so many citizens live away from that government center of Boise. How would that requirement, though, look at the end of session when so often we see a flood of last-minute omnibus-type bills coming through that are really, really critical. And there have been a handful of lawmakers working on those throughout the session. But as you mentioned, for a lot of folks, that’s the first time that they’re seeing it hit their desk. Realistically, though, at the end of the session, when people are trying to get out of town, can you require that three-day notice?
Mercier
Well, so, definitely on policy bills as we’re going through the process. Now, when you’re looking at appropriation bills, these are 100-page documents, it’s a little bit harder to do a three-day thing. So, what you would like to see happen when JFAC comes out with their final recommendations, that that sit at least for 24 hours before there’s any action on it. Now, 24 hours to go through hundreds of pages, most people aren’t going to be able to do. But it at least gives experts, those who know the funding issues, a little bit of time to say, hey, you might have missed something, or maybe consider this. Now, when you look at the rules, there’s technically those type of waiting periods between – they’re called readings, first reading, second reading, third reading. But sometimes legislative rules can be a little bit like the pirate code, but you still want to see that, at least that intent in there, and hopefully followed.
Davlin
Not all of your proposals have to do with the legislature. A lot of them have to do with taxes and how the government is spending money. Let’s talk a little bit about the tax transparency website. What’s the vision there?
Mercier
Yeah, so the vision there, if you look right now with what Controller Wolf has done on Transparent Idaho, getting a lot of detail on the spending, on the budgets, being able to kind of see where the money is being spent and how – fantastic resource. What you want to do is now add the tax side of that. So, the concept on a tax transparency website, when you look at Idaho right now, there are more than 1,200 taxing districts. These are individual government entities with the authority to impose a tax liability. Now, as a taxpayer, I’m paying taxes, but to whom and for what? So, what this tax transparency website would do is you would enter in your home address or your business address. You would see all the taxing districts you are subject to, at which rates, and not for your actual tax liability, but for an educational basis, what your potential tax burden would be. Now, this gets into not only providing that transparency on what you’re paying and to whom, but you can get it some tax competition. Let’s say I want to open my business in Nampa versus Twin Falls. What would my tax liability be? Or I want to move to Meridian, you know, versus Nampa. What would my cost in my home be? So, it just kind of provides a little more transparency for the citizen and the business to see what they’re looking at as far as taxes.
Davlin
Idaho, as you mentioned, has more than a thousand taxing districts, about 1,200. How hard realistically would this be to pull off if you need buy in from all of those taxing districts to submit that information in the first place?
Mercier
Well, I know Controller Wolf is already trying to move in this direction as far as getting that information from the taxing districts. And I think what would facilitate this is if you had more standardized reporting. Now, they know what they’re leaving in taxes. They have to because that’s how they are able to get that money from the citizens. It’s just a matter of getting that standardized reporting to whether it’s the comptroller’s office or another entity that they can pull from that database.
Davlin
This kind of goes hand-in-hand with another one of your proposals, tax receipts, where basically a taxpayer would be able to figure out or find out exactly how much of their tax burden is being paid into which bucket. Can you walk me through that?
Mercier
Yeah. This is something Utah has been doing for several years, and it’s a really fun resource. You know, when you go shopping, you’ll get your line-item receipt. You can see where your money went to. And if you can’t remember what you were spending, that’s a pretty good little snapshot. So, what the taxpayer receipt does is the same thing. So how Utah does it, you enter in your household size, your income, your home or your rent value, how many cars you have and how much you drive. Now, this information is not kept by the government. This is just used to run this estimate. And then it will take those data points and tell you, well, here’s how much your state tax liability is going to be, how much you can pay in gas tax, property tax, sales tax, income tax. And then it translates that amount of taxes into a proportional amount of the budget. So, from that, you say, well, this is how much you went to criminal justice, here’s how much went to higher ed, here’s how much went to agriculture. So, it just kind of takes these billion-dollar budgets and puts them into a little more digestible sizes.
Davlin
The Idaho courts have an almost identical feature on their website, breaking down what court fines and fees go to, if you have a $100 fee that that you pay. This is how much goes to drug courts or whatever. Are there other areas of government where this this concept might make sense?
Mercier
So, I guess a little similar thing is when you think about schools right now, and education spending. You know, parents want to know what’s happening in my schools? So, when a levy or a bond comes up, I can make a good, informed decision about, are additional resources needed? So, what we’re working with Superintendent Debbie Critchfield on is what we’re calling the Public School Transparency Act, and this would require standardized information for all school districts on page one of their budget. Now, a school district budget is a big thing. You may not really understand what you’re looking at, especially if you’re trying to compare between districts. And what we would say needs to be on that very first page includes obviously the total spend, how much is being spent per student, how much is actually making it to the classroom, what are the wages and benefits for administrators and teachers, and what’s the ratio of administrators to teachers to students, so we can kind of start to get a feel for these investments that we’re making, what’s actually getting to the classroom? And then we can kind of have a determination when that levy or bond comes up, is additional resources needed?
Davlin
You know, a question on that. All of that information is so important. You know, the more information, the better. But at the same time, you can’t always tell the whole story using a spreadsheet or using infographics. A lot of times you need information. You know, this is why we had to spend more money in this area this year, because we had this special situation or students who had these specific needs. Is your proposal enough to paint that whole picture for taxpayers?
Mercier
Well, I think now you’re getting into additional data points you can add to this, right, because you look at English as a Second Language, obviously, you’re going to be seeing more intense requirements and investments, the same for special ed. Now, we’re just talking about the appropriations. We’re not talking about the results. That’s the other side of this coin. Then you start to add to this. You can see, we’ll have our test scores change, what’s happening in reading. And when you’re thinking as you’re getting a little bit older, in some civic education or an economic education. I will say Idaho has done a great thing as far as the financial education so people can understand how to do a balance sheet, a checkbook, start saving for their home. So, these are some of those where now you’re going to the results you could also add to a future idea where you’re going to like a website of this.
Davlin
One more policy proposal that you had was gas tax stickers. Can you walk me through that proposal?
Mercier
So, let’s go back to when we go to the grocery store. We get we see what we have purchased, how much that is, and then we see how much the sales tax was. It’s not just put into the total price. When you go fill up at the pump right now, you’re just getting the total. That’s including the about $0.32 of Idaho gas tax and the $0.18 of federal gas tax. So, what this concept is that several states have done with these gas stations, these pumps have to be inspected by the state. So, when they are, what we are encouraging to have happen is a gas tax sticker be applied to each pump that would show how much is the state tax, how much is the federal tax, kind of like a gas tax receipt. So, when you’re seeing, well, it’s $3.50 a gallon, $3.00 of that is the gas and $0.50 of that is the tax.
Davlin
In places like Ohio and Utah where this has been implemented — and more broadly speaking, the more information people have about how their taxes are being spent and how that’s being parceled out — in general, when taxpayers know more about where their money is going, do they tend to be more supportive of paying those taxes or approving additional requests through bonds and levies? Or do they tend to say, hang on, wait a minute, I don’t know if I agree with this, or does it depend on the district?
Mercier
It’s going to depend upon what the results are, because right now we just hear a conversation of a need, without being able to evaluate what’s currently happening, and then what are the results. Basically, what you’d like to see happen — this is a different topic I’ll throw for you, that we’d eventually like to see the legislature do as well — it’s called performance-based budgeting. So, rather than when you open up a budget, it just being a line item of appropriations, it actually gives you a high-level outcome of what the expected result is. And so, an example of this would be – I wouldn’t advocate that we have a budget as big as Texas, because Texas’s budget is about 1,500 pages. But it’s that size because with every appropriation they are identifying a high-level outcome. So now, you can have that conversation as a lawmaker when an agency comes to you and says we need X amount more. It’s not just, well, was that because of inflation? Was that because of headcount, or what result you’re trying to achieve? Because ultimately, we’re spending these tax dollars to get a service from the government, not just a spend. And if we’re not focusing on those results, we’re not having the full question answered.
Davlin
Jason Mercier, Mountain States Policy Center, thank you so much for joining us.
Mercier
Thank you.