by Logan Finney, Idaho Reports
Gov. Brad Little scored two important victories at the statehouse this week amid the late-March legislative horse trades.
A pair of Thursday afternoon floor votes advancing Little’s key policy agenda items signaled the release of a legislative logjam which had the potential to extend the 2024 lawmaking session. But there are still major hurdles legislators have to clear before they adjourn.
BICAMERAL BRUISES
As Idaho Education News reported earlier this week, the joint budget committee announced it would not set the rest of the public schools budgets until action was taken on House Bill 521.
That high-profile school facilities bill had been awaiting a vote in the Senate for exactly two weeks. Following a closed-door Senate GOP caucus meeting Thursday – during which Idaho Reports witnessed House Speaker Mike Moyle meeting briefly with Senate Majority Leader Kelly Anthon – the Senate debated HB 521 precisely as the House took up funding for the Idaho Launch grant program.
“There’s a lot of parts to this bill. It’s a bill we’ve talked about for a while. We know it’s been sitting on the calendar for a bit,” acknowledged bill sponsor Sen. Doug Ricks, R-Rexburg, chairman of the Local Government and Taxation Committee.
Frustration at House leadership over a pattern of massive tax proposals permeated the debate.
“Quite frankly, I get tired of it. Every single year, we call them ‘going home’ bills. Why do we do that to ourselves?” said Sen. Jim Guthrie, R-McCammon, chairman of the State Affairs Committee. “Every single year, we do this and we put ourselves in the corner.”
The Senate is forced into a responsive position in taxation debates because the state constitution requires revenue bills to originate in the House.
“I really hope this is the last time that the body across the rotunda gets to force these omnibus bills upon us,” said Sen. Janie Ward-Engelking, D-Boise, who voted in favor of the bill.
For others, the politics between the chambers was enough to tip the scales toward a vote against it.
“The only way we’re not going to have to deal with a big, complicated bill like this at the end of session is if we finally take a stand and decide when enough is enough,” said Sen. Lori Den Hartog, R-Meridian.
Now that HB 521 is headed to the governor, the Senate has much less leverage to push for amendments to the package unless they hold something else hostage in the weeks to come.
“This bill has too many facets to it. I have not liked it from the beginning. I would love for us to amend it. I’m told that won’t happen,” said Sen. Cindy Carlson, R-Riggins. “I would love for us to send some trailer bills through. I’m told those trailer bills, they would be great trailer bills and we could possibly have great ideas in them, but we’re not guaranteed that those trailer bills will go into effect. It needs to be fixed.”
A FLEET OF TRAILERS
The State Affairs Committee introduced four new pieces of legislation Thursday morning, competing proposals to tweak details in HB 521 and address some of their concerns. The committee advanced them all to the floor on Friday morning.
The four trailer bills take slightly different approaches: pushing back implementation by a year, revising oversight of four-day versus five-day school weeks, and adjusting the payment distribution.
- SB 1438 would limit the program to a $100 million maximum distribution – affecting only West Ada School District – and a $100 thousand minimum, which is more than five districts receive under the current formula. It would also push back a year the limitations on switching from five-day to four-day school weeks.
- SB 1439 would repeal the four-day school week provision in HB 521 entirely. Multiple school district superintendents testified to offer vocal support for the bill, citing local control and community support.
- SB 1440 would change only the bond distribution to a range of $100 thousand to $100 million.
- SB 1441 would push implementation of the entire HB521 package back by one year. President Pro Tempore Chuck Winder, R-Boise, voiced worry on Friday about delaying important funds that schools are expecting.
The provisions of the bills are in conflict, and so not all could pass into law. Majority Leader Anthon told Idaho Reports on Thursday the caucus still needs to discuss which, if any, will move forward.
Changing the top and bottom ends of the bond distribution formula would presumably change the payments for all other school districts as well.
FUNDING FOR CRUMBLING SCHOOLS
The new school facilities modernization fund represents a historic step toward the Legislature providing funding for new school buildings, as well as addressing schools in disrepair across Idaho.
“In our constitution, it requires us to provide some responsibility from the state level when it comes to our school facilities, and provide a more uniform system,” Ricks said.
The bill commits an annual $125 million in sales tax revenue for the next ten years to take out a $1 billion bond and distribute the proceeds to school districts for facility modernization needs.
The billion dollars in proceeds will be sent to school districts based on average daily attendance, adjusted for how many of the students are attending the district in-person in a physical building.
“Fairness is subjective, as you know,” Ricks said. “It is based on average daily attendance on the funding formulation. That’s how we fund public education budgets currently.”
Many senators were vocally disappointed by that fact.
“We know schools, even if we pass this bill, are still going to need to bond,” said Sen. Ali Rabe, D-Boise. “Certain urban districts are getting three times more compared to rural districts, when you look at the actual facilities or square footage that schools are needing to maintain. The irony is that these districts that are receiving more money have a much higher passage rate of bonds.”
Two school districts, Prairie Elementary and Three Creek Elementary, would get the minimum $25,000 payout. West Ada would receive an outlier amount of $140 million.
“The distribution to rural schools is inadequate,” said Sen. Dan Foreman, R-Moscow. “The schools in my district are rural schools, and quite frankly they wouldn’t get the money they need under this.”
Salmon School District, an example highlighted in recent media coverage and in Little’s State of the State address, will receive about $2.6 million. The district is preparing to ask voters for a $20 million bond soon, Idaho Ed News reports.
“I’m worried that Ada County is the real big winner in this facilities funding” Ward-Engelking said. “I think we’re going to need to come back, and we’re going to need to make sure there’s a reasonable floor for small rural districts.”
Some communities need to replace aging buildings. Others need new schools to expand capacity.
“We have some rural communities where the buildings are crumbling. We have communities like mine where we can’t keep up with the growth. And frankly while it looks like Ada County may turn out on top, those numbers don’t address all of our growth needs either,” Den Hartog said.
“If the state is going to be this heavily invested and involved in school facilities, in a way that we never have before,” Den Hartog said, “we should do it right, and we should do it right the first time.”
Others argued that borrowing a billion dollars was too big of a commitment while still not enough money to meet the needs across the state.
“We’re asking to send a billion dollars without having a comprehensive database of the age of our schools, the extent of the repairs, how many schools we need to build to begin with,” said Sen. Carrie Semmelroth, D-Boise. “Let’s not pass a billion-dollar bill and then say we fixed facilities – at the literal expense of our rural school districts. We cannot confuse more with adequate.”
Some senior lawmakers expressed concern at the state cutting more income taxes and taking on more debt, based in part on the promise that sales tax revenues will continue to grow over time.
“As we continue to go to sales tax time and time again, we are doing that on the heels of a very strong economy,” Guthrie said. “In part prompted by a very large influx of COVID money, and funded further by higher inflation, which means six percent of a higher number.”
A BILL ABOUT TAXES
HB 521 reduces the state’s income tax rate yet again after the move from brackets to a flat tax rate.
“With this change, Idaho is now in between our friends in Utah who just reduced their income tax rate to 4.55%, and Montana with its two rates of 4.7% and 5.9%,” Mountain States Policy Center vice president Jason Mercier said in a statement after the vote. “According to the Tax Foundation, moving from a 5.8% to a 5.695% individual income tax rate will help improve Idaho’s ranking from 33 to 29 for all states and from 24 to 20 for those states where wage income is taxable."
Bill sponsors have dubbed taxation the golden thread tying the many disparate sections of HB 521 together.
“This past year, there’s been at least 14 other states that have reduced some of their income tax rates,” Ricks said. “This will help Idaho be a little more competitive amongst our neighbors surrounding in the intermountain area.”
The income tax cut is projected to cause an over $60 million annual revenue reduction for the state.
“I believe it creates a tax cut we cannot afford, and also just have concerns about the unequal distribution of funding to schools that need funding the most,” Rabe said. “Our facilities are in desperate need of help. No one is denying that.”
The positives of the bill outweighed the negatives for many at the end of the day.
“I think the ideal thing if you want a lot of participation in these bond elections is to consolidate down to two election dates, May and November. This bill does that,” said Sen. Phil Hart, R-Kellogg. “Like the rest of you, there's things in this bill I don't like. There’s a lot of things in this bill that I do like. But I think that consolidating the bond elections down to just two days is a really big win.”
Others seemed unimpressed with the justification that the big school facilities bill is about property taxes via bonds and levies, or about taxation as a whole.
“We don’t reduce income taxes so we can take that fifty bucks we saved and go support a levy,” said Sen. Brian Lenney, R-Nampa, referring to language in the bill’s statement of purpose.
EMBRACING A SINGLE SUBJECT
In addition to cutting income taxes and taking out a bond to establish modernization funding for schools, HB 521 would give the governor the power to appoint the president and executive director of the State Board of Education. The board members name those positions under current law.
“If we want to have Christmas tree bills, we should amend the Constitution,” said Sen. Rick Just, D-Boise.
Doubts about HB 521’s constitutionality united a few Democrats and conservative Republicans.
During his debate, Lenney recounted his experience as a citizen in the Senate gallery watching the 2022 special legislative session. He said many then-senators voiced serious doubts about the constitutional standing of House Bill 1 – which covered the flat tax move, rebate checks, in-demand career funds that became Idaho Launch, and K-12 school funding – but voted in favor of it anyway.
“The main problem I have with this is it violates the single-subject rule,” Lenney said. “I sat right there in that gallery, and I said, man, I'll never do that.”
The legislation would also ban local school districts from requiring job applicants to sign written diversity statements, and it includes language limiting districts’ ability to shift from a five-day to four-day school week unless they meet yet-to-be-created requirements from the state board.
“I really want to ask each of you. Do you really understand what each component of this bill does?” Rabe asked her colleagues. “These are policies that are completely unrelated to taxation. I’m concerned that we continue to interpret taxation to pass one of these large, long, complicated, Frankenstein bills at the end of each session.”
The bill drafters characterize the various policy provisions as accountability measures for the historic funding that will be going to school districts.
STILL AN EASY VICTORY
Despite the massive heartburn – over both the bill’s contents and the way it was leveraged politically between the chambers – the Senate passed HB 521 in a comfortable 23-11 vote.
“It’s really easy to tear things apart, it really is. Let’s look at what we’re getting here,” said Sen. Dave Lent, R-Idaho Falls, chairman of the Education Committee. “It will reduce local property taxes. It will reduce personal income taxes. This is a huge step in the right direction that we want to go for our school districts.”
The legislation increases and simplifies the property tax relief money that goes to districts from last year’s tax bill. Sponsors said they don’t expect HB 521 to be a silver bullet for new facilities either.
“We’ll continue to look at this in future years, and we’ll determine what those needs are, and try to participate more on the state level to help out,” Ricks said.
Little celebrated passage of his signature 2024 policy proposal in a press release after the vote.
“In my State of the State, I called on the Idaho Legislature to make addressing funding for critical school maintenance priority number one. Together, we delivered. Together, we secured the largest-ever investment in school facilities funding in state history while giving families back more of their hard-earned money with property and income tax relief,” Little said. “With LAUNCH, Idaho is also taking unprecedented steps to prepare our young people for a lifetime of prosperity.”
The Joint Finance-Appropriations Committee met on Friday morning to continue setting public schools budgets, the last major item before the budget committee finishes its work for the fiscal year. Additionally, the Senate on Friday passed the original public schools maintenance budget.
The most politically valuable moves — passing the school modernization bill and getting the funds for Idaho Launch out of the House — mark major progress in the session. However, there are still plenty of outstanding issues to iron out before the chambers agree to adjourn.
The State Affairs Committee scheduled its vote on the latest library bill for Monday morning.
AYE (23) – Anthon, Bernt, Bjerke, Burtenshaw, Cook, Grow, Harris, Hart, Hartgen, Herndon, Just, Lakey, Lee, Lent, Nichols, Okuniewicz, Ricks, Ruchti, Schroeder, Taylor, Toews, VanOrden, Ward-Engelking
NAY (11) – Adams, Carlson, Den Hartog, Foreman, Guthrie, Lenney, Rabe, Semmelroth, Trakel, Wintrow, Zuiderveld
Logan Finney | Associate Producer
Logan Finney is a North Idaho native with a passion for media production and boring government meetings. He grew up skiing, hunting and hiking in the mountains of Bonner County and has maintained a lifelong interest in the state’s geography, history and politics. Logan joined the Idaho Reports team in 2020 as a legislative session intern and stayed to cover the COVID-19 pandemic. He was hired as an associate producer in 2021 and they haven’t been able to get rid of him since.