The Idaho Legislature convenes January 9th. In advance of the session, we interviewed several legislative leaders and asked them about Idaho’s economy and what the state could be doing to boost growth and job creation.
Rep. Maxine Bell (R-Jerome) is co-chairman of the Joint Finance Appropriations Committee. JFAC is the committee that crafts the annual state budget. A retired farmer and school librarian, Bell was first elected to the Idaho House in 1988.
Q: Are you approaching the session with a strong sense of what the main issues and discussions will be?
A: I think, as a rule, the issues come along once you get there and people start talking to each other about what they’ve learned out in their districts. And then if you look at some of the issues that failed last year or didn’t come to fruition, you can almost assume that some will be back.
I know the Chambers of Commerce are looking at some tax changes, some tax issues, and I don’t know how far they’ll push those. But the overriding issue – when there’s lots of money, or when there’s not enough – is always the budget. Trying to separate the needs from the wants and apportion out the limited resources, that will be the overriding issue.
Q: In terms of tax changes, what is being discussed?
A: I hesitate to speak for the Chambers of Commerce, but I would assume that — part of keeping the economy growing is to make sure that our corporate tax is in reason with the states around us. I know many of us feel that our corporate tax should be somewhat lower, but we’re not in a position to lower the taxes at this point. Most of the businesses, as I understand it, in Idaho, are small enough that they file as income tax, not corporate tax. So it could be that as they look into that issue, perhaps a better way will be to drop the tax rate, period. That would help smaller businesses.
I remember those years when Micron was the biggest corporate taxpayer, and when they sneezed, the State of Idaho got pneumonia. You have to be very cautious and careful that you make a climate that’s conducive. A good solid tax base and a good fair tax base for businesses to come in, because we have a good workforce.
Q: At the same time, the state doesn’t want to give so much that it harms itself by decreasing tax revenue.
A: That is true.
Q: When you say, “dropping the tax rate” do you mean “lowering the income tax rate”?
A: That’s right. Ours is medium high, and a little high for the states around us. The more money you can leave in people’s pockets, the healthier your economy is because they have an opportunity, then, to choose to send their children to college, or to improve and enlarge their businesses. It just makes sense. You don’t take away from people their buying power, because that’s where the economic growth is in the state.
The last time we dropped the rate, the sad thing was the year we dropped the rate was the year that we had the first of the economic busts. We flip-flopped $500 million that year. And part of it was because we dropped the rate when we thought everything was booming and the bubble burst and we got a double hit.
Q: In terms of tax-related issues, what else do you expect?
A: Well, Rev and Tax is a very powerful committee, and an astute group of people. That’s where any tax issues will have to begin. You might keep an eye on perhaps the cigarette tax. You can possibly blame 30 percent of everything we put into Medicaid on illnesses related to smoking, to tobacco use, but the other side of that coin is that you raise taxes on a small group of people to pay for general government.
Q: In your mind, what can the legislature do to create jobs?
A: I think we are in the best position we could ever be in, in an economy that is not creating jobs. We have an educated workforce, a good work ethic, and a stable and fair tax system. And we are not in debt. Our budget is balanced. That’s the best the legislature can do. The next job goes, obviously, to the governor, and he’s good at that — finding markets. Then you have the community colleges, and you have a whole network in all the counties of counsels and people helping from the Department of Labor and the Department of Commerce helping to identify places where they can talk to folks and bring them in. But — the whole world is in an economic downturn. We brought Chobani yogurt in, and we’re just getting that set up and then we learn Simplot is closing a plant in the Treasure Valley, because they’re retooling and modernizing.
There are so many people out in the communities that work on this activity. For my part, as a legislator, I just have to make sure I don’t put any undue regulations on them, difficult taxing situations, and try to do the best I can with education funding.
Q: In other words, you think the legislature is doing what it can do.
A: I think we’re doing what we can do. I think as we continue to find more resources for education as the economy strengthens, and we backfill some of those places where we’ve not been able to have adequate funding, then we will be a good partner in that, yes.
The businesses I’ve seen come into my area – they didn’t just drop here. Someone went out and recruited them and sold the place to them and they were able to get them here, and that doesn’t just happen.
Q: You mentioned reinstating funding to areas like education that have seen cuts. In your mind, what are the really key areas that the legislature should address, assuming there will be more funding available in coming years?
A: I would tell you, honestly, there are places that will never be the same. This is a different-looking government right now, a different-looking economy. There may be some places in the budget that simply will not be there. But of course there’s always growth in K-12, and in K-12 we’re looking at increasing technology. That will continue to be an expense for us as we go forth.
Q: When you say that the allocation or funding for some areas has permanently shifted, what are those areas, in your mind?
A: I can’t come up with anything specific. I just think that those people in our agencies, our government agencies, have restructured the way they do business, to a certain degree. Maybe they’ve done things differently and with fewer employees. Maybe they’ve stopped doing some of the things that were not in code. Therefore we will never go back and replace funding for that structure that is no longer there. I think the structure has changed, because it had to change with the difference in funding.
Q: In terms of the budgeting process, what are your expectations? Last year the governor based his budget on a fairly austere revenue projection. Is that what you expect again this year?
A: Yes. We’re down. The fiscal year 2012 is five months in. And four of five have been under revenue expectations. That’s a trend I don’t like. It doesn’t look good. It doesn’t look promising. With that in mind, we didn’t promise anything we couldn’t afford, so the governor has not had to do any holdback. But at this point I don’t see anything being refilled. I don’t see anything being added onto any of the agencies. I just see a very flat, basic, do-the-best-you-can-with-what-you-have budget coming out.
Q: To those who might be hoping for a reinstatement of certain Medicaid services or education funding, would you say, “That’s probably not going to happen this year”?
A: I can’t see it at this point. What we do in February is we start budgeting, and that’s 18 months out. That’s for 2013. And that starts the first day of July. And you can see that without a crystal ball and with the activity around us, with the states that are in trouble and the countries that are in trouble around us, you just have to assume that we are not out of this depression or this downturn that we have been in.
Q: And you would say that leaves the Legislature with relatively few options?
A: I think so. You can’t raise taxes on people that are already not able to pay taxes. I’m very concerned about the folks out there who can’t even pay their own mortgages, or keep shoes on their own children.
It’s a matter of people not being able to pay taxes, and not being able to buy. So that’s why your sales tax is way down. You can imagine that people are not able to buy what they would like to because they are trying to just simply pay their bills.
The major focus will be putting together a budget so the state can continue to run: taking care of the most extreme issues, and making sure you don’t put in any false expectations anyplace, and making sure you don’t leave anything that will harm anybody. And I just hope that the people who are out trying to get the economy going can keep trying to find jobs for people who don’t have them. There’s no silver bullet. It’s just pretty simple math.
This interview has been edited and shortened.