Rebuttal
May 27th, 2008Read the Original Ads placed in the Coeur d’Alene Press
House Bill 657 of 2008 was the GARVEE highway financing bill. Historically, Idaho has had a “pay as you go” policy with financing the construction of new highways. The GARVEE program uses debt financing to pay for new highways, where the revenue to pay off the debt is future federal highway aid dollars.
The Idaho GARVEE program is now in its third year. At the time of the 2008 session, when we voted on HB 657, the Idaho Transportation Department was 14 months behind spending their GARVEE authorized funds out of 24 months of funding. In other words, out of 24 months of funding, the state had only spent 10 months worth of funds.
GARVEE bonds are tax exempt bonds. According to IRS rules, tax exempt bonds can not be use for any kind of “for profit” ventures. But, since Idaho was spending its GARVEE bond revenue so slowly, the state had a lot of bond revenue sitting in the bank earning interest, and that interest income was considered “profit” by the IRS. Evidently we earned too much interest and the IRS fined the state of Idaho for an amount nearly equal to the interest earned. If the state of Idaho does not spend this bond revenue quickly, the IRS will impose another fine, and might even declare the GARVEE bonds to no longer be tax exempt. This will create a huge problem for the state of Idaho and the GARVEE program with the New York City banking community.
Consequently, I voted “no” on HB 657 because we were 14 months behind spending the GARVEE money and could/should have skipped a year.
We also have a performance audit scheduled for the Transportation Department for 2008. I believe having the results of the audit back before we authorize more debt financing for highway construction would be good management, especially since there have been a few scandals associated with the GARVEE program.
House Bill 121 of the 2007 legislative session was a bill to ban smoking from bowling alleys. I voted against this bill as I saw it as a property rights issue. There is no reason that commercial enterprises in the private sector can not regulate the behavior of their patrons. And patrons can vote with their feet if they don’t like the policies and practices of any particular private sector business enterprise.
Personally I hate cigarette smoke. No one in my immediate family smokes. My father ran the 10,000 meters in the 1956 Olympics and held the American record for the 5,000 meters. My brother competed in the NCAA Track and Field nationals twice in the 3,000 meter steeple chase. And I came within 6 seconds of the American record for a cycling 10 mile time trial. The last thing I want to have to put up with is cigarette smoke.
However, this is a property rights issue, and not an issue for the government to delve into.
In my opinion House Bill 121 deals has a “police state” mentality behind it. I fully supported Governor Otter’s veto message which is found below:
House Bill 503 of the 2008 session would provide tax payer funded college scholarships for high school students that agree to remain drug and alcohol free. These high school students would have submit to random drug tests during the last 2 years of their time in high school. However, there is no tracking of whether or not the students receiving the scholarships remain drug and alcohol free during their time in college. Bills similar to this have been proposed in earlier sessions and have always failed.
House Bill 630 of the 2006 session is a legislator “feel good” bill that is un-needed. It is a bill that criminalizes threatening statements between people on school grounds including students. With HB 630, making a statement between students like “I am going to blow your head off” is a criminal act.
The United States leads the world in incarcerating its people at 712 persons per 100,000 in population. Russia is second at 568 people in prison per 100,000. Most of Europe and Canada falls in the range of 100 to 150 persons in prison per 100,000. House Bill 630 follows a misguided assumption that every problem can be solved by making it a crime and putting people in prison. We owe it to our students to try harder to solve problems before we call law enforcement and have them arrested.
House Bill 680 – Community Infrastructure Districts, was a bill that should have been defeated. We will be revisiting this legislation many times in the future as it provides opportunities for abuse. It reminds me of the Urban Renewal legislation that was passed in the 1980’s that we are struggling to fix today.
The legislation is said to provide a way for development to pay for itself. In reality, it allows a real estate developer to transfer his development costs to the property taxpayers. House Bill 680 is special interest legislation that was heavily promoted by lobbyists. This 20 page bill is very complex and has some major flaws.
The bill allows for a taxing district to be formed by only one landowner. The taxing district can sell bonds (a form of debt financing) to be paid back by multiple future land owners after the original land owner has subdivided the property. It transfers from the developer the financial burden of developing the infrastructure of his development to the property taxpayers. It will allow developers to get into and out of a real estate development with minimal investment. The developers love this bill, the property tax payers owners are not going to hate it.
We already have a problem in our country with what I call a “culture of debt.” The housing bubble created excessive inflation in housing costs and was caused by too many reckless borrowing schemes. Now that the housing bubble has turned into a bust, the resulting credit crunch threatens the entire economy and banking system. House Bill 680 is just yet another scheme to add to the consumer’s out of control debt burden.
Another problem with this CID scheme is that it requires county commissioners or city council members to be the board members of the CID. These public servants are already overburdened with too many meetings and issues to deal with. It will be difficult for them to be adequate watchdogs over the workings of the CID.
Once established, the CID will be able to sell future bonds without a vote of the property owners. And the use of these bond revenues does not have to be within the CID!! This is a huge departure from the long established policy in Idaho that property owners get to vote on whether or not their property will be collateral for public debt.
There was another bill in the 2008 session that allows for financing of community infrastructure that was more worthy of support, that being HB 655. HB 655 would finance community infrastructure with newly developed sales tax revenue sources from new commercial development. The funds could be spent on infrastructure improvements some distance from the commercial establishment generating the sales tax. HB 655 pay-as-you-go scheme accomplishes the same result as HB 680 without using debt. I supported HB 655.
What the sponsors will tell you HB 588 does is to give all Idahoans an income tax credit for the money they spend on sales tax on food. The credit starts out at $50 and grows to $100 in 5 years. Those who don’t make enough “income” to file an income tax return will receive their credit from the state in the form of a check that the state will mail to them assuming that the proper paperwork was submitted.
House Bill 588 – the Grocery Tax Credit Bill – was the bill I worked on the hardest in the 2008 session. My goal was to kill it as it was and is a terrible bill. We were successful in killing its predecessor in committee, HB 439, which was even worse.
The sponsors will tell you that the advantages of keeping the tax on food is that we get to collect “free sales tax” revenue from out of state tourists, illegal aliens and out of state business travelers. However, the pie in the sky claims of the sponsors were never supported by any research or data. The sponsors claims were based on “off the top of my head” assumption of a single economist.
I did the research of the expected impacts of the bill and the results were vastly different than the sponsor’s claims. The “free money” is only half of what the bill sponsor’s claim it is. And the sponsors never even looked at the entitlement that the bill would create for the state.
Idaho has approximately 35,000 illegal aliens. (Federation for American Immigration Reform) Much of their income is sent back to Mexico, and what they are left with here is about $18,000 per year per household. (Pew Hispanic Center, Wash. D.C.) According to the BLS (Bureau of Labor Statistics) such a household will spend $2,476 on food a year. With a household size of 3.2 persons, the 10,938 illegal alien households will yield $1,625,000 in sales tax revenue to the state of Idaho.
According to the IRS, many illegal aliens file for the earned income tax credit and receive checks from the federal government for about $3,200 per household. We will have the same problem at the state level as HB 588 makes no provision as to how to police this situation. This bill will result in the state of Idaho sending $100 per person checks to illegal aliens to reimburse them for their food sales tax expenses.
According to the Idaho Department of Commerce, Idaho has 6,830,000 business and tourist overnight stays per year. Of these 4% stay in resorts, 12% stay in campgrounds, 40% stay with friends, and 44% stay in hotels, motels and B & B’s. Plus there are 7.5 million out of state day visits. Based on data from consumer spending habits, these visitors will spend $106 million on grocery store food yielding sales tax to the state of Idaho of $6,362,000.
But, HB 588 created a grocery tax credit entitlement for about 205,000 Idahoans who don’t make enough “income” to file a tax return. These Idahoan will get $100 or $120 per year check from the state to reimburse them for their food tax. (There is a lot of income tax complexity to this bill in order to figure out exactly who gets how much.) In year 5 this will cost the state $21,000,000 per year.
The “free sales tax revenue” claim of the sponsors was in reality a government give-a-way. House Bill 588 created an entitlement and has the state upside down on the legislation for $21 – 1.6 – 6.4 = $13 million dollars.
So the sponsor’s claims were unsubstantiated smoke and mirrors for which they did not spend even a minute trying to actually figure out. All their time was spend on backroom deals on how they were going to get their bill heard while other alternative grocery tax relief bills were bottled up.
In 2007 I authored HB 82 which would have taken the sales tax off of food at the cash register. There would have been no forms to fill out, nor income tax credits to claim, and no money held by the government to be doled out later. House Bill 82 was tax simplification. I re-introduced HB 82 in the 2008 session, but never got a hearing on the bill.
Still unaddressed by my analysis is the fact that all the states surrounding Idaho have no sales tax on food, with the exception of Utah which taxes food at 2.75%. About 30% of the population of Idaho lives within 35 miles of a large out-of-state grocery store. Based on conversations I have had with Idaho grocery store owners in border areas, I estimate that Idahoans buy approximately $137 million of groceries out of state each year. Idaho is losing jobs and corporate income tax revenue because we tax our groceries. Of the 50 states, 34 do not tax food at all.
House Bill 588 was a dumb bill. We need to take the tax off of food at the cash register and stop trying to do social engineering with the income tax code.