From the governor's office
BOISE – Governor Dirk Kempthorne last week gave Idaho lawmakers his blueprint for maintaining a fiscally restrained, multi-year perspective on the Idaho state budget, while detailing a number of progressive initiatives that will prepare Idaho for a prosperous future.
In a combined State of the State and Budget Address to a joint session of the 58th Idaho Legislature, Governor Kempthorne invoked the spirit and vision behind Lewis and Clark’s exploration of central Idaho’s rugged mountains and canyons 200 years ago to highlight his plans for Idaho’s future.
“They opened up the West,” Kempthorne said of the celebrated explorers, “and along the way, they left a legacy that current generations study and long to experience. And what is the state of our state 200 years after this magnificent journey? Tonight I affirm to you that the state of our state is strong, and Idaho is poised for new and great opportunities.”
During his prime-time televised address in the House Chambers, Governor Kempthorne said his $2.2 billion budget – a 6 percent increase in regular appropriations over last year – is “a conservative spending plan” that reflects his commitment that the temporary one cent sales tax increase adopted in 2003 will sunset this summer, as planned.
“I’ve heard some folks say, ‘There’s never been a temporary tax increase’,” Kempthorne said. “Well, I have news for them. On June 30th, the temporary sales tax will expire. It’s a matter of credibility. We made a promise to the people of Idaho and I intend to keep it.”
However, Governor Kempthorne pointed out to lawmakers that the sales tax sunset may lead to a budget shortfall one year from now, despite a projected $117 million budget surplus at the end of the current budget year. The problem is the result of a “structural problem in our budgeting process that relies too much on one-time money,” he said. To address the issue, Governor Kempthorne cautioned that lawmakers should “be fully prepared to have me come back next year with suggestions on reforms and a simplification of our tax structure.”
Such a move, “depends on how much we stimulate the state’s economy now.”
To do that, Governor Kempthorne presented an aggressive, forward-looking economic stimulus proposal that includes, among other things, an “extraordinary opportunity to enhance Idaho’s highways, improve safety and expand commerce” and “a progressive tax incentive package…that will grab the attention of Fortune 500 companies around the country.”
Governor Kempthorne’s “Connecting Idaho” proposal is an expansive transportation infrastructure improvement plan that “includes long-awaited and much anticipated safety and highway improvements to each and every region of this state.”
“Over the course of the next ten years, we’re going to build three decades’ worth of highways,” Kempthorne said. “I’m proposing we invest $1.6 billion, and we do it now. It’s time we stop talking and start building.”
Governor Kempthorne proposed using GARVEE (Grant Anticipation Revenue Vehicle) bonds – or selling bonds using future federal transportation payments to the state as collateral – to finance the proposal. This funding tool has already been successfully utilized around the country and does not affect the state’s general fund or bond rating.
“With my vision for ‘Connecting Idaho,’ all of Idaho’s 44 counties will benefit,” Kempthorne said. “And we will realize that north, south, east and west are more than just compass points. We will unite Idaho. Are we not one Idaho?”
The second major piece of Governor Kempthorne’s economic stimulus package is a tax incentive “designed to retain and attract corporate headquarters in Idaho.”
To qualify for the incentive, companies will need to create at least 500 new jobs in Idaho that have a minimum starting salary of at least $50,000 year -- plus benefits; invest at least $50 million in a new office building or plant; and, they must do this all within a 5-year time period.
Governor Kempthorne told lawmakers that those companies “willing to make these kinds of significant investments, and create these types of jobs in Idaho” should enjoy a doubling of the Investment Tax Credit to six percent for a five-year period; the removal of the 50 percent limit on the state’s existing Investment Tax Credit; an enhanced Jobs Tax Credit; a new income tax credit for Real Property Improvement; and property tax abatement on qualified new construction as well as sales tax abatement on construction materials.
“Idaho is home to a number of Fortune 500 companies, but in a time of corporate mergers and consolidations, we can never take that for granted,” Kempthorne said. “This is an investment that will pay for itself with new, high-paying jobs and increased tax revenue to the state.”
As part of his FY2006 budget proposal, Governor Kempthorne recommended a $999 million public school budget – another increase in funding for K-12 public schools.
“We’re hovering at our first $1 billion budget for public schools in Idaho,” Kempthorne said.
Governor Kempthorne’s budget provides for a one-percent salary increase for state employees to recognize their contributions “in making Idaho a great place to live, work and raise a family.” The Governor’s budget also includes full funding for the increased employer costs of state employee health insurance plan, which was recently redesigned to address the effects of health care inflation.
With accelerating Medicaid costs causing havoc in state budgets all across the nation – in some states Medicaid spending is starting to eclipse public school spending – Governor Kempthorne pointed to successful reforms in Idaho that have eased the burden, with minimal impact on citizens.
“And what have been the results? More than $150 million in savings over the past two and a half years and better care for patients,” Kempthorne said. “The Medicaid budget that I have submitted to you tonight anticipates that we will find additional ways to contain rising costs.”
Despite Idaho’s streamlining, Medicaid costs continue to rise. Kempthorne cautioned lawmakers that “absent federal reforms in the Medicaid system, or drastic and even devastating reductions in vital services, we will have to revisit this year’s Medicaid budget next session. There is money in reserve accounts if we need to cover those costs.”
Governor Kempthorne also discussed two major water issues facing lawmakers during the coming legislative session: the Snake River Basin Adjudication agreement with the federal government and the Nez Perce Tribe, and the issues facing groundwater users on the Eastern Snake River Plain.
Governor Kempthorne pointed out that the SRBA, which determines water rights throughout much of Idaho, will be the largest adjudication of water rights ever in the United States when completed.
“When I first took office, I made it clear that I would not support any negotiations in the SRBA involving the Nez Perce Tribe and the water users that did not protect our state sovereignty and existing water rights,” Kempthorne said. “The historic agreement we announced last May in Idaho with Interior Secretary Gale Norton affirms those principals. Thanks to the work of our outstanding Congressional delegation, Congress and the President have now approved our landmark agreement. Millions in federal dollars have been set aside for Idaho, and are waiting for this Legislature to now act.
“This is a solution reached by water users – these are their water rights. Listen to them and ratify this agreement.”
Governor Kempthorne also praised legislators on their efforts to find a resolution to “another pressing water issue – the Eastern Snake Plain Aquifer – a problem that has been decades in the making.”
The Governor reminded lawmakers that he has directed the Department of Water Resources to send out requests for proposals to find willing sellers for the 60,000-acre feet necessary to meet the requirements of the SRBA.
“This is a complex problem that has confronted Idaho water users since the 1950’s,” Kempthorne said. “By continuing our collaborative efforts and working together, we will find a solution.”
Governor Kempthorne told lawmakers that the deteriorating condition of the Idaho State Capitol Building, including a severe lack of modern safety requirements, must be addressed – 100 years after the 1905 construction on the landmark building began. He also proposed addressing the question what to do with the former Ada County Courthouse across the street from the Statehouse.
“In good conscience, we can’t put this off
any longer,” Kempthorne said. “I’m proposing we combine
those two projects, and by continuing the current rate on the cigarette
tax and redirecting those resources to the Permanent Building Fund,
we’ll be able to pay for them.”
“The centerpiece of the park’s renaissance is a new multi-use building that will house park offices, meeting rooms, public common areas and 30 guest rooms,” Kempthorne said.
“This rustic lodge, which will be built among soaring Ponderosa pines, will provide Idahoans with a new and special place to enjoy and experience the beauty of Ponderosa Park.”
Governor Kempthorne reminded lawmakers and the citizens of Idaho about the sacrifices being made by Idahoans serving in the military in Iraq and other theaters in the War on Terror.
“Their families’ needs must become our needs,” Kempthorne said. “If we take care of the family, then the soldier can take care of their mission, until the reunion occurs. That is our responsibility…Let’s do our part for the families of these brave soldiers, and let’s pray for their safe return.”
In conclusion, Governor Kempthorne told lawmakers about
the opportunities facing them:
“When you look at your budget books, you’ll see that on the cover we depict these opportunities – Lewis and Clark in 1805, the construction of the State Capitol in 1905, and our troops overseas in 2005.
“You have it within your grasp to be regarded as one of the greatest legislative sessions in the history of the state. If you’re bold and if you’re ready to aggressively reach for our future, all the ingredients are here. The opportunities are waiting for us.”