Batt Speech Focuses On ‘Opportunities’ Income Tax, Election Finance Reform Highlight State Of The State Address

Gov. Phil Batt, convinced the policies of his first two years have checked the growth of state government, proposed on Monday eliminating the multimillion-dollar marriage penalty from the state income tax and limiting campaign contributions.

“We face a wide variety of problems but unlimited opportunities,” the governor said in his State of the State address to the opening session of the 54th Legislature.

In his 40-minute speech to the most Republican Legislature in the nation, the GOP chief executive called for cooperation among the state’s diverse interests to continue improving the education system in a time of slower economic growth.

He also asked legislators to assure job training and opportunities for future generations and resolve persisting environmental questions.

“We need to find those opportunities without unduly impacting our incomparable quality of life,” Batt declared.

“We are growing rapidly and we must provide jobs for our young people so that they do not have to move out as they did 20 years ago,” he said. “We will build our future in our schools, in job training, and in economic development initiatives.”

Batt endorsed the 1996 proposal of Rep. Dan Mader, R-Lewiston, to eliminate the so-called income tax marriage penalty by ending the $1,250 discrepancy between the standard deduction for single taxpayers and for married couples.

The price tag was $11.5 million to fully implement that change, and the bill failed because the state could not afford the lost revenue.

But Batt backed the idea only on the condition that income tax rates, already among the highest in the nation, be raised to offset the tax break.

“This can only add to the already attractive benefits of entering into marriage,” he said, promising proposals on property and other general taxes in his budget message on Wednesday.

A month ago, he said, that limited state revenues would preclude any major property tax cuts.

House Speaker Michael Simpson, who described Batt’s speech as “headed in the direction I’d like to go,” agreed with the governor’s logic but withheld judgment until seeing exactly how the tax rates would be manipulated to pay for the cut.

The administration refused on Monday to detail its plans for modifying the tax rates. If only the top rate of 8.2 percent, which is paid by just 70,000 of the state’s 440,000 tax filers, was changed, it would have to be raised to 8.7 percent to finance the tax break. A substantially smaller increase would be needed if other rates in Idaho’s progressive system were changed as well.

But whichever way the administration handles the rates, single taxpayers, who file 40 percent of the returns, and taxpayers who itemize their deduction will subsidize the tax cut.

Batt’s campaign finance reform package includes a ban on foreign and out-of-state contributions, a general contribution limit of $5,000 in statewide candidate and issue campaigns and $1,000 in legislative and local races, and some kind of restriction on so-called independent expenditures that were rampant during 1996.

“I will not accept any one-sided solutions,” Batt told lawmakers.

While hailing the success of the welfare reform package his special task force gave lawmakers a year ago, Batt said he wanted more time to evaluate the recommendations a similar task force made this fall on Medicaid reform before submitting legislation on that front.

But he refused to embrace the congressional decision to withhold food stamps and Medicaid from poor legal aliens or to deny education to noncitizen children.

“I do not think it is in our best interest,” he said. “There can be no benefit to Idaho society to have within its borders children declared to be pariahs - uneducated, unhealthy, and shunned.”

And the governor criticized the Clinton administration’s Justice Department for refusing to crack down on what he contends are illegal gambling devices at reservation bingo halls. He told lawmakers it was time for them to decide exactly where the state stands on gambling.

“Do we think it is OK to shut our eyes to casino-type gambling on reservations?” he asked. “If so, do we want to afford the same opportunity to other Idahoans? I do not believe that we can or should maintain a double standard. Either we condone video poker and slot machines in Idaho, or we do not.”