Otter urges school funding hike, tax cuts in State of State message

BOISE – Idaho Gov. Butch Otter called for boosts to school funding and tax cuts for businesses and top earners in his State of the State message to a joint session of the Legislature on Monday, drawing enthusiastic applause from lawmakers.

But the chairman of the Senate tax committee, Sen. Jeff Siddoway, R-Terreton, wasn’t convinced. “Quite frankly, we saw those same proposals last year as far as tax cuts,” Siddoway said after Otter’s talk. “But I’m dead serious about fixing education. … Then we’ll be able to see if there’s going to be enough revenue left over to do any tax reductions. I’m pretty skeptical.”

Siddoway said if the House passes Otter’s proposed cuts in the top personal and corporate income tax rates, “It would probably end up the same place the last one did.” That’s in Siddoway’s desk drawer, where it died without ever being scheduled for a Senate hearing.

Otter proposed a 7.4 percent boost in school funding next year, finally bringing Idaho’s school budget above the 2009 dollar level after years of cuts; the plan would bring funding to $57 million above that year’s school budget. But much of the increase is earmarked for proposals from Otter’s education improvement task force, including a new teacher career ladder and salary increases, additional investments in professional development for teachers and school technology. Idaho’s minimum teacher salary would rise from $31,750 this year to $32,800 next year under the plan.

Operational funds per classroom for school districts, at $23,660, would remain below the 2009 level of $25,696, and that’s not considering inflation. But Otter said, “We’re getting a whole lot closer than we’ve been for a long time.”

He noted that he’s proposing a $20 million boost to operational funds and got $35 million of those funds restored last year; that’s ahead of the schedule set by his task force, which recommended restoring the slashed school operations funds back up to 2009 levels over five years, at $16.5 million a year.

“It probably is the largest increase that I’ve ever offered for education, but I think it’s warranted and I think I can defend that,” Otter said.

He also called for 3 percent merit raises for state employees; proposed beefing up Idaho’s rainy-day savings funds with an additional $4.1 million; and called for rebidding the voided contract for a statewide high school broadband network, while pouring up to $9 million into keeping it going for the next year. Otter proposed one more new behavioral health crisis center, after one was built in Idaho Falls last year, without specifying where it would go, and asked lawmakers to hold hearings on the findings of his Medicaid redesign task force, which is recommending reforming and expanding Idaho’s Medicaid program.

Overall, Otter proposed a 5.2 percent increase in state spending next year. His economists are predicting state revenue will grow by 5.5 percent, so the budget sticks to Otter’s pledge to grow overall state spending at a slower rate than the growth in the economy.

Sen. Steve Vick, R-Dalton Gardens, wasn’t impressed with the speech. “It didn’t seem like, to me, to be a very conservative message,” Vick said. “Big increases in spending and very, very small tax cuts. I do like the fact that he would like to reduce our income tax rates, but we’re still going to be uncompetitive with our neighboring states.”

Otter proposed cutting Idaho’s top income tax rates for individuals and corporations from 7.4 percent to 6.9 percent over five years, dropping the rate a tenth of a percent each year. Under the plan, the top rate would drop to 7.3 percent next year, at a cost to the state general fund of $17.8 million.

“This effort will provide relief to 44 percent of taxpayers this year and up to 51 percent of taxpayers by 2018,” the governor told lawmakers.

House Speaker Scott Bedke, R-Oakley, said, “Obviously I think that there’s a pretty receptive audience in the House.”

House Majority Leader Mike Moyle, R-Star, said, “I’m glad he’s talking about it. Everyone says Siddoway’s not going to hear it, but there’s a lot of people that want it. The session’s young.”

Siddoway said, “I represent a lot of small school districts. … We can’t keep our teachers. It’s 50 percent and 70 percent new teachers, year in and year out.”

If Idaho needs to raise starting teacher pay to $40,000 – the aim of the career ladder plan – it shouldn’t phase the move in over five or six years, Siddoway said, while considering tax cuts now. “I’m trying to do the right thing,” he said.

Otter called for improving Idaho’s transportation infrastructure, calling the issue the “elephant in the room,” but made no specific proposals, instead saying he wants ideas from lawmakers. He did say he wouldn’t consider any move to shift money away from the general fund – the funding source for schools, higher education, health and welfare and other needs – to the transportation system, which is funded entirely from gas taxes, federal funds and other dedicated funding sources. That disappointed some lawmakers who want to shift sales tax proceeds from tires and car parts to road work.

Rep. Sage Dixon, R-Ponderay, said, “I would like him to be a little more open to different funding options on transportation. Having more options is always good.”

New state schools Superintendent Sherri Ybarra issued a statement saying she was “thrilled” with the governor’s education budget proposal. “This continues the trajectory path for increased funding for Idaho’s students,” she said.