Statehouse roundup, 3.27.17: Grocery tax repeal passes House

Amidst concerns over fiscal responsibility — and the fate of funding for K-12 — the House voted to eliminate the sales tax on groceries late Monday afternoon.

The 51-19 House vote comes as lawmakers hope to wrap up business for the 2017 session, perhaps as early as Tuesday.

While most work on education issues has been finished for the year, lawmakers have spent the session’s endgame trying to craft consensus on tax and transportation issues. But education, and K-12 funding, loomed over Monday’s tax and transportation debates.

In the session’s final days, a heavily rewritten House Bill 67 has emerged as the Legislature’s last and likeliest prospect for tax cuts. In its original form, HB 67 was a bill to to reduce income tax rates. The Senate overhauled the bill — removing all references to income tax relief and eliminating the sales tax on groceries. The Senate passed the repeal Wednesday on a bipartisan 25-10 vote.

The state would cover most of the costs of grocery tax repeal by eliminating an income tax credit on groceries — now worth $100 per person for most Idahoans. Even so, the repeal could cost an estimated $79 million a year.

The repeal would add up to a $52.8 million tax cut, starting on June 1, 2018. The state would also provide local governments an increased share of sales tax revenue, to the tune of $26.2 million a year. But the actual costs would probably come in below these estimates, said Sen. Clifford Bayer, R-Meridian, the architect of the grocery tax repeal.

The sticker price was a recurring point in Monday afternoon’s House floor debate.

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“An $80 million hit to the general fund has got to come from somewhere,” said Rep. Fred Wood, R-Burley, one of just 12 House Republicans to oppose the repeal.

Citing the $695 million in school bond issues and levies voters passed on March 14,  Rep. John Gannon said the repeal cuts into a sales tax base that is supposed to support K-12. “I have to vote for fiscal responsibility,” said Gannon, D-Boise.

Supporters said it was inappropriate — and even immoral — to expect Idahoans to pay a tax on a staple. “This is a taxation on survival,” said Rep. Greg Chaney, R-Caldwell.

Education groups have stayed on the sideline in the grocery tax debate.

Lobbyists for three education groups were in the audience Monday afternoon, as the House Revenue and Taxation Committee unanimously endorsed the repeal, but none of the three testified. The Idaho School Boards Association, the Idaho Education Association and the Idaho Association of School Administrators have not taken a formal position on the grocery tax bill.

Monday’s action came at a critical juncture, as lawmakers hope to adjourn the 2017 session in the next couple of days. Fittingly, Revenue and Taxation’s hearing drew a crowd of lobbyists, and nearly a dozen lawmakers who sat in the audience as spectators. Also attending was a representative of Gov. Butch Otter, who has voiced his opposition to the repeal.

The repeal also passed the House over the opposition of several prominent Republicans: House Speaker Scott Bedke of Oakley; Joint Finance-Appropriations Committee co-chair Maxine Bell of Jerome; and Education Committee chair Julie VanOrden of Pingree.

Another transportation bill emerges

The Senate made another attempt to unlock one of the session’s last unresolved issues: transportation funding.

The latest version of a transportation plan, Senate Bill 1206, would authorize up to $300 million in highway bonding, diverts $15 million of sales tax money into highway projects — and extends the so-called “surplus eliminator” that moves unspent state general fund dollars into transportation.

The bill moved quickly Monday. The Judiciary and Rules Committee held a brief midafternoon hearing to introduce the bill. Senate leadership quickly sent it to the Transportation Committee; after a late afternoon hearing, the bill survived on a 5-4 vote. The full Senate could vote on the bill Tuesday morning.

In Senate Transportation, replacement lawmaker and Boise school trustee Troy Rohn questioned the $15 million sales tax diversion. Rohn — who is sitting in for Sen. Cherie Buckner-Webb, D-Boise — said the shift jeopardizes funding for the career ladder and master teacher premiums, two initiatives to boost Idaho teacher pay.

Sen. Patti Anne Lodge, R-Huston, pushed for the transportation package — saying the repairs are essential to the state’s economy, and are, in turn, essential to preserving transportation funding.

In the aftermath of the severe winter of 2017, highway repair has emerged as a linchpin to adjournment. Last week, House members from Lodge’s Canyon County gathered en masse in the Statehouse media room, and said they will not leave for the year until the Legislature passes a highway bill.

Adult scholarship bill on hold

In the legislative endgame, some bills get hung up in the last-minute maneuvering between the two houses and the governor.

One such bill is Otter’s House Bill 190 to establish an “adult completer” scholarship for people who return to college after dropping out. The bill has been awaiting a vote on the House floor, and on Monday, House members agreed to leave the bill on their calendar.

Opponents say the $3 million scholarship essentially rewards college dropouts. But supporters say the scholarship is one more way to boost the state’s languid college graduation numbers, and earlier this month, Otter issued a guest opinion urging lawmakers to act. “This legislation is about investing in Idaho’s people and our economy.”

Last-minute trial balloons

Some of Monday’s action was symbolic.

In a hastily arranged midmorning meeting, the House Ways and Means Committee voted to introduce three bills — including two that won’t go anywhere in the final days of the session.

Rep. Ron Nate, R-Rexburg, unveiled a new version of a bill to allow local governments to choose to publish legal notices online, instead of publishing in newspapers.

Rep. John McCrostie, D-Garden City, presented a constitutional amendment to drop the required reading of bills on the House and Senate floors. Normally, lawmakers agree to waive the reading in order to expedite floor proceedings. But on several occasions this session, maverick conservatives have forced clerks to read bills on the floor in protest — and in past sessions, Democrats have used the same maneuver to bring the Legislature to a standstill.

Neither proposal is expected to get a further hearing.

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