Despite a slow start and a healthy dose of political posturing, the 2017 Idaho legislative session has hit full stride and they are finally getting to “the work of the peoples’ business,” a commonly-spoken phrase at the Capitol. As is tradition, a majority of the work accomplished during the first month centered around the Legislature’s Joint Finance and Appropriations Committee and hearings on the Governor’s budget recommendations and state agency and department requests. Additionally, House and Senate Committees have been busy with hearings on relevant state agency and department negotiated rulemaking (addressed in more detail below). Because the Governor has predicted a shorter session, and legislative leadership has set a goal of adjourning near the end of March, we are starting to see committee agendas fill up with legislative proposals that are sure to captivate both the media and politicos at the Statehouse.

Below are some of the higher profile issues at the Legislature, including those that are sure to dominate the remainder of the legislative session.

JFAC Budget Hearings and Negotiated Rulemaking: During every legislative session, state agencies and departments give their budget presentations and requests to the Legislature’s Joint Finance and Appropriations Committee, widely accepted as the Legislature’s most powerful committee due to its ability to control the State’s purse strings. To view the highlights of the Governor’s budget recommendations please click here. In addition to budget committee hearings, negotiated rulemaking consumes much of the first few weeks of every legislative session, and this year has been no different. This past fall, Idaho voters approved HJR 5, a constitutional amendment which enshrined in the Idaho Constitution the Legislature’s ability to review and reject agency rules. Because Idaho is one of only three states in the nation that provides the Legislature with this authority, the responsibility is taken very seriously despite the time and energy it consumes over the first month of every legislative session.

Return to the Attorney-Fee Standard Bill: An issue likely to be of interest to many attorneys is House Bill 97, which proposes to maintain the current rule for governing the award of attorney fees to the prevailing party in a civil case. House Bill 97 is a direct response to an Idaho Supreme Court ruling this past fall that, without legislative action, would move Idaho to a loser pay system on March 1. House Bill 97 passed the House Judiciary Committee last week and recently passed the full House of Representatives on a 61 to 8 vote. The bill now goes to the Senate where I fully expect it to pass and become law.

Tax Issues: Despite the Governor not addressing any major tax efforts in his State of the State address earlier this year, a few tax related bills have surfaced at the Legislature:

  • The first major tax bill, House Bill 67, proposed by House Majority Leader Mike Moyle, would lower Idaho’s top personal and corporate income tax rates from 7.4 percent to 7.2 percent and also exempt the first $750 of taxable income from the Idaho Income tax. House Bill 67 passed out of committee on a 14-2 party-line vote, and then recently passed the full House on a vote of 58-11. The bill now goes to the Senate where it will be heard and debated in the Senate Local Government & Taxation Committee.
  • House Bill 155 proposes to collect sales tax for online purchases by Idahoans. Currently, Idaho taxpayers are supposed to keep track of online purchases and account for sales tax owing on their annual state income tax returns. Because it is hard to track, and many don’t pay these taxes, House Bill 155 would require online retailers to collect and remit the taxes to the Idaho State Tax Commission. (A similar bill is making its way through the Utah Legislature.)
  • I am working with the Idaho Department of Commerce on a bill aimed at bolstering Idaho’s technology sector and attracting capital investment to the State by granting a sales tax exemption to eligible server equipment purchases in the rapidly growing data center industry. This bill is exciting because Idaho is well poised to become a leader in this industry due to our low-energy costs, ideal climate, and minimal risk of natural disasters. We are currently unable to compete with other states for businesses in this budding industry because of our current tax structure. The proposed tax exemption would reduce those roadblocks and will be introduced in the House Revenue & Taxation Committee in the very near future.

Transportation Funding: In the ongoing debate about how best to address Idaho’s aging infrastructure, four bills were introduced last week in the House Transportation Committee addressing this issue:

  • Two of the bills propose to extend an expiring law, commonly referred to as the ‘surplus eliminator,’ which splits any unexpected budget surpluses 50-50 between funding transportation and the state savings account for two more years. The two proposals differ in that one bill would split the money between the Idaho Transportation Department and local highway districts, whereas the second proposal would keep the law as-is, with the split going directly to the Idaho Transportation Department.
  • The third bill, House Bill 157, proposes moving the annual funding for Idaho’s State Police, approximately $16 million, out of the gas tax fund to the state general fund budget. House Bill 157 passed out of the House Transportation committee yesterday after a spirited debate.
  • The final infrastructure-related bill proposed a temporary, three-year gas tax increase of five-cents per gallon. This bill failed in committee due to the committee members’ reluctance to raise the gas tax again, given the 2015 seven-cent increase (the first gas-tax increase since 1997).

Other high-profile issues that have either already surfaced, or I expect to surface in the near future, include:

  • proposals dealing with Idaho’s minimum mandatory drug sentencing laws
  • a new state healthcare Assistance Program to provide primary care for Idaho adults who fall into the healthcare coverage gap
  • multiple proposals affecting Idaho’s municipal governments, including a proposal to withhold statefunds from “sanctuary cities”
  • changes to laws governing Idaho’s oil and gas industry

Because there are far more issues than I can possibly monitor and include in one report, please feel free to contact me with any questions or insight that you might have on other issues that are of interest to you or your clients. A great resource for tracking bills, agendas, legislator information, and much more, can be found on the Idaho Legislature’s website at www.legislature.idaho.gov.

Thank you.

Jonathan