By Idaho First District Senator Jim Woodward
The 2021 legislative session looks like it may be one for the record books. Where the legislature typically finishes by the end of March, we find ourselves halfway through the month of April without a clear path to concluding the session.
The topics of debate are the annual state budget, a long-term transportation funding package, and tax relief proposals.
Most of the FY2022 budget debate centers on two budgets, the K-12 schools budget and the colleges and universities budget. Both proposed budgets have seen significant pushback from a special-interest lobbying group in Boise that alleges our Idaho education system is rife with social justice and critical race theory teachings.
For those of us with children in the public schools, I believe it is fairly clear to see this is not the case in our local districts.
School district curriculum is determined at the local level by elected school board members. Those board members are typically parents or grandparents of students, are involved in the community, are willing to give their time, and have a desire to see the best possible outcomes for our children.
We will pass the education budgets in the next few weeks, but I find it unfortunate the statewide education community is suffering in the meantime.
The current long-term transportation funding proposal, House Bill 362, will provide upwards of $1.5 billion in transportation improvement projects statewide.
To fund the projects, 4.5 percent of annual state sales tax collections will be dedicated to transportation. Currently, Idaho sales tax collections are approximately $1.8 billion. They grow every year with the economy and an increasing population.
Today, 4.5-percent of sales tax collections is just over $80 million. The bill is written such that $80 million is devoted to statewide projects. Any revenue over $80 million will go out to cities, counties and highway districts via a standard distribution formula based on population and miles of road.
As always, the proposed transportation spending must be balanced with any tax relief proposals and the need for adequate rainy-day reserves. Both the transportation and tax bills will be in the Senate this upcoming week.
Separate from our normal budget deliberations, Idaho is receiving another round of federal funding through the American Rescue Plan Act (ARPA). The ARPA funds are flowing direct to individuals as stimulus checks, direct to counties and larger cities and to the state.
Cities with a population less than 50,000 will receive funding via the state. We are appropriating some of the state funds this legislative session, including the funds for cities under 50,000 people, but not the majority of the funds.
ARPA funds are authorized for use through 2024. It is the intent of the legislature to develop a plan this year for the majority of the funds and approve that plan during the 2022 legislative session.
I’ve spoken in the past about the importance of revenue projections to the process of generating a balanced budget.
Projecting revenues is more challenging with the amount of additional federal money flowing to the state.
Idaho has a Gross State Product of $84 billion. Last year, more than $8 billion in unanticipated federal funds came to Idaho in the form of stimulus checks, pandemic recovery aid, etc., which is nearly 10-percent of the total normal economic activity.
This year, we will see an additional $5 billion in federal funds in the Idaho economy.
We are also experiencing significant population growth, which increases economic activity and state revenues but also raises the demand for roads, schools and other state services. For budgeting and planning, the question becomes one of anticipating state economic activity and state revenues after the federal funds stop.
Idaho has steered a steady financial course for many years. We will make sure the binnacle and compensating spheres are well maintained as we navigate this latest challenge.