Team 17 Newsletter

The 2012 Session Begins

The 2012 session began on Monday with the Governor’s State of the State and Budget address. He laid out some standard priorities (economy, education, and a vague tax cut) based on an inflated revenue picture. Education gets a tiny bit of added funding for the Luna laws but teachers will still be traded for computers and merit bonuses as required by the laws. The $45 million he sets aside for some sort of tax reduction might not actually occur if the revenue isn’t there. While one time bonuses for state employees and teachers (based on merit) are contingent on revenues actually materializing. Team 17 will keep you informed as the big issues are debated with a newsletter every few weeks. Tell your friends about the newsletter and have them send us a request to be included at


From the Desk of Senator Werk:

A Culture of Arrogance and Entitlement

Idahoans value hard work and integrity. We understand that government should be limited and that it should work for the people – not for the interests of connected insiders. Unfortunately 2011 was the year in which ethical issues came home to roost and that the public’s confidence in its state government was shaken to its core.

During this past year or so there have been a number of ethical issues associated with elected officials, their appointees, high ranking employees, and political party officers (State Treasurer Crane, Chigbrow, Bujak, and various legislators just to reference a few). All of these issues have been associated with Republicans.

Just to be clear, neither party has a lock on ethical behavior, but in Idaho, Republicans control every statewide office and a supermajority of the legislature. They create and foster the culture of government. And that culture is now one of arrogance and entitlement.

Along with my colleagues in the Democratic caucus I have been actively pursuing ethics reform since 2005 (following the Jack Noble scandal). Unfortunately none of the bills that we have sponsored have even gotten a hearing. Controlling the revolving door of government officials to lobbyists, exposing potential conflicts of interest by legislators, and reigning in the influence of lobbyists are just some of the bills that we have proposed.

During the Governor’s State of the State speech on Monday he didn’t utter one word about the ethics scandals that have infected his party. Not one. Instead he actually complimented the legislature on its honesty. That’s what people usually call tone deaf.

In the coming weeks you will see the Idaho Democrats roll out a full suite of anti-corruption legislation. Like you, we value hard work and integrity. We intend to make sure that we renew the trust in state government that has been squandered over the last year.

From the Desk of Representative Killen:

Voodoo Economics 2.0

Some ideas are like cats – no matter how often they appear to be dead, they somehow manage to revive and come back to life, apparently none the worse for wear. A great example is the notion that broad-based tax cuts somehow pay for themselves.  During the last two sessions a proposal has surfaced, and will likely do so again this time, to cut the income tax rates for corporate and individual taxpayers. The proponents claim that such a move in a down economy is the sure way to stimulate economic activity, producing new revenues to offset those lost from the cut. Idaho’s history from the 2001 tax cut to $200 million deficit proves the opposite point.

          Their primary rationale for such a contrarian view is their claim that President Reagan’s administration accomplished this very result in the 1980s. While they are correct that Reagan did cut corporate income tax rates and that subsequently Federal tax revenues increased, they fail to point out that at the same time, Reagan increased substantially federal payroll taxes – these contributed the lion’s share of such revenues. Ed Lotterman, in his syndicated financial column carried by the Idaho Statesman, presented a detailed analysis of the reality behind the claimed benefits of such cuts. He summarized the views of economists of all stripes as follows:  “Argue that low tax rates motivate more work and investment, all other things being equal, and thousands of economists will agree with you.  Argue that the size of the federal government should be slashed and you will be among hundreds.  But argue that tax cuts will increase tax revenues and you will find yourself in a small group of cranks, charlatans and cable TV entertainers.”, Ed Lotterman. Idaho Statesman, March 26, 2010.

          While Idaho’s 7.6% corporate tax rate is nominally higher than many of our surrounding states, this is only a part of the story. We also have such a variety of business exemptions, credits and deductions that the effective rate, though varying by industry, is substantially lower. As Senator Brent Hill, the Pro Tem, recently observed, Idaho’s rather unique Investment Tax credit (ITC) alone can halve the tax liability of many asset heavy industries. Ultimately this is reflected in Idaho’s very favorable Corporate Tax Index published by the Tax Foundation which has placed us consistently in the top twenty states over the last decade.  To borrow a phrase – if it ain’t broke, don’t fix it.

From the Desk of Representative Sue Chew

The Healthcare Exchange

The Patient Protection and Affordable Care Act (PPACA) is a federal health care bill that was passed by the 111th Congress and

signed into law by President Obama on March 23, 2010. Many saw this bill as a way to bring healthcare costs down for individuals and small businesses (with fifty people or less). One provision of the law establishes a healthcare exchange in every state to serve individuals and small business. A healthcare exchange is simply a one-stop shop for consumers to evaluate and price health insurance plans and health insurer services. This will lead to increased competition and lower prices.

Our Governor agrees with the President that a healthcare exchange will allow people to shop for and get the best deals in health insurance.

The PPACA requires individual states to either construct their own health care exchange or the federal government will step in and construct the exchange for them.

What’s happening in Idaho?

The Idaho Health Care Taskforce, took on the task of evaluating a healthcare exchange. In monthly meetings throughout the summer they explored what an Idaho exchange could look like. Last Friday, on an 11 to 1 vote, the task force endorsed moving an eight page bill presented by the Department of Insurance to the two germane committees in the legislature. In addition, the Joint Finance-Appropriations Committee will need to work in coordination to provide the authority to spend the $20.3 million federal grant that would pay for the creation of the exchange.  As Senator Joyce Broadsword stated, this will allow for these committees to, “determine whether it’s best for the state or not.”

Legislators have concerns that with this bill. First, while the bill would set up an oversight board of thirteen members, some feel that this board is stacked with too many insurance industry insiders and too few small medical providers and consumer representatives. Others are concerned that the board, given authority over the plan of operation, will have too much control and will limit consumer options. House Minority Leader John Rusche emphasized, “As always, the devils in the details and the plan of operations is really going to say whether this is successful and meets the needs of Idaho.”

Yesterday, Governor Otter opened the 2012 Legislative Session with his State of the State Address and shared that he believes it is best for, “all Idahoans to discuss our options and decide what’s best for our citizens.” This is tepid support at best, and sets the stage for a very interesting debate.

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