Molly Messick reports: The Idaho Legislature convenes January 7. Over the last month, StateImpact sat down with lawmakers to discuss the most anticipated issues of the coming session.
Rep. Scott Bedke is a rancher from Oakley, Idaho. He was elected Speaker of the House in December, defeating Rep. Lawerence Denney, who had served in that post for three terms.
The new Speaker has said he seeks to be a consensus builder, and doesn’t want to lead the House in a top-down manner. That approach was on display last month, when we began by talking about the likelihood of a state-based health insurance exchange. Gov. C.L. “Butch” Otter hadissued his cautious endorsement of a state-based exchange a day earlier.
Q:The governor says he favors a state-based health insurance exchange. How do you view that recommendation?
A:That’s a multifaceted question. Number one: I view my job as Speaker as a guarantor of the process. In other words, every other person in the House of Representatives is brand new, and I think it’s incumbent upon the leadership offices – whether it’s the Speaker’s office or any of the other leadership positions – to not drive that discourse down into these new legislators.
I appreciate what the governor has done, and I appreciate his seeming willingness to keep the state’s options open. Having said that, I don’t view my position as the Speaker of the House to go down and get his votes for him, or to go get any of the proponents’ votes for them, or the opponents’ votes, either. My job is to ensure that the process works.
Every one of these legislators represents 47,000 people back home someplace. And those 47,000 people think that person they elected is the best person to represent their interests in Boise. It’s incumbent upon me to create a venue where those new legislators can make an informed decision and put their ideas out into the arena of ideas that we call a legislature. If the ideas grow legs, fine. And if they don’t grow legs, then that’s got to be fine, too. And that’s how I view my role. We don’t want to just listen to a few disparate voices on this subject. We need to listen to everybody.
Now, I certainly will have a strong opinion. I represent 47,000 people, too. And I’ll make a vote, and at the appropriate time I will speak up. But I don’t think it’s appropriate for me to do that at the start, particularly given the newness of the Legislature. I think that’s not my place as a Speaker.
Q:You’re saying you want ideas to percolate up from your membership, and have the majority vote carry the day.
A:That’s exactly it. I think we need to reach a consensus. In order for any group to reach a consensus, every member has got to contribute. My role as Speaker is to facilitate a venue where everyone is comfortable laying their cards on the table. From those collective cards, we find what the consensus of the House of Representatives is, and then proceed forward.
Q:As you said, you represent 47,000 people out there in your own district. What do they lead you to think is the best decision?
A:I think it’s safe to say my constituents are very leery of “Obamacare,” and they are leery of the state entering into obligations with regard to Obamacare. I think that my constituents are realistic. I think they understand the difference between the federal government enforcing federal law and the state government being the liaison between the constituent and federal law.
It plays out in many different venues within my legislative district. I think we’re marginally better off having a state Department of Environmental Quality that enforces federal laws with regard to air, water quality, those types of things, than having those laws be administered out of Region 10 in Seattle.
I think my constituents understand the uncomfortable place the state is in. Obviously, it’s a very Republican district. They were very supportive of Gov. Romney in his campaign, and they understand that elections have consequences. I think we will all reason together and see what is the best course for the state. My view will have a Cassia County-Minidoka County color to it, and hopefully that will blend into the rest of the discourse from around the state.
One of the earliest marketing concepts that’s driven into each of us is that we don’t buy pigs in pokes. And this has an element of that. We don’t know exactly what we’re getting into. We don’t know what all the rules will be. We don’t know how the rules that are written will be interpreted. And I think if we read the governor’s statement carefully, you’ll see that he’s very aware of that as well. In many ways it’s a states’ rights issue. We need to be at the table. If no one sits at the table, then there will be no modifications to it.
You’re getting a stream of consciousness here, and I think that that’s indicative of – we have not made a decision yet.
Q: So you also have not made a decision at this point?
A: I think that’s accurate, yes. I haven’t made a decision at all on this.
Q:This issue is complicated. Is the Medicaid expansion discussion even more complicated, because there isn’t, in that case, the pressure of a deadline?
A:I think that’s accurate. The few things we do know about the Medicaid expansion: the State of Idaho provides indigent care, and the way we do it now is costly. The county has part of the responsibility, and the state has part of the responsibility, and it’s costly for taxpayers. If there is a way to do that at a reduced cost to the taxpayers of Idaho, we should be interested in looking at it. Making no commitments one way or the other, we should vet that issue thoroughly.
Q:More than one lawmaker has predicted to me that the Medicaid expansion will not win approval, at least in this session. Do you feel comfortable making a prediction, at this stage?
A:No. I don’t think it’s healthy for the Speaker to get out in front of his caucus.
Q:The business personal property tax is anticipated to be one of the key issues of the session ahead. How do you expect that debate to proceed in the House?
The business community wants it removed, and the counties do not want that removal to harm them in any way financially. The state is not flush with money. If we were, then it would be easy for the general fund to replace that money in the counties’ budgets. That’s not an option because we don’t have that kind of money.
So then the next turn will be, “Well, can we do this in some incremental way?” That’s fine, but this legislative body cannot obligate future legislative bodies. It’s impossible to predict a timetable that we can absolutely stick to, because we don’t know what the situation’s going to be in 2014 or subsequent years.
I think, frankly, the state is better off, the business community is better off, our ability to attract and keep new businesses is enhanced without a personal property tax. It’s just how to change the policy, now, in a way that doesn’t disrupt taxing entities or the counties who are obligated to provide services. The Legislature is not bashful about telling them what to do, or what services to provide. If we then remove some of their financial ability to do that, we’ve got to replace that, or take some of that burden back to the state. That’s why it’s a tougher issue, and that’s why it hasn’t been solved at this point.
Q:We’re dealing with a budget that has already been strained by the recession. Does the state have the money to do away with the personal property tax right now?
A:The short answer is no. Do we have $130 million ongoing that we can just plug into the counties’ budgets year in and year out? No, I would say that we do not. Given the budget as presently constituted, I guess you could go in and carve it out. But that would come at the expense of other government services, and I just don’t see the legislature going there.
Q:Is there a big business-small business tension in this? Some will point out that the state could exempt the first $250,000 of personal property from taxation and save a large percentage of businesses in the state from the headache of this tax, while still keeping quite a lot of the revenue. How do you view that?
A:I’m a big proponent of equal protection under the law. “Big versus little” should not come into play here. Having said that, that has never stopped legislative bodies from playing that game. I suspect that if the past is any indication of the future, we’ll see that rise up again. But I don’t know that it’s good policy. I think the more fairly you can treat all players, the better off we are, and the better policy that is long-term. We ought to be about the business of making our whole tax structure fair, predictable, flat. And treat all comers exactly the same.
Having said that, I’ll use an analogy. If I plant a sapling oak tree next to the house, and I leave it there, and in 30 years it becomes evident that it was a foolish idea to plan the tree that close to the house – if I just hook up to that tree with a bulldozer and pull it out, I will probably do structural damage to the house. That does not mean that the tree is in the right place or that the tree should not be removed. I’m advocating a surgical removal of the tree.
Many counties, all of their finances are heavily dependent on the personal property tax for their budgets. If we just yank that out, then we will cause problems. I think we’ve got to do this in a thoughtful way.
Q:What does that mean, in terms of policy? What is the way that you think works?
A:Well, there’s probably got to be two prongs to it. If everything stays equal, then it is a shift. One set of taxpayers no longer pays it, and a new set of taxpayers then pays it. We all have our own opinion on whether that’s good policy or not. I guess it depends on whether you’re in the new set of taxpayers or the old set.
The personal property tax on farm equipment was removed. We were able to do that, and the world didn’t come to an end. That was much smaller in scope, but the principles that drove that decision should drive this. I think we need to do some definitional changes. What is personal property? I think we all understand that in an office setting, the chairs and desks and fixtures are personal property. But in an industrial setting with specialized equipment, is that equipment personal or is it real?
Because it was exposed to the same mil rates, we’ve never had to struggle with those definitions until now. It didn’t make one bit of difference, one way or the other. Now it does. I think we’re going to have to agree to definitions first, and that will give us the scope of the financial hole that we need to fill. Then, we need to methodically dissect this problem. Frankly, we’ve not really done that yet, in my opinion.
I think that’s in our future, and what little influence I have as a Speaker, I might use that to drive this and get some hard definitions. See what that’s going to cost, under the new definitions, and go from there. But it’s an elephant, and we’ve got to eat it a bite at a time.
Q:Are you advocating a more limited definition of personal property, or are you simply saying that you want lawmakers to sit down and consider that question?
A:I think that we need to consider that question. We’ve got a very experienced group of new legislators, many of which have been county commissioners or commissioners on other taxing districts. They get this. I’m interested to hear their ideas, because heaven knows this issue could stand a little change-up. We’ve gone around and around and around on this. There needs to be something that changes the way we’re viewing this.
Maybe that comes from the new legislators. Maybe that comes from a definitional change. I don’t know what it is, but it seems to me that this is déjà vu all over again. We’re hearing the same things, and yet there’s been no big game changer here. “Get on your mark, get set, go!” And we race around the mulberry bush again. The issue needs some type of a game-changer.
Q:Based on what you’re saying, it sounds like there’s not a single personal property tax bill that already has a lot of support.
A:A lot of bills are floating around, and I think that we can use parts of them. But I think everyone agreeing on what is going to be taxed and what is not going to be taxed is the starting point. Otherwise, this is too slippery of a subject, and there’s too much money at stake.
It gives me some pause that the personal property tax roles seem to have ballooned with our discussing this. I think that might come from the phenomenon that if taxing districts think we’re going to replace that in their budget it’s better to have a higher number than a lower number. Much like if we’re going to enter a weight-loss contest, before we weigh in, it’s okay to drink a lot of water.
Now, I’m not accusing anyone of gaming any systems, but it seems to me there’s been this, “When in doubt, classify it as personal, because down the road we’ll get more reimbursement.” That may be a hair unfair, but I think there’s an element of that.
Q:The other thing I want to talk about is education. What do you anticipate, in terms of policy, given the success of Props 1, 2 and 3?
A:The ideas there are all across the board. The legislature fully funded the changes in education law that were overturned in Propositions 1, 2 and 3. So there’s 40-some odd million dollars of ongoing commitment that the legislature has made that now there’s no accompanying policy.
This is a competitive environment when it comes to money, and so there are other entities outside of the education arena, outside of the public education arena, that are looking at that money. That’s to be expected. If the money is not spent and it’s not put in any other budget, it will just flow through into the public education stabilization fund, which is not all bad because we always can replenish our savings accounts, particularly in public schools.
There seem to be some common themes that are starting to develop on what the path forward will be with regard to education. I think there were some things embedded in Prop 1 that, for many legislators, if they are not in there, those will be deal-breakers. Others feel very strongly about some kind of a pay-for-performance component as well as technology.
Some of the things that were addressed in Prop 1 are important for me. I think a locally elected school board should be accorded the same privilege as a legislative body, in that the actions of the 2013 Legislature in no way bind the actions of the 2014 Legislature, or 15, 20 or 25. Yet we have allowed, in the past, that the actions of one school board have forever bound future school boards. I think evergreen clauses, some of the issues surrounding tenure — those things need to be included, from my perspective, in whatever bill goes forward.
Q:So, a bill that would limit union power?
A:I would call it empowering the local elected school boards to take care of the business end of running the school district. You cannot have a contract that you can never revisit and properly run a school board from a financial end. Things change. We’ve seen that. We’ve gone through the Great Recession. We’ve had less money, and substantively less. The state sent less money to the school districts, and they need to be able to react to the economic realities of the day. You can’t do that by tying their hands, contractually.
Q:It’s alleged that the state is not meeting its constitutional mandate in terms of funding education. What do you think about that?
A:I think that, by and large, we are meeting our constitutional mandate. What is a thorough education? If we want to go by test scores, and compare kids’ test scores out of one school district that is a “rich” school district versus one that is a “poor” school district. I think you’ll see those correlations fall to the side very quickly.
Money certainly is an important part of the education apparatus, but, like I say, I think that we’re doing a thorough job when it comes to educating our kids, or at least having kids have access to a thorough education.
Q:Not withstanding the school fees that families and students pay in some districts?
A:Well, I think there’s a bright line that school districts shouldn’t cross. But again, that’s the beauty of local control. If they get too close to this line, then their local patrons need to remind them that the line is there. I don’t know that that’s a state issue.
Q:The line being that districts shouldn’t charge for core requirements.