Lawmakers consider transportation funding

Idaho lawmakers are considering two competing proposals to raise enough transportation revenue just to repair and take care of the existing roads in Idaho.

A group of legislators is working on a proposal to bump the state sales tax to 7 percent with a 1-penny increase and also replace the state's graduated income tax rate with a flat rate around 6.6 percent for individuals and corporations, according to the Idaho Statesman newspaper.

While there is no legislation drafted yet, the Statesman reported on Sunday that lawmakers say the plan, which would eliminate sales taxes on groceries, will create economic stimulus while boosting money for roads and bridges.

"Individually you can kick down every piece of it," said Majority Caucus Leader John Vander Woude, R-Nampa. "But putting it all together, I think it's a way forward."

Meanwhile, on Monday the House Transportation and Defense Committee unanimously voted to introduce a competing transportation revenue bill that would generate about $200 million.

The legislation that was introduced on Monday would increase a number of fuel taxes, registration fees and other highway user fees to generate the revenue.

Rep. Luke Malek, R-Coeur d'Alene, said last week that he expected to see competing legislation, but he told The Press on Monday he is waiting on final projections from the Tax Commission before he takes a position.

"I have yet to see a bill printed," he said, adding there could be other proposals coming as well.

The comprehensive plan, which includes the sales and income tax increase is just starting to emerge in the House and would meet the goals outlined by Gov. Butch Otter in his State of the State address. Legislative leaders say Otter is aware of the plan, according to the Associated Press.

Backers say the plan would raise $150 million for transportation in the coming fiscal year.

Jim Coleman, who represents District 1 on the Idaho Transportation Board, said he is encouraged by the proposals and hopes some sort of transportation funding package will emerge this session.

"We are getting behind. We have a backlog of around $280 million just to take care of what we have," he said, adding he is concerned the sales tax increase may not pass.

"The governor mentioned in his budget message and in his State of the State Address that he did not want the funding coming from the state's general fund," Coleman said, adding a sales tax increase and adjustments to the income tax would go to the state's general fund.

"I am of the same mind as the governor," he said. "I would prefer a user tax, but it will be interesting to see how this works out."

Malek, who sits on the Joint Finance and Appropriations Committee, said the way he understands it, the money generated by the sales and income tax proposal would go to a dedicated account for transportation - if that proposal passes.

Idaho for fiscal year 2016, which starts July 1, has budgeted $514.4 million, according to the AP. Half of that revenue would come from federal money and most of the rest through state fuel taxes.

A governor's task force estimated in 2010 that Idaho needs to spend $262 million more each year just to maintain its roads and bridges, the AP reports.

"There is a recognition in the Idaho Legislature that we've got to set aside those monies that will be sufficient to maintain the billions of dollars of road assets that we already have," said House Speaker Scott Bedke, R-Oakley. "We understand that if you let it deteriorate to the point where you have to replace rather than repair, that it's substantially more, and we're working on ways to address that."

Lawmakers said a flat-rate income tax could be the most difficult part of the plan as it raises rates for less-wealthy taxpayers. But backers said eliminating the sales tax on groceries will offset that. Lawmakers also said a flat-rate income tax makes Idaho more attractive for investment and more competitive with nearby states when vying for businesses.

A benefit of the sales tax increase, lawmakers said, is it will mean more money for roads as economic conditions improve.

The Chairman of the Transportation Committee in the House introduced a sweeping new transportation funding bill, seeking to raise almost $200 million per year to maintain Idaho's crumbling roads and bridges.

It aims to cover most of the state's transportation shortfall, which transportation officials have warned lawmakers about for the past five years.

The legislation would increase the state's gas tax by 8 cents in fiscal year 2016. Diesel tax would increase by 12 cents. Both fuel taxes would increase by 1 cent per year in order to match inflation.

The bill would also increase vehicle registration and permit fees.

Rep. Joe Palmer, R-Meridian, said he expects the plan to change in order to survive both chambers.