North Idaho Legislative Tour 2006 Governor's Banquet
Thank you for that kind introduction and the warm reception. It is apparent that the North Idaho Chamber of Commerce is producing a first class event. I want to thank the sponsors; with out them this event would not be possible.
First of all, Vicki and I want to thank you for the honor and privilege of serving as your 31st Governor and First Lady. I don't know how people will remember their 31st Governor, but I know they will remember Vicki as a gracious and hard working first lady. As my partner, she has worked on our nursing initiative, expanding the 211 care line, keeping kids safe on the internet, and working with the drug czar on the anti-drug initiative among several other efforts.
I hope history doesn't remember my administration as one of flood, fire, pestilence with West Nile virus, and now flooding again, although we certainly have had all that.
I hope rather history will remember my all star constituent service staff; that I reorganized the Department of health and welfare, corrections and other agencies, prohibited the discharge of mercury into Idaho's air, created rules for the management of Idaho's 275 roadless areas, continued the pressure on the feds to give us management of wolves, open a North Idaho and Eastern Idaho office, and, of course, property tax reform.
I come before you tonight knowing I will transfer the authority of this office at the end of the year. I commit that my top priority between now and then will be to complete a smooth and seamless transition to Governor Otter and his new staff and cabinet.
Tonight I want to leave you with some thoughts for the future. I fully realize these matters will be in your hands, and the hands of our new Governor.
I want to take a moment to add to what you heard this morning about the connecting Idaho project and GARVEE. First let me say that I have been, and continue to be, a strong proponent of GARVEE. A half dozen states before us invented and used GARVEE, and it has worked successfully for them. I inherited the legislative resolution that identified 6 projects and authorized 200 million dollars. There was not a lot more detail than that at the outset. I was, and I am, determined, and committed to make it work. As you heard this morning, I immediately issued the bonds, and put $200 million in the bank. Then I broke each project down into the 4 phases of each Preliminary Engineering, Final Engineering, Right of way acquisition and construction, and produced a clear picture as we allocated the initial $200 million. We then determined the cost of completion of each stage of each project. Next, we evaluated the bonding and the flow of federal money to pay back funds, given the restrictions the legislature wisely placed on the spending authority.
Now all that sounds fairly simple, but it wasn't. I want to speak plainly.
In the end, to complete all 6 projects as contemplated by the legislature, the estimate is $1.6 billion. The outer limits of our bonding capacity with the restrictions is about $1 billion. The path forward I am suggesting uses $950 million of that available bonding. Since you chose six projects, those are the ones for which I have designed a path forward. Out of respect for your choices, I have not included the Twin Falls bypass, which the transportation board is recommending, and is needed, and can be accommodated if you so choose.
Now, before I go further, I would urge you in the strongest terms that we not focus on disappointment that we can not achieve what some had hoped we could, but rather let's be excited and focused on what we can do, and that is quite a bit.
We have scaled back each of the 6 projects - some more than others, but we have developed a definitive, doable path forward, detailing what can be done and how it should be done. Immediately following the organizational session, I will transmit those very specific recommendations to you. It is a one page chart, easily readable and color coded, which breaks down each project into its four component parts, identifies costs of each component, and identifies a timeline for each, as well as the timing for issuing bonds. At that point, it will become your responsibility and that of the new administration, keeping in mind that this is only a recommendation, albeit a reasonable and doable option- I hope you can make it better, but I will tell you as I have told everyone working on this - for the sake of all Idahoans, make it work.
At my direction, ITD has created an entity whose sole job it is to press GARVEE forward, since experience tells me that it is in the best interest of taxpayers that this initiative move forward as rapidly as possible, in light of the exploding inflationary construction.
Now let me talk about some budget items. As the law requires, I have worked on the '08 budget in detail, and will make an achievable and reasonable recommendation to my successor who will no doubt make it even better before he presents it to you. But I do want to talk briefly about a few items.
In early July, I appointed Idaho's first Drug Czar, Jim Tibbs, and gave him the specific direction to first inventory and then evaluate all drug programs. In the last session, you passed House Bill 833, which crated the Interagency Committee on Substance Abuse, Prevention and Treatment. I was pleased that the Drug Czar was selected as chair of that committee. One of the recommendations coming from that committee is that the Office of Drug Policy and the position of Drug Czar be codified in the next legislative session. I hope that you will approve the recommendation of your interagency committee.
The initial report that Jim Tibbs gave me in mid-October identified 133 government-sponsored programs in Idaho. Now I knew there would be quite a few programs, but that number surprised even me. It is my hope that eventually the czar will be responsible for coordinating and overseeing all programs.
I do need to speak specifically about one of our drug programs, and that is ATR - Access to Recovery. Many of you may not be familiar with it, but it is about the only program in Idaho through which a person can access treatment and recovery, outside the legal or penal system.
ATR came to us from the Feds in a 21 million dollar grant for 3 years at $7 million a year. The ATR program will terminate next August. I really don't see how we can effectively deal with the drug problem without an ATR type program. The budget I will pass on makes provisions to continue that program.
I know that many of you have heard me talk about the critical nursing shortage that Idaho is facing, and you know that I appointed a task force to make recommendations to address the issue. In 2005, Idaho's colleges and universities produced 745 nursing graduates. Based on the pending retirement of nurses, it is projected that in addition to the 745 grads per year, Idaho will need an additional 400-500 graduates a year to meet the state's growing need for entry-level nurses. The interest in becoming a nurse is there. Idaho institutions turned away more than 800 qualified people who wanted to be accepted into a nursing program last year. The nursing shortage has become a crisis in our hospitals. Right now, between 400 and 500 nursing positions are vacant in just our critical care centers in Idaho.
Idaho's nursing programs are currently filled to capacity, and all of the programs report difficulty in attracting and retaining qualified faculty. The task force admirably set aside regionalism, and did an outstanding job coming up with several recommendations, identified to the existing Idaho nursing programs, that deserve your serious consideration next year, and I will transmit those to you in the near future.
The price tag is not cheap. But it is imperative that we address this shortage and the budget I will pass on provides for this initiative.
When I charged the task force with their duty, I purposely did not ask them to make recommendations regarding brick and mortar. I know that discussion invariably generates regional feelings, and I did not want those feelings to disrupt the otherwise candid evaluation of ,and work on, each institution's program. I chose to make the facilities evaluation myself. Vicki and I personally visited many programs, and evaluated facilities.
When I accepted and announced the report of the task force, I proposed that two new health science facilities be built, one on the campus of the College of Southern Idaho in Twin Falls and one at Lewis-Clark State College in Lewiston, using surplus one time money for half of the cost, and bonding for the other half for a period of 20 years. In that manner, we can easily fund the $37 million needed to build these two buildings. But knowing you and the new administration must make the budget work, you may want to adjust that funding mechanism, but I do ask for your support to move on these two important projects. I know that both ISU and BSU would like to have new facilities. Both have outstanding nursing programs which will get even better with the recommendations I have made. New Facilities at LCSC and CSI are the right thing to do right now. Future discussions about nursing facilities at community colleges, and at universities, have to continue.
For over 100 years, Idaho has been on the cutting edge of research, promotion of and assistance to our natural resource industries. We should not give that up in any way. But it is a plain fact that in Idaho our jobs and economic growth which establishes our quality of life are coming from the science and technology sector of our economythe so called new economy.
We are well behind other states in efforts to support and encourage the new economy industries. Some time ago I worked with the Department of Commerce in urging the establishment of a science and technology advisory committee. When I became Governor, I challenged that committee to give me some specific and aggressive steps that our state can take to move this initiative forward - and boy did they! As an example, one of those recommendations is to double the $5 million grant program for high-speed access that has been so successful in getting service to 73 additional rural communities. The budget recommendations I will transmit to the new administration will contain many of these recommendations, and I would hope they will get your favorable consideration.
Any discussion about economic development must include community colleges. Further development of an Idaho Community College system should not be a discussion of "IF" but rather a discussion of "WHEN" and "HOW." We get a tremendous bang for our buck out of community colleges, and they are a growing and necessary component of Idaho's education system. I have followed with interest the work of the interim committee, and I am encouraged by the strong support expressed by Governor Otter last night. Although I have not specifically waded into that discussion, I want to stress the importance of moving the community college initiative forward, and encourage you to find an appropriate solution to meet the expanding educational needs of our citizens. Although a specific dollar amount is difficult to identify, I have placed funds in the budget that I will transmit to the new administration for that purpose.
As you can see, I have spent a great deal of time on the 2008 budget. Thanks to our strong economy, we are optimistic that another surplus in the $200 million range can be expected when we close the books on June 30, 2007. There are many needs for this money, but we must be wise stewards of the resources that we have received.
Finally, we should visit a little about tax policy. When I became your Governor, the most pressing issue our citizenry wanted resolved was relief from sky rocketing property taxes. They wanted real permanent and significant property tax relief. Seldom in my career have I seen real and significant tax reform, but we did it. 2/3 of each house supported it, and most significantly, 72% of Idahoans agreed, ratifying and validating HB1. Every single county - all 44 agreed -and all 35 legislative districts said we did the right thing, and of the 955 precincts in Idaho, not one voted "no." We did the right thing.
But we owe Idahoans something more. We generally don't levy sales tax on life's necessities, such as rent, utilities and prescriptions, but we do tax food. It is time to remove the sales tax on food.
Some in this room will tell you that I made an effort to at least start to address this issue in HB 1, but since there are a number of possible ways to address this, I really believed it was not appropriate for a special session, and it needs to have public hearings, and a full discussion by you. My preference has been, and is, for a full and immediate repeal of the sales tax on food. That would cost $181 million in lost revenue annually, and that, of course, is not possible.
However, I did promise to propose an idea for a path forward to accomplish this goal. I have prepared an RS that will completely remove the sales tax on food without increasing any other tax to replace it. Although I am not locked into this idea, it does offer a reasonable and doable path to get the sales tax off of groceries once and for all. This proposal would phase out the sales tax on food by one-penny per year for the next six years. The net cost of this proposal to the general fund, is $30 million annuallyeach time a penny is removed. That is something we can afford. Although the proposal does not remove the tax immediately, which will disappoint some, it provides a painless and real path to removal that, once adopted, could only be reversed by specific legislation in the future. Idahoans deserve a permanent and painless elimination of the tax on their groceries. The bill holds cities and counties harmless by increasing, slightly, their percentage of distribution, and uses the federal definition of food already in use by retailers' computers for food stamp purchases.
Today, the average Idahoan pays about $100 in sales tax on groceries. In return, they get a $20 to $35 credit on their income tax return. Increasing that credit is certainly a viable alternative to taking the tax off at the cash register. The same $30 million I propose could be used to double this exemption. My preference to simply take the tax off, rather than using the income tax credit is based on the fact that we have long recognized that the sales tax as a flat tax based on consumers' decision to spend more or less. We have used the income tax to do the social engineering to recognize that a person who makes more, and can afford more, should pay more.
By mixing the two, we start down a slippery slope that leads to a constant struggle of who pays how much. I would prefer to leave that to income tax policy, and keep the sales tax a simple flat tax, that is totally predictable. Additionally, very few people, other than those who deal with tax policy, even know that they get an income tax credit. In the end, Idahoans just don't like paying tax on groceries. So far, the income tax credit has not satisfied their desire to get the tax off groceries.
I offer this concept knowing that you will give this and other plans your full scrutiny. Governor Otter will also weigh in on the issue, and whether it is this or another plan, the people of Idaho want and deserve tax relief when they buy their groceries.
There is a great deal of work ahead of us. But as I look around this room and see the talent here, I know that we are up to the task. The people of Idaho have elected us to do great work on their behalf and I have every confidence that we can get the job done.
Thanks again for your solid support during my term in office. As you know, my door has always been open to all of you, both Republican and Democrat and I am excited about working with you again in the future.
http://gov.idaho.gov/mediacenter/speeches/sp_n_idaho_leg_tour.html