Idaho governor: Eliminate personal property tax

BOISE, Idaho (AP) - Gov. C.L. "Butch" Otter aims to eliminate Idaho's $141 million personal property tax, and then reimburse local governments with state funding as well as cash they'd raise themselves through new taxes.

Otter outlined his intentions during Monday's State of the State speech, where he unveiled a $2.8 billion budget for fiscal year 2014, about 3 percent more than the current year.

And while Otter supports a state-designed health insurance exchange, he refused to endorse another change associated with President Barack Obama's 2010 health care overhaul - expanding Medicaid coverage to more low-income people.

To kick-start personal property tax repeal, the Republican governor set aside $20 million to pay cities, counties and school districts for the money they'd lose. Otter suggests giving local governments more flexibility to raise their sales taxes, to help make up the rest.

"That isn't necessarily about using state revenues to make counties 'whole,'" Otter said of the state's financial commitment, according to an advance copy of his speech. "In fact, my preference is granting local-option taxing authority that enables county voters to decide for themselves how to address their most-pressing needs."

In 2008, cities including Boise failed to win additional power like this to take taxation proposals to voters, to help them pay for infrastructure including public transportation. Now, however, Otter hopes a marriage with personal property tax relief will help it succeed this year.

Otter's seventh State of the State address since taking office in 2007 was an opportunity for him to outline not only his budget, which he says is conservative because it grows less quickly than the state's overall anticipated revenue, it was also a chance to inform lawmakers and the public what's important to his administration over the next three months when the Legislature meets in Boise.

Lawmakers convened the 2013 session on Monday.

Otter asked lawmakers to increase state funding of public schools by 2 percent, to about $1.28 billion, or $63 million more than the current year. He did not propose pay raises for teachers and most state workers.

The governor acknowledged Monday that he and Superintendent of Public Instruction Tom Luna made mistakes in pushing through the "Students Come First" public education overhaul in 2011 without more public support, a problem that led to voter's rejection of the plan on Nov. 6.

He reiterated hopes a panel he's assembled comes up with new proposals by the 2014.

"I'm convinced that acting too quickly or without due deliberation will generate needless distraction," he said.

Aides for the governor did say he hopes lawmakers can at least agree during the current session to direct some of roughly $37 million in funding left in limbo by the education referendums' failure to address less-controversial aspects, including expanded math and science education and paying for students to earn college credits while in high school.

Otter's budget socks away $35 million in rainy day accounts, in case of an economic downturn.

In addition, Otter is asking lawmakers to expand a 2-year-old hiring tax break for employees - his "Hire One" Act, from 2011 - that would sweeten the pot for employers who hire veterans returning from tours in Afghanistan or Iraq, costing up to $11 million annually in the near-term.

The two-term governor also promised quick legislation for Idaho to begin crafting its own insurance exchange, envisioned by Obama's health care law as a federally-subsidized online marketplace for individuals and businesses to compare and shop for insurance coverage. Lawmakers must still approve the bill, something hardly guaranteed in Idaho's conservative Legislature.

He's avoiding another, related fight, however, by not endorsing the expansion of Idaho's Medicaid coverage to include more than 100,000 additional low-income residents whose bills would largely be paid for with funding from Washington, D.C.

That's despite a recommendation in November - from Otter's own, hand-picked panel - that rejecting such an expansion could cost Idaho $284 million by 2024.

Instead, Otter plans to study revamping Idaho's federal-state funded health care system for the poor. Meanwhile, he'll continue funding an existing insurance fund for indigent people, costing Idaho about $40 million for the coming year.

"We have time to do this right," he said, on what he calls a "broken" Medicaid program. "I hope to return in 2014 with specific proposals."