Like other states, Idaho’s transportation infrastructure is the backbone of the state’s economy. Much of Idaho’s $77.9 billion Gross State Product relies on the movement of people and goods, whether for employment, agriculture, or general services. Idaho’s transportation network is comprised of more than 56,000 miles of public road, over 4,400 bridges and 1,700 miles of freight railroad. The need to preserve, maintain and expand infrastructure to accommodate growth throughout Idaho is paramount to ensuring economic growth and competitiveness. Taxes and fees that fund roads Including the 18.4-cents in federal taxes per gallon, Idaho drivers pay a total tax of 50.4-cents per gallon in gas taxes. At today’s average, taxes comprise more than 11% of the purchase price of gasoline. In FY2019, the state imposed more than $256 million in motor fuel taxes, the main source of road and highway funding. Other major sources of funding in FY2019 include $100 million in special fuel taxes (diesel, propane, natural gas, etc.), $99 million in passenger car and truck registration fees and $59 million in commercial truck registration fees. Fuel taxes in Idaho are governed by the 45th Amendment to the Idaho State Constitution, which protects tax revenue for highway purposes, limiting diversion to other modes of transport. Road and highway condition The Reason Foundation, a libertarian think-tank, frequently analyzes road conditions, government spending and cost-effectiveness throughout the United States. Its most recent report ranked states using 13 different performance metrics. It found that Idaho ranked eighth best, Montana ranked 11th, Wyoming ranked 12th and Washington state ranked 42nd – among the worst. Idaho received exceptional marks in pavement condition on both rural and urban Interstates, ranking first and third nationally, respectively. However, Idaho ranked in the bottom 20 of all states in its overall fatality rate. How people in Idaho travel In general, when the people of Idaho commute, they tend to commute via car. In Idaho, 88.4% of commuters take a vehicle (drive alone and carpool), while 6.2% work from home, 2.7% walk, 0.8% cycle and 0.7% take public transportation. In the capital of Boise, people cycle more than in the state of Idaho as a whole (2.8% of city commuters versus 0.8% of state commuters) and carpooled significantly less (7.3% citywide versus 9.9% statewide). Driving alone is close to the same for Boiseans as it is all Idahoans. Role of transit in the Treasure Valley Since 2000, Ada and Canyon County populations have grown 73%, to 972,610 people in 2020. Yet transit ridership has only increased 17%. In addition, operating expenses have more than tripled in that timeframe. This imbalance will continue to put pressure on politicians and transportation officials, as they may consider tax increases or cutting routes to match service with ridership. COMPASS Idaho, the Metropolitan Planning Organization in the Treasure Valley, states that “COMPASS continually strives to increase transportation funding with new or enhanced revenue sources.” This may include increasing the local tax or fee burden with tolls and the controversial tax on every mile driven. Conclusion While Idaho ranks well in terms of roadway and interstate conditions, calls to increase transportation funding continue. No doubt, the rapid growth in the Treasure Valley and the rest of the state is cause for concern in terms of transportation infrastructure. Policymakers should focus on how people want to travel instead of trying to force people into other modes. As seen in other states’ proposals, transportation officials may look to alternative funding schemes as a way to subvert the “user fee” concept of the gas tax – where drivers pay and drivers benefit – to boost funding to less popular modes of transportation. We will continue to dig deeper into each of these issues analyzed as the Mountain States Policy Center continues its push to improve the movement of people and goods throughout the state.

The nation’s newest free-market think tank is now open following today’s launch of Mountain States Policy Center in Boise. “The eyes of the policy world are on the Mountain States today,” Chairman Ken Dey said at the organization’s kick-off event on the steps of the Idaho state capitol. Former Idaho Governor Butch Otter and various state elected officials were in attendance for the launch event. Mountain States Policy Center is a non-profit, non-partisan research center that will not endorse political parties or candidates but will provide free market solutions to successfully grow the region. It will concentrate its work in Idaho, Eastern Washington, Montana and Wyoming – one of the first organizations of its kind to cover multiple states. “This is a policy party,” President & CEO Chris Cargill said. “Without ideas, politics can be a mess of various interests. But when you have ideas, that’s when good things happen.” The organization’s mission is to empower individuals to succeed through quality research that promotes free enterprise, individual liberty and limited government. The new MSPC has impressive momentum. It has already raised nearly $600,000 to fund its efforts and has tens of thousands of people engaging on its social media platforms. Dey, of Boise-based J.R. Simplot Company, has been named the first chairman of the Mountain States Policy Center, while Cargill has been named President and CEO. Fifteen other leaders from across the Mountain States will also join the board. A complete list is available at mountainstatespolicy.org Cargill said the organization has two initial goals: a listening tour across Idaho, as well as a number of studies, including 10 recommendations for lawmakers for the upcoming legislative session. ALSO: IDAHO CAPITAL SUN: New Mountain States Policy Center wants to have "adult debates" CDA PRESS: Think big - Mountain States Policy Center launches in Coeur d'Alene KBOI: Mountain States Policy Center launches KHQ (NBC) 6: Nonprofit free market think tank will provide suggested solutions to help grow the region

As gas prices continue to surge, who do we blame? The president’s policies are always a point of contention. So, too, are the profits of oil companies. Occasionally, even innocent gas station attendants and owners get angry treatment. Earlier this year, the president suggested gas station owners were voluntarily jacking up the price. What you rarely here is how much the government takes from the cost of a gallon of gasoline, for itself. Gas prices are inflated by government taxes and fees. Do consumers in the Mountain States really know what they are paying when they fill up at the gas station? The answer is likely no. That’s because gasoline is one of the few products we purchase where taxes and fees are built into the price. This means there is no transparency about the true financial burden placed on consumers. The U.S. Department of Transportation says gas taxes make up about 19% of the overall cost of a gallon – but this will vary depending on the state and the current price. For example, if the gas price is high, the gas tax percentage will be lower. Likewise, if the gas price is low, the gas tax percentage could be much higher. Gas taxes vary by state, but the Mountain States do charge more than average. In Idaho, the state gas tax is 32 cents per gallon. It was last increased in 2015. In Montana, the state gas tax costs consumers 31 cents per gallon. And in Washington, the state tax hits nearly 50-cents per gallon. Washington is also preparing to implement a carbon tax and low carbon fuel standard that will dramatically increase the cost of a gallon of gasoline – and force more border drivers to Idaho to find cheaper options. The state-by-state tax burden does not include the federal gas tax of 18.4 cents per gallon. When you add it all together, Idaho, Montana and Washington all have gas taxes that rank among the highest 16 states. In most states, gas taxes are mostly used to fund roads, bridges and a state’s transportation system. And, so long as the money is being used wisely, most drivers are okay with that. However, when policymakers adopt gas tax hikes, there is no accountability built into the system. The cost is hidden in the price. This is unusual when purchasing almost any product. After all, the price of a loaf of bread at the grocery store does not have the sales tax built in. Neither does the purchase of a bottle of water. Most consumers can see the tax burden they face on their receipt. If they don’t like it or don’t think it’s being used properly, they can talk to their elected officials. But with gas taxes, consumers are left in the dark. The fix to this lack of transparency is what has been called “truth-in-labeling.” In 2017, Washington state passed a law requiring the Washington state Department of Agriculture to produce a sticker that would be placed on every gas pump near the weights and measures certification. The sticker would simply inform drivers of their state and federal tax burden. In Washington, the WSDA conducts periodic inspections of gas pumps, so it made sense to assign the transparency task to that agency. Overall, drivers responded positively to the stickers. The cost for taxpayers was minimal – simply the price of the stickers – as state workers already travel around the state to pumps for weights and measure tests. In Ohio, state workers began placing the stickers on gas pumps in 2019, as part of a deal to increase the gas tax. In Utah, gas tax stickers are being placed at stations beginning this year. This simple, transparent idea should be considered in Idaho and across the Mountain States. Since government taxes and fees make up such a large portion of the overall cost of a gallon of gas, a “truth-in-labeling” policy is a reform worth pursuing.

It turns out Idaho voters will no longer consider a measure that would increase K-12 public education funding in the Gem State while adding one of the highest income tax rates in the country. It was reported today by the Capital Sun that Proposition 1 - the "Quality Education Act" - is being removed from the ballot by its sponsors. Supporters are apparently pleased with the action the Idaho Legislature took in last week's special session - adding more than $400 million into K-12. As we reported along with the Tax Foundation, there were legal issues with the measure that could have led to court battles and a lot of confusion. Furthermore, the measure would have raised Idaho's top income tax rate to among the highest in the country at 10.9% for those making more than $250,000 per year. While most states move to cut taxes, increasing Idaho's rates didn't make a lot of economic sense. National tax policy experts had warned if the “Quality Education Act” was approved, Idaho’s business climate ranking would have fallen precipitously from 16th best now, to 35th. It's also important to know that states that rely heavily on income taxes to support government revenue can find themselves on a roller coaster ride during inevitable economic downturns. While no revenue source is immune to economic waves, graduated income taxes are the most volatile taxes. Now, the attention shifts back to lawmakers and where this $400 million+, as well as additional funding, will be spent. With this latest hike, Idaho has now increased education spending by 93% since 2016. Total state enrollment numbers for 2021 show 302,910 students in Idaho public schools, meaning, with the latest increases in state funding, the total state allocation for K-12 is roughly $8,913 per student. Lawmakers have a responsibility to ensure these funds are spent wisely and with performance outcomes. State numbers do not include local and federal dollars that flow into school districts. For example, the state’s largest school district, the West Ada School District, had a total 2020-21 revenue budget of more than a half billion dollars – which included a substantial beginning balance. The largest chunk of revenue came from the state, however, local taxpayers still pitched-in $85 million, and federal taxpayers supplemented the district with another $32 million. West Ada School District serves approximately 40,000 students, meaning for 2020-21, the district had almost $14,000 per student in resources. Not all districts are the same. Not all have the same resources. Some will be higher or lower based on the approval or rejection of local property tax levies. Still, education advocates and the state teacher’s union continually highlight the state budget numbers and conclude that Idaho isn’t spending enough. Unfortunately, there is little correlation between spending more on K-12 and improving outcomes for students. For example, neighboring Washington state spends $18,135 per student, per year. For a classroom of 20 students, this amounts to $362,700. In the past decade, Washington has nearly doubled its K-12 spending. But student outcomes have not increased in the Evergreen State – in fact, they’ve declined. Only 30% of Washington students are now meeting statewide math standards, and less than half are meeting statewide English language arts standards. Education Savings Accounts may be the best tool for ensuring every child has access to a quality education. Fortunately, Idaho’s Department of Education has an entire section of its website dedicated to school choice. And Idaho is home to some impressive charter school options. But it falls short in allowing the more extensive options available in other states. This year, the state of Arizona passed a measure that will give all families in the state a $7,000 Education Savings Account (ESA). An ESA is a tool that allows parents access to some or all of the dollars that were supposed to be allocated to their child’s education. It can only be spent on education-related items, such as school tuition or tutoring, but it gives many families more flexibility. It is especially helpful for special needs families and those struggling in a neighborhood school that might not be up to par. The Idaho Constitution makes clear it is the duty of the state to maintain a general, uniform and thorough system of public, free common schools "complete with regard to every detail.” Unfortunately, right now, Idaho’s public school system is incomplete. The detail it is missing is school choice. Right now, many Idaho children, including special needs children, have no choice but to attend the public school they are assigned, based on their zip code. These public schools may not suit the child’s needs. They are not "complete with regard to every detail." To meet the full promise of the state constitution, Idaho lawmakers should move quickly to advance school choice legislation that is thorough and complete “in every detail,” allowing every child access to a high-quality education specifically suited for their needs. In the last two legislative sessions, lawmakers have introduced several school choice bills. The most recent legislation – House Bill 669 – would have created Education Savings Accounts of roughly $6,000. The money could be spent on private education, tutoring, help for special needs students and costly learning materials. It failed in committee by one vote after members expressed constitutional concerns. Idaho’s record surplus gives legislators the opportunity to bring Education Savings Accounts to Idaho, while supplementing the base of K-12 funding. Fortunately, most Idahoans support advancing school choice options like Education Savings Accounts. Do you support Education Savings Accounts (ESA’s)? ALL IDAHO ADULTS 66%- Strongly/Somewhat Support 34% - Strongly/Somewhat Opposed IDAHO PARENTS Strongly/Somewhat Support - 75% Strongly/Somewhat Opposed - 25%

As children across the region and the country head back to school this fall, a new survey from the Gallup organization shows a decline in the number of Americans who are satisfied with K-12 education. According to Gallup polling, 55% of Americans are now either somewhat or completely dissatisfied. When asked about their own child's education, at least 48% of Americans express some satisfaction - but this question included parents of those in private schools, charter schools and homeschooling parents as well. It is reasonable to assume that those parents would be more likely to be satisfied. The internals of the poll are fascinating. More than 65% say the curriculum is the issue, while 28% say a lack of resources and 17% say political concerns. You can always find reports that schools are not being funded enough. But no one ever answers the question about how much is enough. As the research shows, the amount spent per student does not necessarily lead to better outcomes. The Reason Foundation published this new comprehensive study on K-12 education. It shows the amount Americans are spending per student, per year, has continually increased. In some states, the increases are staggering. The research shows we spend an average of more than $15,000 per student, per year. Most of that spending increase has not been on the child, but on the increase cost of salaries and benefits for teachers and school district employees. The founder of Reclaim Idaho - which is pushing a ballot measure that dramatically increases taxes in the state to put more money into K-12 - posted this controversial tweet on Labor Day. The translation here: it's not about the students, it's about the educators. This outrageous belief is far too common in education today. In reality, parents want to know that their students are achieving success in the classroom. There are various ways this can be accomplished, but certainly it is necessary to look at the results. When taxpayers put money into K-12, they do so to pay to educate the child. In Washington State, teachers in several school districts, including Seattle, are threatening an illegal strike. Florida teachers did the same thing just a few weeks ago. None of these actions will help children. It will only further disrupt education. In the end, the money belongs to the student. It does not belong to any district, building or educator. We should be funding students, not systems. Fortunately, the majority of Americans across the political spectrum agree.

Like other states, Idaho’s transportation infrastructure is the backbone of the state’s economy. Much of Idaho’s $77.9 billion Gross State Product relies on the movement of people and goods, whether for employment, agriculture, or general services. Idaho’s transportation network is comprised of more than 56,000 miles of public road, over 4,400 bridges and 1,700 miles of freight railroad. The need to preserve, maintain and expand infrastructure to accommodate growth throughout Idaho is paramount to ensuring economic growth and competitiveness. Taxes and fees that fund roads Including the 18.4-cents in federal taxes per gallon, Idaho drivers pay a total tax of 50.4-cents per gallon in gas taxes. At today’s average, taxes comprise more than 11% of the purchase price of gasoline. In FY2019, the state imposed more than $256 million in motor fuel taxes, the main source of road and highway funding. Other major sources of funding in FY2019 include $100 million in special fuel taxes (diesel, propane, natural gas, etc.), $99 million in passenger car and truck registration fees and $59 million in commercial truck registration fees. Fuel taxes in Idaho are governed by the 45th Amendment to the Idaho State Constitution, which protects tax revenue for highway purposes, limiting diversion to other modes of transport. COMING SOON - A complete study on Idaho's road network, including where the state ranks in terms of roadway and interstate conditions.

With the action taken at Thursday’s special session of the Idaho legislature, the Gem State has joined a growing list of states that have adopted lower, flat income taxes. Governor Brad Little signed the flat tax into law on Thursday evening. The votes in both chambers were overwhelming. Lawmakers not only flattened the income tax to 5.8%, but also provided tax rebate checks for Idahoans and increased education spending in the state by more than $410 million. There will be plenty of debate about whether the increased education funding will truly increase student outcomes. Policymakers should tie spending on education to performance outcomes, instead of a blind concern about national rankings regarding spending per student. And there were concerns about the process – including the fact that notifications to the public about public hearings were limited. But it’s also important to highlight the positive about what was accomplished with the flat tax. Idaho’s revenue sources have now become more predictable, Idaho’s working families will benefit, and Idaho has sent a message to the nation that it remains open for business. As we noted on Wednesday, the flattening of the income tax is the most important and underreported issue to come out of the special session. Moving away from graduated income taxes will help improve Idaho’s competitiveness and reduce revenue volatility. As noted by the state’s recent credit rating from Fitch (emphasis added): “Idaho's revenues, largely individual income and sales taxes, are economically sensitive, particularly income taxes…Idaho's revenues are derived primarily from individual income tax, accounting for nearly half of general fund receipts, and sales taxes, making up about 40%. Tax revenue performance is sensitive to changes in the economy, particularly the component of individual income tax derived from non-withholding.” It's also important to stay competitive – and Idaho has done that with the approval of this bill. At least 10 other states have reduced or flattened their personal income taxes in 2022, and many more did so in 2021. Idaho’s 5.8% rate, however, is still relatively high. Newest Flat State Income Tax Rates Idaho – 5.8% Iowa – 3.9% Arizona – 2.5% Mississippi – 4.0% (by 2026) Georgia – 4.9% (scheduled phase in) In addition, nine other states have had flat tax rates for some time. With record revenue on the horizon, policymakers should continue to look for ways to lower the income tax rate. But today, Idaho lawmakers and the governor deserve credit for helping Idaho families and businesses, and keeping the state competitive.

Mountain States Policy Center is watching the happenings in Boise as a special session of the legislature is now underway. We'll update what's happening in this blog throughout the day. UPDATES: 6:27pm - Governor Little has signed the bill 5:00pm - Senate passes bill 34-1. Pending Governor’s signature, Idaho will have a flat income tax of 5.8%. 4:10pm - Senate debating bill. Sen Jim Rice refers to MSPC blog post on importance of flat tax 4:00pm - Bill passes out of committee unanimously 3:45pm - Senate reconvenes. Recess called for a committee meeting 3:00pm - House approves bill to adopt flat income tax, tax rebates and increase in education funding. Vote was 55-15. 2:35pm - More on the process: We found out this morning that the legislative practice of informing/notifying the public of hearings doesn’t extend to the special session. They don’t keep prior subscriptions. That is a huge deal and limits public participation. Major tax policy shouldn’t be made in 24 hours. A legislative body should always allow for maximum public involvement. 1:45pm - A lot of discussion - and anger - over the process. It's true, the process stinks. More to come on that point 1:04pm - House returns to session and begins debate on bill 12:06pm - House expected to return to the floor in about 45 minutes. Senate Local Government committee to convene around 3:00pm. 11:34am - If you haven’t read the bill, you can access it here 11:20am - House committee on revenue and taxation votes to send bill to floor 10:16am - Public hearing now underway 9:05am - Newest version of the Governor's proposal would remove 3% yearly inflator for education spending 8:35am - House Revenue and Taxation committee has introduced official bill 8:00am - Special session convened

Depending on the results of Thursday's special legislative session, Idaho could be joining the “Flat Tax Revolution.” As we noted in our research on the Idaho Quality Education Act, many states are moving in the direction of lower, flat income taxes. Those include Arizona and Iowa, which just lowered their income taxes rates to 2.5% and 3.9% respectively - and made them flat. Even at the 5.8%, Idaho's rate will remain relatively high. Still, moving in the direction of lowering - and flattening - the tax is a win for Idaho's working families. According to the Tax Foundation: “Flat taxes are meaningfully simple, however, in several ways. It is easier to forecast revenue under a flat tax, and to project the revenue effects of potential tax changes. It is easier for taxpayers to estimate their tax liability and how it would change under different income scenarios, which enhances tax transparency and potentially improves some economic decision-making. It accords better with impressions that taxpayers form of tax burdens based on headline rates, such that individuals and small businesses may be more attracted to a state with a relatively lower flat rate than one with a graduated-rate system that would yield similar liability. And it simplifies the function by which taxpayers decide whether to work or invest more on the margin, since all marginal returns to labor and investment are exposed to the same rate. Of greater significance for taxpayers, however, is that flat-rate income taxes tend to function as a bulwark against unnecessary tax increases, and to provide greater certainty for individual and business taxpayers. Economic decisions are made on the margin; choices about investments, labor, or relocation will be made on the basis of the effect on the next dollar of income, not the prior ones. A competitive top marginal rate matters most for economic growth, and flat income taxes—given their ‘all-in’ nature—not only mean a lower rate on that all-important margin, but tend to be harder to raise in the future, whereas highly graduated taxes are more susceptible to targeted, but often economically inefficient, tax hikes.” Moving away from graduated income taxes will help improve Idaho’s competitiveness and reduce revenue volatility. As noted by the state’s recent credit rating from Fitch (emphasis added): “Idaho's revenues, largely individual income and sales taxes, are economically sensitive, particularly income taxes…Idaho's revenues are derived primarily from individual income tax, accounting for nearly half of general fund receipts, and sales taxes, making up about 40%. Tax revenue performance is sensitive to changes in the economy, particularly the component of individual income tax derived from non-withholding.” The volatility of income taxes is something that has been noted in Washington’s credit rating. Per Standard and Poor’s(emphasis added): “Washington's revenues have historically exhibited less cyclicality than others (due in part to the lack of a personal income tax) . . . we have observed that capital gains-related tax revenues are among the most cyclical and difficult to forecast revenues in numerous other states." The Washington Policy Center has also done terrific work on this subject. They noted this about the impact of that state’s tax structures on revenue volatility: “Though there is no recession-proof tax structure, Washington has consistently ranked as having relatively stable tax collections compared to other states. The reason for this is Washington’s three major tax sources (sales, gross receipts, and property) are among the least volatile taxes. Graduated income taxes, however, are the most volatile taxes.” California’s Legislative Analyst’s Office echoes these concerns about the volatility of graduated income taxes: “The PIT (Personal Income Tax) is also a highly volatile revenue stream. Its unpredictable revenue swings complicate budgetary planning and contributed to the state’s boom‑and‑bust budgeting of the 2000s. In a February 2017 report, we reviewed the volatility of the PIT base. In this report, we analyze how the PIT structure—its graduated rate structure and various deductions and credits—contributes to volatility. The state has made various choices about the design of the PIT. We find that about 40 percent of PIT volatility is due to choices about which types of income to tax. About another 40 percent of PIT volatility is due to the rate structure, which taxes higher incomes at higher rates. This amplifies the volatility of taxes paid by high‑income taxpayers.” The Tax Foundation also recently conducted a review of academic economic studies and found: “The likelihood of an employed head of household obtaining a better job within a year is higher when a tax system’s progressivity is reduced. A decrease in a tax system’s progressivity is associated with an increase in the real growth rate of wages.” By moving to a flat income tax, Idaho is taking ongoing steps to improve its competitiveness and revenue reliability. Moving to a flat rate could also eventually put Idaho on the path to adopting a revenue-trigger phase-out of its income tax based on future growth. This proposal, as part of the Thursday special session, is the most important - and underreported - part of the session.

Idaho legislators meet in Boise this week to convene a special session that will lower the state's tax burden, issue tax rebates, and increase education spending. Record state revenue is causing states across the country - both Democrat and Republican - to lower taxes or issue tax rebates. The Mountain States are no different. According to the AP: "Montana lawmakers are weighing whether to convene a special session later in September to provide tax breaks from a budget surplus. A proposal calls for giving $1,000 rebates to homeowners who paid property taxes during the past two years. It also would provide income tax rebates of $1,250 for individuals and $2,500 for couples. Montana’s Republican House and Senate majority leaders said in a joint statement that the rebates would offer help “as soon as possible with expenses such as gas, groceries, school supplies and so much more.” But some lawmakers, including term-limited GOP Rep. Frank Garner, have expressed reluctance." Montana does not have a sales tax. It relies on the state's property tax and income tax for most of its state revenue. You can compare Montana, Idaho, Washington and Wyoming's tax burdens in our Comparing States section.

It is yet more proof of the severe damage caused by COVID school shutdowns. Today, we learned the national average ACT score for the class of 2022 was the lowest in more than three decades. More than 40% of seniors met none of the college benchmarks. ACT says the declines in performance have returned student achievement to levels not seen since the early 1990’s – in other words, we have lost more than 30 years of student achievement. Only six states tested all graduates – Wyoming was one of them. Montana tested 94%. Idaho, however, only tested 15%. Washington tested just 7% of graduates. But Washington and Idaho’s composite score was above the national average. More info from the ACT report: The average Composite score declined by 0.5 points, from 20.3 in 2021 to 19.8 in 2022. It is the first time that the average Composite score has been below 20.0 since at least as far back as 1991. Between 2021 and 2022, average English scores declined 0.6 points (from 19.6 to 19.0), average mathematics scores declined 0.6 points (from 19.9 to 19.3), average reading scores declined 0.5 points (from 20.9 to 20.4), and average science scores declined by 0.5 points (from 20.4 to 19.9). Slightly less than one-third of ACT-tested graduates in the class of 2022 (32%) met at least three out of four ACT College Readiness Benchmarks. More than 40% of ACT-tested graduates in the class of 2022 (42%) met none of the benchmarks. Participation in the ACT State and District Testing program continued to grow in the 2021-2022 academic school year. This is a trend that has been increasing since 2015, when only 27 percent of ACT-tested graduates took the test as part of a statewide or districtwide administration. For the 2022 graduating class, 60 percent of students tested at least once through the program. The ACT State and District Testing program provides students the opportunity to earn college-reportable ACT scores by taking the test in their own classrooms during regular school hours on a weekday. School day testing availability expands access to education opportunity for all students, but especially for students from low-income families, those who would be the first in their families to go to college, and students in rural areas. For the class of 2021, the college enrollment rate was 57 percent, down from 59 percent for the previous class.

Governors are the chief executives of their states. Leadership, especially during troubled times, is sometimes difficult to find – but not in the Mountain States. During the COVID pandemic, Governors across the nation seemed to take two different approaches – shut everything down and hope for the best or take necessary precautions but keep their economies open. Time will tell which strategy was best. Governors are now facing a different type of challenge – how to handle an economy that is slowing but still producing major tax revenues. Some states spent the cash on new government programs and expanded budgets, while others decided to give the money back to citizens, or help small business still struggling. The Cato Institute has released its 16th fiscal report card on the governors, and the showing of Idaho’s Brad Little, Montana’s Greg Gianforte and Wyoming’s Mark Gordon is impressive. In fact, Governor Little ranked in the top 5. Meantime, Governor Jay Inslee in Washington ranked dead last. Cato says it uses statistical data to rank the governors on their tax and spending records. If a governor held the line on taxes, they ranked higher. If a governor increased taxes and overspent, they ranked lower. Another interesting part of the report is on interstate migration – the number of people moving from one state to another. Even though Washington is four times the size of Idaho in terms of population, more people moved to Idaho (15,120) in 2020 than Washington (13,822). In terms of budget and taxation, Idaho is doing a lot of things right – and the nation is taking notice.

Earlier this week, irrigation water turned off for the season and many farmers heaved a sigh of relief and gave thanks for existing water reservoirs. Simultaneously, many agriculturalists wish for more water, in preparation for years like 2022. Entering the 2022 growing season, the water situation in the Western States was dire. After multiple years of short rainfall, most reservoirs had exhausted long-term storage amounts and only partial water allotments were scheduled, meaning less available water over a shorter season. Accordingly, farmers made necessary preparations. Planting choices changed to more drought tolerant crops and shorter day varieties, fields were left fallow allowing farmers to transfer water rights to higher value crops, and water efficient systems were installed. Despite, high commodity prices, many farmers were predicting lower incomes. The long-term outlook was also pessimistic, the predicted La Nina winter for 2022-23 meant drier weather for the southwestern states. Though months later than average, the wet weather arrived. Multiple reservoirs and regions received rainfall that restored allotments to their full amount and extended the growing season. Though crops were already planted, farmers benefited from the moisture, with increased yields and incomes for 2022. For less fortunate farmers, Mother Nature missed their watersheds, or reservoirs lacked capacity to capture the rainfall. Years like 2022, reaffirm the need to increase water storage, benefitting farmers and the surrounding communities. In Idaho State, water storage is an issue the legislature tackled in the last session. The Idaho legislature voted to appropriate funds to increase the capacity of the Anderson Ranch Dam, providing an additional 29,000 acre feet. Much of this will be used to meet growing population demands in the Treasure Valley, and leaves water available for farmers. In the western states, increasing water availability is essential to protecting the agricultural community and the food supply. Idaho and Utah are having this conversation, but Washington and Oregon are moving in the opposite direction with dam removal a frequent topic. Increasing storage, encouraging water conservation technologies, and prioritizing agricultural water rights are essential to protecting the region's agriculture and the food we produce. Including these agricultural water topics in the upcoming legislative sessions prioritizes the region’s farming community and helps buffer farmers in years like 2022.

Idaho school districts are facing a big problem. A recent survey conducted by the state’s Office of Performance Evaluation found that just under half of the state’s 115 school districts have self-reported school buildings in fair or poor condition. Lawmakers aren’t sure of the exact scope of the problem (only 77 of the state’s 115 districts even responded to the survey), but the current estimate is that it would take $847 million to bring these schools up to “good” condition. Many school districts may not be able to fund these renovations through bonds due to voter fatigue and the constitutionally-required two-thirds threshold for indebtedness. In advance of the January legislative session, lawmakers have assembled an interim working group to brainstorm school funding ideas to address Idaho’s aging school buildings. They should add public-private partnerships to the state’s fiscal toolbox to clear some of the backlog of school projects. A public-private partnership (P3) is a contractual arrangement between a government and a private entity for all or some of the provision of infrastructure and services. Although public financing of public schools has been the norm for most construction projects in the U.S., many P3 schools are now successfully operating all over the world. With roughly thirty years of data for some of the world’s oldest P3 schools, Idaho lawmakers can explore what kind of conditions, contracts, objectives, planning, and management results in successful partnerships. These “lessons learned” can help shape what P3 legislation would need to look like to be successful in Idaho. In the late 1990’s, Nova Scotia constructed thirty-nine P3 schools with mixed results. Although the schools were critical to closing the education infrastructure gap, due to lax oversight, poorly-worded contracts, and confusion over pubic-private responsibilities, the program is often used as a “cautionary tale.” In his analysis of the partnership, Paul Bennett, Founding Director of Schoolhouse Consulting, observed, “Critical to the arrangement are contracts which provide an acceptable level of public transparency and yet respect the proprietary rights of private companies to structure projects, financing, and performance contracts in ways that reduce costs and ensure a fair return on their investments.” To that end, many other governments have successfully used public-private partnerships. Australia, British Columbia, Scotland, and other parts of the UK have built hundreds of P3 schools. Governments that have adopted these arrangements are looking for ways to economically deliver large infrastructure projects while the private contractor assumes the construction risk. Such an arrangement brings private money and management skills to school planning, capital financing, and operations, allowing the public partner (school administrators or the charter school management company) to focus on education rather than school building maintenance. Entertainment Properties Trust is a specialty Real Estate Investment Trust (REIT) that built or rehabilitated 47 U.S. charter schools until the portfolio was sold for nearly half a billion in 2019. The company’s CEO stated that EPR had enjoyed “very attractive returns” for its charter school market, but the tax-exempt bond market created competitive financing alternatives that ultimately led to the sale. Rosemawr Management took over the charter school portfolio. The Turner-Agassi Charter School Facilities Fund develops school sites in urban communities, attracting private equity social impact investors. Nationwide, the fund has built 124 charter schools since its inception, creating nearly 60,000 school seats. The fund provides turnkey facilities and 100 percent of a school’s development costs, which are then leased to school operators. This arrangement allows charter school administrators to focus on education, while the fund takes care of the building and facilities. The administrators can purchase the schools once they reach enrollment objectives, and the fund assists schools with their capital campaigns and long-term funding options. There are many factors to consider whether and when a P3 arrangement may be appropriate for Idaho schools. Private competition is important to drive costs down for taxpayers. A costly or complex procurement process can discourage bidders and result in more expensive projects. Well-designed contracts, clear roles for each partner, oversight, and performance measures need to be employed to ensure the public-private partners work together to achieve agreed upon objectives. While there are advantages to being a landlord, Idaho legislators should ask, “What is the role of government in education?” Article IX, §1 of the Idaho Constitution states, “…it shall be the duty of the legislature of Idaho, to establish and maintain a general, uniform and thorough system of public, free common schools.” Idaho’s constitution does not mandate how this is to be done, only that it must be done. School buildings are the means by which children and teachers gather to learn together. But there is no inherent requirement that state or local governments own, operate, and maintain the school buildings. In fact, such responsibilities can detract from administrators’ primary mission: to educate kids. Idaho is a frugal state—and that’s a good thing. Being at the top of the spending pack is not the goal, but rather building a high-achieving, student-centered system that delivers results for families and taxpayers. A few decades ago, it would have hardly been possible to imagine any arrangement other than a government-owned school building, but the 21st century has ushered in opportunities for public-private partnerships that could be the answer to the state’s education infrastructure problem.

The Idaho Legislature convenes in a special session on Thursday, September 1st. Here's what we think about the proposals that will be considered by lawmakers. ON TAX REDUCTIONS: The proposal to adopt tax rebates and move to lower the state's income tax will help Idaho's working families, and help the state compete. With a record amount of revenue, Mountain States Policy Center has recommended lowering the state income tax to a flat, across-the-board rate, and perhaps doing away with it altogether. We are delighted to see the state move in this direction. The research shows many other states have lowered or eliminated income tax rates. This will help Idaho stay competitive. ON EDUCATION SPENDING INCREASES: This is almost $100 million more than is called for in the Quality Education Act initiative being put before voters in November. Unfortunately, increased education spending does not necessarily lead to better outcomes. It will be important for the legislature to confirm the money is being spent wisely. Based on research about what's best for children, Mountain States Policy Center recommends any increases in education spending go directly toward funding students, not systems.

We are excited today to launch the Mountain States Policy Center blog. As the organization's incoming President & CEO, I am humbled by the support we have received thus far and look forward to a long-lasting impact not only here in Idaho, but across the region. The idea to launch Mountain States Policy Center has been in the works for quite some time. There have been starts and stops, but all along, the people who are behind this effort have had one thing in mind: create a credible, free market oriented think tank that can empower you and make life better in our region. This blog will give us an opportunity to talk to you directly. We'll be posting here as much as possible. We hope it will become part of your daily reading. We hope you'll have feedback and be part of the discussion. You may not agree with every position we take - and this is fine, and healthy. But we guarantee that we'll always take a stand, not based on politics, but based on what the research recommends. I hope you'll subscribe to our email list by signing up here. Today is day one of something that I believe will last far beyond me or any of us, because we believe in the power of ideas. And ideas never stop.

Neighbors in both Washington and Idaho are dealing with a fight over an income tax. In Washington, voters have said no to an income tax 10 times, and yet the Washington State Legislature recently passed a bill to adopt a capital gains income tax. Supporters deny it is an income tax, but every state revenue department and the Internal Revenue Service confirm that capital gains are income and are taxed as such. A lower court ruling in Washington threw out the new income tax, but it is being appealed and the Washington state Supreme Court will hear arguments on the case soon. In Idaho, it's a different type of battle. Education activists have put an initiative forward that would nearly double the top rate of the state's already-high income tax. The Idaho Statesman has recently run two opinion articles supporting the measure, which supporters say would be used for education funding. What's striking is that, in both articles, there is no mention about educational outcomes. Research is clear that money does not play a role in whether student outcomes improve. In fact, Washington state spends nearly double what Idaho does on K-12, per pupil, and yet has worse results. We'll be producing more research on the Idaho ballot measure in the coming weeks.

There is no question the American economy is shrinking. Whether it has reached a recession is still a question. Technically, a recession is defined as two straight quarters of negative economic growth. For sure, we have had one. We'll find out soon whether the second quarter also shrunk. For now, we can review the state by state data from U.S. Bureau of Economic Analysis. It shows some remarkable differences. For instance, Washington state's economic contracted at a rate three times greater than Idaho. Montana's contraction was even worse. And Wyoming's was off the charts. But let's take a closer look at Idaho vs. Washington - as the differences are stark. Idaho has been cutting taxes and regulations, and experiencing a boom in population growth and workers. Washington has been increasing taxes and regulations, and has been experiencing a population flatline. Who is doing it better and keeping its state out of the worst of the economic downturn?

While most states have ended their states of emergency, Washington State remains under emergency proclamation. Governor Jay Inslee issued a COVID emergency declaration in 2020 and hasn't given it up since. That means that he can act without legislative approval on a host of items that he deems are impacted by COVID. Each state has its own rules regarding emergency powers, as the National Conference of State Legislatures reports: Washington No order or orders concerning waiver or suspension of statutory obligations or limitations (during a declared emergency) may continue for longer than 30 days unless extended by the legislature through concurrent resolution. If the legislature is not in session, the waiver or suspension of statutory obligations or limitations may be extended in writing by the leadership of the senate and the house of representatives until the legislature can extend the waiver or suspension by concurrent resolution. For purposes of this section, “leadership of the senate and the house of representatives” means the majority and minority leaders of the senate and the speaker and the minority leader of the house of representatives. Wash. Rev. Code § 43.06.220 Idaho The legislature by concurrent resolution may terminate a state of disaster emergency at any time. During any state of disaster emergency, the governor may not alter, adjust, or create any provision of the Idaho Code. Idaho Code § 46-1008(2). Montana A state of disaster may be declared by the governor when the governor determines that a disaster, as defined in 10-3-103, has occurred. The governor may not declare another state of emergency or disaster based on the same or substantially similar facts and circumstances without legislative approval. A state of emergency or disaster may not continue for longer than 45 days unless continuing conditions of the state of emergency or disaster exist, which must be determined through a poll of the legislature as provided in 10-3-122 or by the declaration of the legislature by joint resolution of continuing conditions of the state of emergency or disaster. A state of emergency or disaster may continue for a drought, an earthquake, flooding, or a wildfire as long as continuing conditions of the state of emergency or disaster exist unless terminated by the declaration of the legislature by joint resolution of termination of the state of emergency or disaster. The governor shall terminate a state of emergency or disaster when: ….at any time the legislature terminates the state of emergency or disaster by joint resolution. However, after termination of the state of emergency or disaster, disaster and emergency services required as a result of the emergency or disaster may continue. The legislature may, by joint resolution in a regular or special session: terminate a state of emergency or disaster, extend a state of disaster; provide conditions or limits on the governor's actions taken pursuant to 10-3-104; and approve or disapprove the continuation of any executive order, proclamation, or regulation that was enacted based on a state of emergency or disaster. Mont. Code Ann. § 10-3-303 A proclamation [of emergency] is ineffectual unless the legislature is then in session or the governor simultaneously issues an order convening the legislature in special session within 45 days. Mont. Code Ann. § 10-3-505. If a majority of the legislators fail to approve the call for a special session within 30 days after the secretary of state mails the ballots or notifies each legislator, all ballots are void and may not be used again. When the purpose of the special session is to consider an existing state of emergency or disaster declared under the authority of 10-3-303, if a majority of the legislators fail to approve the call for a special session within 7 calendar days after the secretary of state sends the ballots or notifies each legislator pursuant to 5-3-106(2), all ballots are void and may not be used again. If a poll is not approved, the entire process must be repeated to call the legislature into special session. Mont Code Ann. § 5-3-108 It is important for the executive to have the tools he or she needs to respond to an actual emergency. But emergencies don't last two years. Washington legislators had the chance to act to limit the governor's emergency powers and bring the people back into the process, but they failed. Many options are available, as Washington Policy Center's Jason Mercier explains here.

With gas prices hitting a new record, Democratic lawmakers in Idaho have called for a suspension of the state's gas tax. The "gas tax holiday" being proposed by Rep. James Ruchti and Senator David Nelson would cut Idaho's cost of a gallon of gasoline by 32-cents. “It’s a great way to get money back in pockets of Idahaons who are just they're going to go spend it on the economy. You would think of it as a targeted tax break,” Ruchti told KTVB. Idaho's gas tax isn't as high as Washington's, at 49.5 cents per gallon. You can see comparisons of Idaho, Washington, Montana and Wyoming here.