Raising the minimum wage is one of the many policy ideas peppered with tradeoffs, but one of the few that have such a direct impact on businesses and employees alike. Lawmakers in Idaho and Montana have introduced legislation intended to raise the minimum wage. The legislation in Idaho has been introduced by Rep. Steve Berch. House Bill 48 would repeal a prohibition on local governments setting their own minimum wage. Meantime in Montana, House Bill 201 introduced by Rep. Kelly Kortum would hike the minimum wage to $11.39 per hour plus tips. The minimum wage in Montana currently sits at $9.95 per hour, while Idaho's minimum wage is the federal minimum of $7.25 per hour. Currently, there are only 54 cities or counties around the nation that have their own minimum wages which vary from their state minimum wage. The patchwork of different wages makes it difficult in some states for small business owners to properly plan for and track employee hours, especially if employees work at multiple locations. The broader issue, however, is the financial impact on small businesses and the workers themselves. It is true that some workers will see paychecks rise as a result of minimum wage increases, but many more end up seeing wages fall as hours are reduced. We know this from experience, and projections. This Congressional Budget Office tool gives users the opportunity to see the impact of raising the minimum wage. It shows some positive impacts, including a decrease in the number of people living in poverty. But it also shows negative aspects - specifically, the change in employment and the overall change in real family income. Under a scenario where the minimum wage would increase to $15 per hour, both see declines. Research from the Harvard Business Review had similar findings: "For every $1 increase in the minimum wage, we found that the total number of workers scheduled to work each week increased by 27.7%, while the average number of hours each worker worked per week decrease by 20.8%. For an average store in California, these changes translated into four extra workers per week and five fewer hours per worker per week — which meant that the total wage compensation of an average minimum wage worker in a California store actually fell by 13.6%. This decrease in the average number of hours worked not only reduced total wages, but also impacted eligibility for benefits." The University of Washington conducted a review of Seattle's increase of the minimum wage to $15, phased in over several years. Researchers wrote "those earning less than $19 an hour saw wages rise by 3.4% once the city’s minimum wage was $13, while experiencing a 7.0% decrease in hours worked." In other words, the hike was costing jobs. In fact, the research showed there would be 5,000 more jobs in Seattle if the hike had not been adopted. While some businesses might be able to afford the hit of a minimum wage hike, others will not. Restaurants, retail and hospitality, for example, run on very low profit margins. The impact there is likely to be much more severe. In the end, some workers will benefit from a hike in the minimum wage, but others will see fewer hours and lower earnings. It's a tradeoff - not necessarily the rosy picture some activists and policymakers project.

It's been five years now since Idaho voters approved a ballot measure adopting Medicaid expansion. As we've previously written, the promises of the expansion went out the window a long time ago. The latest numbers show enrollment is more than double the projection - more than 1 in 4 Idahoans are now enrolled. There were also at least 83,000 ineligible enrollees reported in January 2021. These enrollees do not meet traditional eligibility standards, but state officials are unable to remove them from the program because of the congressional handcuffs. There were state-sought waivers to make changes to the program for the betterment of Idaho. Four were requested, and only one has been approved. All of this - plus the enormous cost - have given many lawmakers and policy watchers heartburn. In the last legislative session, legislators increased the state’s Medicaid budget. And it’s also now the state’s largest agency budget. The House Health and Welfare Committee has made a recommendation that Medicaid expansion stay in place, at least for now. The committee said it had "serious concerns" about the program at the present time, including the “unsustainability of the current increased budget request.” The committee also sent these six recommendations to the Speaker of the House. So what should have been done? We laid out some ideas here, courtesy of the Foundation for Government Accountability. One of the recommendations was to remove previously ineligible enrollees. It appears at least that part is being addressed and the timeline to do it is being moved up. And re-evaluating the program again in 2025 is also a good thing. In addition to concerns about the cost of the program, Medicaid coverage can be extremely limiting. Not only do providers run into billing problems, but reimbursement rates are also extremely low. Many health care providers will only take a limited number of patients. So, while citizens may have coverage, it might not mean much.

A constitutional amendment that would change the way the citizens of Idaho gather signatures for an initiative is one step closer to going to voters. SJR 101 is a constitutional amendment that would require 6% of legal voters in every legislative district in the state sign on to an initiative for it to go before voters. The current threshold is 6% in half of the state's legislative districts. The legislation is similar to a bill that was passed in 2021 making a similar change. The difference, this time, is that lawmakers are seeking to pass the change via a constitutional amendment instead of just a standard bill. Proponents of the amendment say it is about making the participation in the initiative process more representative of the entire state. Senator Abby Lee pointed out the issue wasn't about whether people supported or didn't support the change, but rather whether it should go before voters to let them decide. A majority of public testimony opposed the concept, but not necessarily placing it before voters. Regardless, the Senate State Affairs committee approved moving the constitutional amendment forward. The distribution threshold, as it's called, is not necessarily unusual as we reported earlier. Massachusetts requires that no more than 25% of signatures come from any one county. Utah has requirements spreading the initiative requirements out among legislative districts. Policymakers should always be careful about changing the right of citizens to make law through an initiative process. If this particular amendment does not make it to the ballot or is rejected by voters, lawmakers may want to consider a variation of the state of Nevada's requirements. In order for statutory initiatives to pass in Nevada, a single general election vote in favor is needed. But for constitutional amendments, a majority of voters is needed in two consecutive elections. A referendum - or veto of the legislature's work - would still take just one majority vote. But if citizens choose to bypass the legislature and create their own laws, a higher threshold could be adopted requiring two affirmative votes of the people.

Today, Idaho lawmakers introduced a bill (SB 1038) to fund universal education savings accounts (ESA) that would fundamentally change the landscape for Idaho children. Modeled after Arizona’s ESA program, the bill showcases various best practices for education choice, many of which are detailed in our policy study, Education Choice Improves Outcomes. The bill would establish individual education savings accounts for all qualified Idaho students in grades K-12, which could be used to fund private school tuition, textbooks and curriculum, educational therapies and tutoring services, online learning programs, AP and standardized tests, computers, and specific services provided by a public school including individual classes and extracurricular programs. Students who enroll will receive 80% of the per pupil state general fund operating expenditures (currently estimated at $5,950 per student per year).This is a student-focused bill, aiming for universal education choice right out of the gate, which is laudable. Other notable aspects include: · A wide range of “allowable” expenses, which will permit parents to select the means and methods of education that best suit the individual student; · Financial and competitive benefits to public schools, such as allowing them to charge ESA students for extracurricular programs and classes; · Carrying over ESA balances into postsecondary institutions; · Annual random compliance audits of ESAs to deter and restrict potential abuse, including an appeal process for parents who disagree with an audit finding; · The establishment of a “Parent Oversight Committee” consisting of six qualified parents of ESA students, to review ESA policies and procedures and to make recommendations for improvements based on the experience of ESA participants. The bill also explicitly protects the independence of private schools that accept ESA payments and “does not permit any government agency to exercise control or supervision over any nonpublic school or homeschooling.” Under the bill’s protections for private schools, no government agency can require a private school to “alter its creed, practices, admissions policy, or curriculum” to accept ESA students. This is an important provision for protecting the independence, religious practices, and curriculum preferences of parents. From a “best practices” policy perspective focusing on students and their individual needs, we would recommend a few changes, such as a targeted ESA program for special needs students in addition to the universal program. Eligible students would need an IEP, but after establishing eligibility, they could apply for the program and receive additional funds for special therapies or tutoring, while staying in the public school they might prefer. In addition to allowing ESA balances to carry over to postsecondary institutions, legislators should allow students to use the fund at a qualified Idaho trade school. Currently, the state’s post-secondary education goals do not match the priorities of Idaho families, particularly rural families. Only 37 percent of high school seniors pursue postsecondary education, while the state’s goal is 60 percent. Rural students in particular want more access and support for trade schools. Allowing ESA balances to be used for trade school enrollment would get students the training they want, instead of forcing them into a college education they don’t, and create incentives to keep more Idaho students in state and on track to become permanent, productive Idahoans. IN-DEPTH: Read the entire legislation here. RESEARCH: Students first - how education choice improves outcomes

Call it the opposite approach. As some states (California and Washington, for example) move to ban the sale of gas-powered vehicles in favor or electric vehicles, Wyoming legislators are moving in a different direction. SJ004 would phase out electric vehicle sales by 2035 in Wyoming. The legislation calls electric vehicles "detrimental" and says "Wyoming's vast stretches of highway, coupled with a lack of electric vehicle charging infrastructure, make the widespread use of electric vehicles impracticable for the state." Wyoming is home to thousands of people who work in the oil industry. It is a critical part of the state's economy. More than a dozen states in total have moved to ban gas-powered vehicles. To prove a point, Wyoming legislators added this final section to their bill: Section 3.That the Secretary of State of Wyoming transmit copies of this resolution to the President of the United States, each member of Wyoming's congressional delegation, the President of the United States Senate, the Speaker of the United States House of Representatives, the governor of Wyoming and the governor of California. It's likely this bill was intended to get national headlines. And the legislation does reference one of the outstanding questions about the electrification of vehicles - where will we get the power and how can it possibly be delivered all at once? A recent report concluded "electrifying a typical highway gas station will require as much power as a professional sports stadium by the year 2030. By 2035, a big truck stop serving electric rigs is expected to require as much power as an entire small town."

The Idaho Supreme Court has recognized, “In the American concept, there is no greater right to the supervision of the education of the child than that of the parent. In no other hands could it be safer.” But apart from the new and limited “Empowering Parents Program,” Idaho currently facilitates such supervision solely within the restrictive confines of the state-created system. While education freedom advocates have tried to help legislators pursue the benefits of an arrangement that gives parents direct control and oversight of their children’s education, they have faced heavy opposition from those who benefit under the current system. “Education choice” simply means allowing some of a state’s education money to follow the student to the education method or school of their choice, rather than allotting all funds to the school district where the student resides. Opponents of education choice have scared legislators into believing that education choice would violate Idaho’s constitution. They rely upon Idaho’s so-called Uniformity Clause, which creates a duty to “establish and maintain a general, uniform and thorough system of public, free common schools.” Many states with similar clauses have effective school choice programs because their state supreme courts have recognized that the provision creates a baseline duty for the state, not a prohibition for promoting education through means outside of the public system. In addition to Idaho’s Uniformity Clause, constitutional questions surrounding the state’s Blaine Amendment, which expressly prohibits government financial aid to religious organizations, have stalled attempts to advance education choice. The way the argument goes, if the state were to set up a voucher program, where private schools are paid directly for student enrollment, some of those vouchers would go to religious schools, which would violate the Blaine Amendment. If Idaho’s constitution were the only factor at play, that might be the end it. However, two recent U.S. Supreme Court cases have curtailed Blaine Amendment restrictions: Espinoza v. Montana Department of Revenue (2020) and Carson v. Makin (2022). The Espinoza decision held that government attempts to exclude religious schools from public scholarship or tax credits are subject to strict scrutiny, meaning lawmakers must prove they have a “compelling interest” in restricting the free exercise of religion of scholarship or tax credit recipients. The Carson majority held that “a neutral benefit program in which public funds flow to religious organizations through the independent choices of private benefit recipients does not offend the Establishment Clause." In other words, states cannot fall back on their Blaine Amendments to justify prohibitions on public funding of schools solely due to their religion. In addition, a state cannot discriminate against religious beneficiaries of public scholarships or tax credits by forbidding them from using those benefits at religious schools. Neither of these decisions compel states to subsidize private education, but once they do, they cannot disqualify a school solely for religious reasons. The legislature is free to extend a voucher, tax credit, or education savings account benefit to all Idaho families, and doing so would be consistent with Idaho statute, which recognizes that parents “have the fundamental right and duty to make decisions concerning their [children’s] education.” Even setting aside the Espinoza and Carson rulings, Idaho’s Constitution and caselaw would support a system that awards education benefits to parents (rather than to religious schools directly). In 1971, Idaho’s Supreme Court established the Epeldi test to determine the validity of a statute relative to the state’s Blaine Amendment. If the legislation is “in aid of any church” or “to help, support or sustain” any church affiliated school, then it would run afoul of the Blaine Amendment. Nonetheless, a 1997 State Attorney General Opinion clarified that an individual grant or tax credit would likely not violate the Epeldi test because the benefits flow to the taxpayer or parent and not to the religious school directly. Both the U.S. Supreme Court and the Idaho Supreme Court have recognized that children do not belong to the state, and the purpose of education is to prepare them for life, not to homogenize them. Nothing prohibits the Idaho legislature from exercising its broad authority to structure tax law and education policy to benefit families directly. Now that the constitution can no longer be used by education choice opponents as a kill switch, a rigorous policy debate can occur on a level playing field. Maintaining that the Idaho Constitution prohibits education choice is simply a strawman to avoid the policy argument. Legislators can and should change the underlying incentives within Idaho’s education system to shift decision-making power to those closest to the student (parents) who are best able to assess that student’s unique education needs. It is time to move beyond Idaho’s 20th century, fossilized, one-size-fits-all education model and ask, “Can we improve outcomes for students and families by offering more education options?” Education choice opponents are free to make the policy argument that parents should not have the right to decide what is best for their own children. We’ll wait.

Numerous states – now including Montana – are considering legislation calling for an Article V Convention of the states. What does that mean? Article V of the United States Constitution outlines two ways to amend the document. The first is through the normal process of two-thirds votes in each House, as well as ratification by the states. The other method much less known allows for two thirds of the states to call a Convention to propose amendments (still subject to ratification). This is not the first time an Article V push has been mounted, as the Congressional Research Service reports here. In order for a Constitutional Convention to be called, 34 states must submit applications. Right now, 19 states have passed a resolution, six more have passed it in one chamber, and now Montana is considering it. We'll see soon whether Idaho, Wyoming or Washington consider the effort. What topics might a Constitutional Convention tackle? Consider the effort in the 1980’s, when supporters pushed states to call for a Constitutional Convention to tackle the topic of a balanced budget amendment. But there is a possibility that numerous topics could be considered – if it ever happened. Much could depend on the kind of convention that is called. Generally speaking, there are three different conventions discussed: · The general convention, which would be free to consider any and all additions to the Constitution, as well as alterations to existing constitutional provisions. · The limited convention, which would be restricted by its “call,” or authorizing legislation, to consideration of a single issue or group of issues, as specified by the states in their applications. · The “runaway” convention, frequently identified by convention opponents as one of the dangers inherent in the process, is essentially a limited convention that departs from its prescribed mandate and proceeds to consider proposals in a range of issues that were not included in the original “call.” In the 1910’s, the United States was one state short of seeing a constitutional convention for the purpose of whether to require the direct election of Senators (instead of via state legislatures). Ultimately, the 17th Amendment was passed and the convention calls were silenced. In this case, however, it is difficult to see a common issue around which the states are rallying, which leaves some concerned about the “runaway” convention scenario. Ultimately, it will be up to the states to decide whether a convention is needed. It could be many years before that ends up happening.

The Montana Department of Agriculture tried to get people to report their huckleberry patches in 2007. After 16 years of failed attempts, the department is looking to undo its own requirement. The House Agriculture Committee heard House Bill 94 on Tuesday. This bill proposes that the rarely-used huckleberry regulations are discarded. The legislation was sponsored by Rep. Paul Green, R-Hardin, at the request of the Department of Agriculture. According to the previous law, the Department of Agriculture required residents to register where they picked huckleberries. The information remains confidential except for when the department responded to general inquiries about whether an area was listed for huckleberries. As no one shared the location of their huckleberry patches, Department of Agriculture and Lt. Gov. Kristin Juras said the rule was unnecessary and never used. Additionally, there are no employees attached to enforcing the rule and no mechanisms to fine people for noncompliance. No one testified against House Bill 94 on Tuesday. The department requested to repeal the rule entirely, but there are options to amend it such as moving the huckleberry reporting out from under the control of the agricultural marketing department, according to Cort Jensen, lobbyist for the Department of Agriculture. The committee did not immediately vote on the bill.

Montana Senator John Fuller has introduced a new bill that would expand the amount of money available for student tax credit scholarships. Tax credit scholarships are a popular education choice model that assists in expanding the opportunity to more students. Scholarship tax credit programs create new pools of funding so that children can receive scholarships to attend the private schools of their parents’ choice. Corporations and individuals make private donations to nonprofit organizations that provide scholarships to eligible children. In return, the corporations and individuals receive a state income tax credit. There are 21 scholarship tax credit programs operating across the country, and research has demonstrated that these programs are positive for student achievement and save money for state and local governments. SB 118 would allow the aggregate amount of tax credits allowed be increased from $1 million to $2 million per year in 2023, $10 million in tax year 2024, and $12 million per year in tax year 2025. Montana originally passed its tax credit scholarship program in 2015. All students statewide are eligible to participate, but the funding has been limited because of state law. In 2022, the $1 million cap was hit 19 days into the year, with 60 donations from individuals and another nine donations from businesses wanting to take advantage of the credit. This bill would dramatically increase the funds that could be available for students.

It’s all about improving outcomes for children. As President of Mountain States Policy Center, I’m proud to announce the launch of "Education Choice Improves Outcomes." This interactive effort includes seven new informational videos, an interactive website, a complete listing of programs, debunking myths, and much more. Our recent Idaho Poll showed a third of Idahoans are not familiar with education choice, but when they know about it, they overwhelmingly approve. What if you could use some of the money allocated to your child’s education to get them extra tutoring – something that would supplement your public school? What if you had the resources to send your child to a private or specialty school to focus on a specific subject on which they excelled? What if, like me, you had a special needs child that needed extra assistance outside the classroom – and you finally had the ability to pay for it? This is not about shutting down public schools. As a state and region, we need to do better to make sure parents and families have more choices, and businesses have a future workforce that is skilled and qualified. When families have more choices, the outcomes for our children improve. How do we know this? On mountainstatespolicy.org you’ll find a complete list of education choice programs from across the country – which ones succeeded, which ones failed, and which ones made no difference. The vast majority show education choice programs save taxpayers money, allow for more diverse schools, and improve academic outcomes for those participating and those who choose to stay in their local schools. Unfortunately, those interested in the status quo are frightening citizens with a lot of myths. Here are the top six. Myth One – Allowing more education choice will harm public schools In reality, public schools are part of education choice. If your neighborhood public school is working for you, nothing will change. In fact, education choice can help improve your local public school. Why? Because parents will have more resources to get their child extra tutoring or assistance outside of the classroom. This can take some of the burden off your public school. Myth Two – Education choice violates the separation between church and state The U.S. Supreme Court has ruled that appropriately designed education choice programs are fully constitutional. And numerous state courts have upheld the constitutionality of education choice. Still, it’s important to know that most won’t use education choice to send their child to a private or religious school. Most will stay in public schools, and instead might use education choice to help pay for the extra tutoring or help that their child so desperately needs. Myth Three – Students don’t benefit from education choice Seventeen major studies have examined academic outcomes for education choice participants. Eleven of them have reported an increase in student outcomes. Four reported no effects. Only two reported negative effects. Education choice has led to higher graduation rates and 43% of students who have used education choice are more likely to enroll in college. Myth Four – There’s no accountability when it comes to education choice All education choice programs have a level of administrative and financial accountability. Most have academic accountability. In most states, your student still must either take state assessments or tests to measure whether they are meeting standards. Furthermore, families must opt-in to education choice programs, and they can opt out at any time. This adds another layer of accountability. If your education choice program isn’t working, you have the greatest accountability tool of all – the ability to leave. Myth Five – Education choice hurts rural communities A Brookings Institute report shows a full 70% of rural families live within ten miles of various education choice options, including charter schools and private schools. As other states have advanced education choice, supply has increased to meet demand. In Florida, the number of private schools in rural areas doubled after numerous expansions of education choice. In Arizona, a public school is 15 times more likely to lose a student to another public school than a private school. Myth Six – Education choice is anti-public school Public schools are critical to the success of our region and country. But they don’t always work for everyone. And when that happens, children and families should be able to get the extra help they need. Every child can learn and should have the chance to do so in a way that meets their individual learning needs. We’re paying to educate the child. That must be what comes first. As state courts have recently ruled, public schools and education choice can exist at the same time. Education choice is important because education choice improves outcomes for children. Every state does it differently, but the Mountain States are behind the times when it comes to providing your family with more options. In places where education choice is allowed, the results are impressive and the future for children improves. That is what’s most important.

As legislative sessions in our region are underway, one cannot help but look at the list of bills being introduced and be overwhelmed. While we are still waiting to see the bulk of legislation in Idaho (which doesn't allow pre-filed bills), there is plenty of legislation being introduced in Montana and Washington. So far, we have seen nearly 400 bills introduced in Montana and 483 introduced in Washington State. According to the National Conference of State Legislatures, we still have a long way to go. On average, more than 109,000 bills are introduced in state legislatures each year. An average session length is approximately 120 calendar days. Throughout our region, the number of bills introduced typically depends on the state. Some states, including Montana and Wyoming, have limited the number of bills a legislator can introduce, a policy which forces lawmakers to focus on important issues, and not spend time naming official state rocks or dinosaurs.

Idaho Governor Brad Little announced Monday a plan to increase K-12 spending in Idaho in several areas. From the Governor's release: · Targets starting teacher pay to Top 10 nationally ($47,477), up from #41 nationally when Governor Little took office. · Strengthens pay for all teachers – including our most experienced educators -- by $6,359. In total, this adds $145 million for enhanced teacher pay statewide. · Closes the salary gap that schools face for classified staff by providing $97.4 million to better position schools to hire critical support staff such as cafeteria workers, bus drivers, and paraprofessionals. · Continues the state’s commitment to raising take-home pay of teachers and school staff by providing an additional $27.9 million for health insurance benefits. · Provides $52.4 million for the largest single-year boost of discretionary funding to schools in state history, allowing local schools to meet local needs and defray reliance on property taxes. · Puts forward $2.9 million in ongoing funding to improve dyslexia outcomes throughout the state through training and outreach. · Makes permanent the widely popular Empowering Parents grants by investing $30 million to continue helping families take charge of education expenses for their children. · Provides $20 million in one-time grants for the Securing Our Future Initiative from the Office of School Safety and Security. Funds will be used to make meaningful, durable, and demonstrated effective investments in K-12 school facility security throughout the state. · Provides $30 million in one-time grants to preserve school investments in information technology, including student and classroom devices and network infrastructure. Many of these items may be very popular. We know that the Empowering Parents grants, for example, is popular and has helped students get extra assistance outside the classroom. That program should be expanded to include all families and more education options - with the goal of improving outcomes. Our question is whether the other spending will improve student outcomes? What is the measurement whereby we can determine if it will help children? What are the goals? The number one priority of any plan to increase education funding should be student outcomes. Unfortunately, many states have increased funding on their K-12 system without seeing results. The latest National Assessment of Education Progress scores prove the point. Even before the pandemic, the scores were flat. Idaho currently spends more than 50% of its budget on K-12. You can decide for yourself whether that's too little, too much, or just right.

Montana is considering legislation that would tighten the rules for the auditing process — including penalties for state employees that do not comply with audits. This proposal stems from frustration on behalf of the Legislative Audit Division of state government that is attached to Montana’s Legislature. Legislative Audit Division employees are tasked with performing a variety of audits to ensure the state’s programming is running and budgeting is being spent according to the will of the lawmakers. These audits include both financial reviews as well as performance reviews. In the past decade, the Legislative Audit Division has run into roadblocks with their requests either getting delayed or outright ignored which delays the legally required audit process. At this point, the Montana Audit Act does not have penalties for state employees or departments that refuse to comply with the process. LC 4126 would introduce penalties in order to incentivise state employees and departments to comply with the audits. If an elected or appointed official ignores or delays the audit, they will be charged with a misdemeanor. Additionally, the law would make materials under review confidential until after the audit has been released — something that has been understood by not outrightly confirmed.

Governor Brad Little welcomed members of the Idaho State Legislature today with his state of the state address, pressing a theme of "Idaho First" in his remarks. The governor spent a large chunk of remarks on education funding as well as tax reductions and fiscal responsibility. On education funding, Governor Little wants to increase teacher pay, increase salaries for classified school staff, increase the state coverage of teacher health insurance benefits and increase school funding. In total, those four ideas would represent more than $300 million in spending. The governor also said he favored making permanent the popular Empowering Parents program. This form of school choice has been helpful to parents seeking to get their children extra help they need outside the classroom. Other highlights of the governor's address include: $120 million for ongoing property tax mitigation $62 million to the state's rainy day fund $200 million+ surplus and a balanced budget for the next five year $80 million to provide $8,500 for qualifying high school graduates to use at any Idaho university, community college, career technical program, or workforce training provider of their choice It is especially encouraging to hear the governor's comments on the Empowering Parents program. It has been an enormous success, but state lawmakers would be wise to not only make it permanent, but also expand eligibility and the options for parents inside the program. Our children deserve nothing less. Today, we launched Education Choice Improves Outcomes. Mountain States Policy Center will release a comprehensive study on education choice and the options available for lawmakers this Thursday.

Idaho residents are experiencing a painful consequence of rising real estate values. Not only is it more difficult to purchase a home and/or relocate, but property taxes are also increasing. From 2020 to 2021, there was a 20.2% increase in the assessed value of Idaho property, totaling $230.7 billion. Then from 2021 to 2022, assessed values increased by 43.7% to reach $332.1 billion. To put this in perspective, in the last market run-up from 2005-2006 before the Great Recession, Idaho only experienced a 19.8% increase in assessed property values. Despite lowering levy rates throughout Idaho’s local governments, the property tax amount paid by each homeowner has increased substantially. The Idaho State Tax Commission recently presented to the Idaho House of Representatives Committee on Revenue and Taxation. One chart shows that, of the major property categories in Idaho, residential properties have increased more than the other property categories which include commercial, public utilities, agriculture, timber, and mining. The thousands of dollars that individual Idaho families are having to divert to ballooning property taxes is a difficult burden in this inflation-driven economy. Kathy Ireland, with the Idaho State Tax Commission, shared with the Committee on Revenue and Taxation, that in 2021-2022 residential property owners (excluding new builds because they have an inherent premium) saw a 9.3% increase in taxes. Commercial property owners had a 13.5% decrease in property taxes over the same time-period. Property tax relief has been built into Idaho’s property tax system for decades. Beginning in 1980, homeowners received a property tax exemption up to 50% of the value of their home, originally capped at $10,000. This exemption was deducted from the assessed value of the home, while the remainder was then the taxable value of the property. In 2006, Idaho began to rely upon the Federal Housing Price Index to set the exemption amount for property taxes and this number fluctuated with the housing market. In 2016, the Idaho legislature voted to cap the property tax exemption at $100,000 (which later increased to $125,000). If a homeowner’s property is greater than $250,000, the homeowner’s exemption will be maxed out. At the end of 2022, the average Idaho home cost was $459,947. Unfortunately for homeowners, assessed housing values increased dramatically post-2016 and the majority of the tax burden quickly shifted onto residential property and away from commercial. Canyon County estimates that 75% of its property tax income comes from residential property. A proposal to re-instate the HPI in last year’s legislative session had 40 sponsors but was never heard in committee. If the HPI was re-instated, it would have increased the exemption to almost $180,000 in 2022. This would have saved the average urban household roughly $573.65 in 2022. (180,000 minus 125,000 equals 55,000. This was multiplied by the average urban property tax levy rate across Idaho of 1.043%.) Governor Little has also called for property tax relief, but has left it to lawmakers for a specific strategy. He called for the setting aside $120 million from the general fund to buffer local property tax needs, while the legislature develops a longer lasting solution. Providing funding to our cities, schools, counties, roads, and other municipal services is critical to the daily functions of both homeowners and businesses, but the cost should not be borne by only one of type of property owner. Not only do local governments need to keep spending in check, the Idaho Legislature needs to find and hear out a workable proposal that fairly distributes the property tax burden. Hopefully, as the Legislature begins its fourth week of the legislative session, workable proposals will find a path forward to fix Idaho’s property tax system.

An astonishing 4,332 bill draft requests have already been submitted to the Montana Legislation committee, according to the state Legislative Services Division. For perspective, the entire 2021 legislation session had 3,367 bills. Despite the large number, most of these requests will not end up making it to committee based on previous years. In the 2019 and 2021 sessions, less than 40% of the bill requests were introduced for debate and 20% or less of those requests have made it through the Legislature. There are 271 bills that have already been assigned to committees before Legislation has begun. The first week of the session will see at least 85 of those bills in their first committee hearings. A majority of these bills are tackling cleaning up state code and consolidating state boards. The committee work is starting work immediately which is unprecedented according to House speaker-elect Rep. Matt Regier, R-Kalispell, in an interview with KTVH. The current topics are mainly concerned with education, election and taxes. So far, these are the bill requests: 28 deal with abortion 49 deal with guns and weapons 52 deal with marijuana 81 deal with housing 147 deal with fish and wildlife 269 deal with education 269 deal with elections 342 deal with taxes Additionally, 48 proposals for amending the Montana Constitution have been submitted. If two-thirds of the Legislature endorse the amendment, it will be placed on the 2024 ballot for voters to approve or reject. Currently, Republicans have a 102-seat supermajority which means if they united, they could advance a proposed constitutional amendment.

Governor Greg Gianforte today called on the Montana State Legislature to approve his plan to provide property and income tax relief. The governor's plan is a $1 billion proposal. Roughly $500 million would be used for property tax relief in Montana - a $1,000 property tax rebate in both 2023 and 2024. Governor Gianforte also wants to increase the state's earned income tax credit, and reduce the state income tax from 6.5% to 5.9% - a move that would immediately make Montana more competitive with its neighbors, including Idaho, which just lowered its state income tax to 5.8%. The governor's budget also "cuts taxes for Montana's small business owners, family farmers, and family ranchers by expanding the business equipment tax exemption from $300,000 to $1 million." Like Idaho, Montana can afford tax relief as it has an enormous surplus. While distributing rebate checks is welcome, policymakers should aim for more permanent tax relief. If rebates are needed, the government is over-collecting. Today, we released a study on how Montana and Idaho can tie their state income tax rates to revenue triggers. Properly designed, the revenue trigger option can result in numerous benefits and negate the need for tax rebate checks.

The federal, state, and local government responses to the COVID-19 pandemic vary based on region, and sometimes based on political party leadership in any given area. Some regions locked down for months, while others reopened quite quickly. Some states required masks and emergency orders for more than a year, while others swiftly lifted requirements. Who did it best? It depends on who you ask. For example, a comparison of a report published by Sykes Enterprises (a corporate consulting company) and another report from the Committee to Unleash Prosperity (a non-profit organization promoting supply-side economics) shows that attempting to rank states based on the handling of COVID-19 is a biased endeavor. Five of the top ten states in the Sykes Enterprises report, actually rank in the bottom ten for the Committee to Unleash Prosperity. Meantime, three of the states in the Sykes bottom ten are in the top ten for the Committee to Unleash Prosperity. Differing values make an unbiased comparison of Covid-19 responses impossible, because the values of the authors determine ranking. Methodology and values differ widely across reports on Covid-19 government responses. For some perspectives, the lowest case transmissions and highest use of healthcare resources was the ultimate value, regardless of costs. Other sources weigh the health impact of the pandemic against other costs, including unemployment, GDP, and academic performance. For example, the Sykes Enterprise report assumes government mandates including masks and stay-at-home orders decrease transmissions (correlation analysis does not support this assumption). The report disregards economic and academic impact and looks at the health industries use of resources. The Committee to Unleash Prosperity, controls for more variables, including geographic isolation and industry composition. Using these weighted metrics, the report ranks states based on pandemic performance factoring the cost to GDP and academic success against the benefit of lower transmissions. Complicating the ability to draw conclusions from Covid-19 data is the low correlation of datasets. Chung et al., using Oxford Covid Government Response data, found that the only metrics that were consistently correlated with decreased transmissions were contact tracing and the health index (a metric calculated by the Oxford Covid Government Response data team). The researchers concluded that intense testing and accurate tracing were critical to controlling the spread of Covid-19 and reducing daily confirmed cases. However, despite multiple statistical models and time-lags, the report could not predict which other government actions decreased COVID-19 cases. Despite many variations, the statistical models concluded that stricter government policies had positive coefficients, meaning the implementation of these policies increased the number of COVID-19 cases within the statistical model. The researchers concluded that these policies were still significant to decreasing transmissions in the real-world but interacted in a more complex way than could be predicted accurately by the model. Literature offering measurable proof supporting stringent pandemic regulations is hard to find. Literature offering collaborative and unbiased ranking of states and their COVID-19 response policies is non-existent. This leaves policymakers in the difficult position of knowing who and what to trust. Responsible policy and regulatory decisions must look below the surface of all reports, to identify the bias and understand how the numbers are interacting and what value systems are guiding the rankings. Mountain States Policy Center is preparing to release a study of the western states regulatory response to COVID-19. The study analyzes the policy efforts of Idaho, Montana, Utah, Washington, and Wyoming and the resulting transmissions within the state. MSPC values the health of our families. MSPC also understands that economic prosperity and academic success are critical contributors to the health of the region. MSPC’s analysis seeks to identify the factors that significantly decreased transmissions and points out the costs of the pandemic.

Over the past few years, Idaho lawmakers have twice lowered the state’s income tax rate. The latest legislative action passed last September brings the Gem State’s income tax to a flat rate of 5.8% for all income levels. ​ Like Idaho, Montana lowered its income tax from 6.9% to 6.75% in 2022. Governor Greg Gianforte says there’s room for an even larger reduction. He has proposed lowering the top state income tax rate to 5.9%. ​ The reduction action in both Montana and Idaho follows a national trend of lowering state income tax rates. One of the only states not following the trend happens to be neighboring Washington, providing a golden opportunity for policymakers in Idaho and Montana to take advantage of an extraordinary policy shift and solidify their state competitiveness for decades to come. Read more about this policy idea in our latest study here. In Idaho, personal income taxes account for $2.319 billion of the state’s yearly revenue – or roughly $40 million per .1% of the 5.8% rate. Policymakers could design a trigger that would automatically reduce the 5.8% based on the amount of excess, sustained revenue reported in the state’s frequent revenue forecasts. For example:

Idaho, Wyoming and Washington are now all considering proposals for an Education Savings Account (ESA) program. This education choice option has been shown effective in other states in increasing outcomes for all students - both those who take advantage of it, and those who stay in the traditional K-12 system. But which state proposal is best? Here's a look: Our analysis on the Idaho bill can be found here. In Wyoming, legislators have already moved the legislation through one chamber. In Washington, the Education Savings Account bill is scheduled for executive session on February 9th. Washington has the advantage as the only proposal - thus far - that contains extra assistance in an ESA for special needs children.