During the lengthy debate over Idaho Senate Bill 1038 on the Idaho Senate floor on Monday, Senator Carrie Semmelroth used an unusual argument to explain her no vote. Senate Bill 1038 was the first bill of the current Idaho session to call for Education Savings Accounts. We're expecting to see more in the coming days. Most of the discussion has been over the budget, or whether the state has adequate education choice options right now, or whether the state has a responsibility to change its funding in the wake of lackluster results. But Senator Semmelroth turned part of her remarks into a rebuke of free markets, saying: There's a bit of irony in government - which has and spends the unlimited resources of taxpayers - concluding that a market model won't work because it just costs too much. The suggestion that the only motivating force in a free market is money is not only very shortsighted - it's just not true. It's important to point out what has happened in other states under an ESA model. In Arizona, for example, 58% of students using choice programs are special needs. Why is this? It's because ESA's are not just about private school tuition - they are also an important tool for families to use to supplement their child's education. Free markets are the most revolutionary force for change the world has ever known. They are all about providing creative solutions to address challenges. Throughout the pandemic, educators across the country used the free market to open micro-schools, learning pods and a host of other schooling options that uniquely fit their qualifications and a student's needs. Now some school districts are taking advantage of this pandemic-era invention. A decade ago, you would have been called crazy if you predicted teachers would open small schools at their dining room table in 2021. Three decades ago, few predicted the arrival of online education. The demand arose, and the marketplace provided. Meantime, a century ago, students gathered in a school house, at desks, facing a chalkboard. This seems to be the only education model that hasn't changed. It is very shortsighted to suggest the free market just can't address issues related to education. As we saw during the pandemic, if you give them a chance, educational models will emerge. Some will succeed and some will fail. But the options that struggle won't stay options for very long. And the options that don't innovate and change will also have a short lifespan. As the father of a special needs child, I know that the marketplace will provide the best opportunity to find solutions that fit his very specialized needs. It won't come from a system that simply provides a one size fits all service model.

If there is one thing homeschool families have in common, it’s the desire to be left alone about their education choices. Parents go to great sacrificial lengths to homeschool, including paying all expenses out of pocket, often doing so on a single salary. Homeschoolers get used to doing things in their own way, in their own time, on their own dime. Homeschool families have a unique set of concerns when it comes to policy debates about education. Many have already opted out of a classroom setting due to special or unique needs or talents of their children, religious or philosophical beliefs, or lack of education options in their area. Many homeschool families rightfully greet the prospect of education choice with a heavy dose of skepticism. “Education choice” means allowing some of a state’s education money to follow the student to the education method or school of their choice (including homeschool), usually in the form of Education Savings Accounts (ESAs). In Idaho, the ESA debate is in full swing as legislators consider allowing parents to control some of a student’s education dollars. For homeschool families the opposition to any iteration of education choice comes down to one primary concern: government control. After all, prior to the early 1980’s, homeschooling was treated as a crime in many states. Homeschoolers have spent decades crawling out from the thumb of government hegemony. ESAs are viewed as a Trojan Horse that will allow the state to reassert influence over homeschooling. No matter how good the bill looks, ESA opponents embrace the slippery slope fallacy and assert that an inevitable chain of bad things will happen in rapid succession, leading to homeschooling’s demise. The fundamental appeal of this argument is fear. As homeschoolers, we would be the last people to defend every iteration of an “education choice” bill. Money is not the ticket to a homeschooler’s heart—freedom is. But money is a neutral tool that may produce greater control or freedom depending on the criteria attached to its use. In the case of any proposed education choice bill, we must resist the urge to view them all equally. Interestingly, conservative homeschoolers sometimes line up with far-left socialists and union members in opposition to education choice, albeit for very different reasons. In either case, categorical opposition to ESAs is always rooted in fear-based arguments: ESAs will destroy public education. ESAs will destroy homeschooling. ESAs will destroy the religious freedom of private schools. ESAs will leave rural students without options. Could a poorly designed ESA program result in one or more of those outcomes? Yes. Just as a knife may be used to prepare a delicious meal or to grievously wound a person, ESAs are neutral tools that must be wielded thoughtfully by policymakers. It is dishonest to ignore causal links and evidence to present a false dilemma that ESAs are categorically good or bad regardless of how they are set up. The truth is there are “right” ways and dangerous ways to set up ESA programs. As Idaho recognizes, it is parents who “have the fundamental right and duty to make decisions concerning their [children’s] education.” An appropriate and effective ESA program should serve to enhance this right and duty in an “opt-in” manner. Although it should ideally be available to all Idaho families, sometimes ESAs are narrowly tailored to low-income or special needs students only. A lack of universality or policy perfection in a pilot ESA bill is not a principled reason for outright rejection. The purpose of education choice is to give parents the means to choose the education method that best suits the needs of their individual child, not to bring the child under the regulation and purview of the state. It should be simple, clear, understandable, and place as much of the decision-making power as possible with parents. It should explicitly forbid state control over curriculum or religious choices of parents and include protective language for private schools and homeschool families. If these criteria are met, it would be needlessly cruel to oppose a policy that would fling wide the doors of opportunity for families who are unable to homeschool for financial reasons, especially when the entire program is “opt-in” and requires no additional funding for students transferring out of public school. Parents who have any reservations can continue homeschooling on their own dime outside of the program. Meanwhile, the ranks of Idaho’s homeschoolers will increase, meaning more families will be prepared to defend against future government intrusion. The reality is that state governments can and do exert regulatory control over homeschoolers whether government money is involved or not. In Washington, for example, parents must be “qualified” as defined by the state, file an annual declaration with the school district where they reside, teach 11 required subjects, have their children tested or evaluated annually by a “qualified” individual, and keep records of academic progress. All these rules exist without homeschoolers receiving one cent of government money. In fact, legislators often propose amendments to Washington’s homeschool law to enhance government control or lower the age that homeschool parents must begin reporting about their children to the state. Lack of government money does not protect homeschool families from state regulation. Vigilance and defense against government overreach is a pervasive role that all homeschool parents must accept if they value their academic freedom. We urge homeschool parents not to prioritize a hypothetical risk about the problems a poorly-designed ESA program may create over the very real crisis that a well-designed ESA program can solve. The possibility that the state might, at some point, exert more control over homeschooling through some future version of a corrupted ESA program is less pressing than the fact that parents are presently compelled by the government to submit their children to an education that may not be best for them, unless they are wealthy enough to opt out. A well-designed ESA program is not a threat to homeschoolers and is a godsend to kids who are trapped in failing or unresponsive schools. It is unreasonable to oppose every version of a policy that would enable these kids to have the kinds of opportunities our homeschooled children already enjoy on the fear that, someday, if a series of bad things happen in succession, we might lose some of our homeschool freedom.

Farm input costs are on the rise, land is less available and less affordable, and the added stress has brought little in the way of additional income. Is there an incentive for farmers and ranchers in the Mountain States to continue farming, despite the stress? On February 7th, the USDA released its latest farm-income data. Nationally, farmers in the Mountain States accounted for 4.9% of the farm related net income. Farmers in the United States as a whole created $140.9 billion in net farm income in 2021. Washington contributed 2.2% and ranked 17th, Idaho contributed 1.3% and ranked 26th. Finishing out the list, Montana ranked 33rd, Utah 37th, and Wyoming 39th. Net income on a per farm basis is most-recently available from the 2017 agriculture census. On a per farm basis, Idaho ranked 14th and Washington 17th (for net farm income per farm). Montana (26th), Wyoming (32nd) and Utah (34th), trailed further behind. Predictably, the Mountain States account for a higher percentage of production expenses. Farm cash expenses, excluding operator housing, totals $345 billion in the United States. The Mountain States account for 6.4% of national farm expenses. The higher input costs for row and specialty crops are the cause of the shift. On a per farm basis of expenses in 2017, Idaho and Washington ranked 8th and 9th respectively. Land rents for the Mountain States in 2021 were 5.1% of the national total. Idaho, Washington, and Montana ranked 15th, 16th, and 18th respectively for land costs. Again, the higher value crops play a role in the higher land rents. Farm incomes are expected to decrease in 2023 for the Mountain States between 12% for parts of Montana, 21% in the Idaho, Utah, and Washington basin and range regions, and 24% for the row and specialty crop regions of Idaho and Washington. A combination of higher production expenses and lower crop prices, will drive the farm economy downward. In the midst of these challenges, what is the financial incentive to continue farming? Net cash farm income (NCFI) is a major motivator for continued farm operations. This is the profit of the operation after all expenses are paid, including owner and employee salaries. This value can be used to reduce debt, pay taxes, cover family living expenses, and invest. For many farm families the NCFI is a financial tool that would be unavailable outside of farming operations. For Idaho this incentive is $52,503 per operation in 2017, and the four other Mountain States followed behind, with Utah the lowest at $19,929. NCFI is a critical tool in increasing the financial stability of farming operations, managing risk for farm families, and incentivizing operations to stay in business. Farm families have benefited from record levels of NCFI through the pandemic, with 2020, 2021, and 2022 setting records. This year, 2023, will likely see a softening of these numbers. However, NCFI is still predicted to be above the record set in 2021, so farmers will still be able to benefit from this financial tool.

"It's a journey," Idaho Senator Dave Lent said, before voting against Senate Bill 1038 - the first bill of the session to create Education Savings Accounts in Idaho. The Idaho state Senate voted 12-23 against the legislation, even as many members spoke in favor of many aspects of the bill. "I look forward to seeing more bills related to education choice this session," Senator Ben Adams said. "But this one creates a new government program." "This is the next iteration [of education choice]," said Senator Lori Den Hartog, encouraging legislators to be in favor even if they might not like every aspect. When MSPC was invited to testify several weeks ago, we encouraged legislators not to make perfect the enemy of the good. Arizona did not advance more education savings accounts overnight, and Idaho won't either. Whether it's this proposal or another, policymakers have the chance to advance more options for more families this session. While 1038 checked a lot of boxes and some considered it a home run in terms of what it accomplished, there is no shame in getting a double or a triple. Attempting to bring more buy-in from more legislators is a good thing. Some of the debate today centered on the state's constitutional mandate regarding public education. It is important to note that West Virginia had similar language, and the state Supreme Court there ruled there was no reason why legislators couldn't meet their constitutional requirements and launch an ESA at the same time. Idaho Representative Lance Clow may be ready to introduce another ESA bill in the lower chamber as soon as this week. We'll see what language that includes. Senator Chuck Winder also seemed to open the door by indicating there were other options coming. Both Winder and Senator C. Scott Grow also suggested amending the language in 1038. Another option for lawmakers is to expand the state's Empowering Parents program to allow for more participation and more access. Senator Julie VanOrden suggested taking parts of 1038 and adding them to Empowering Parents. Our Idaho Poll showed strong support for education choice - when it was understood what education choice meant. As we've detailed in our study Education Choice Improves Outcomes, education choice is important because education choice improves outcomes for children. Each state can and should craft its own plan with children and parents at the core. In places where education choice is allowed, the results are impressive. ​ The vast majority of credible evidence shows 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. Our kids don't have a union. They don't have a special interest group. All they have is parents and lawmakers. The education choice debate in Idaho's current legislative session is still in the first couple of innings. Stay tuned.

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. Two-thirds of the Idaho Senate gave final approval today to SJR 101, 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. 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 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.

As Idaho, Wyoming, Washington and Montana all consider bills to create Education Savings Accounts (ESA) for children and their families, opponents have attempted to label ESA's as vouchers. If you oppose education choice, it's understandable. Polling shows vouchers do not have the same amount of support as ESA's. The word "voucher" has a negative connotation, which explains why so many opponents keep saying "ESA vouchers." The problem is there's no such thing as an "ESA voucher" - in fact, ESA's are very different from vouchers. Many lawmakers don't understand the difference. A voucher program would let parents use taxpayer dollars to pay for tuition at a private school approved by the state. Typically, the state writes a check to a school in the name of a student to cover tuition. An Education Savings Account is much different. First, money is held in an account by the state - it is not given directly to schools. Second, an ESA allows parents to use a portion of state funding on a variety of education services. Yes, it can include private school tuition, but it can also include tutoring, special needs services, curriculum, mental health treatment and much more - so long as it is for an educational purpose. In the end, ESA's are given directly to parents via a state fund, whereas vouchers are given to schools or a specific institution. Our Idaho Poll showed strong support for education choice - when citizens understand what it is. Explaining the difference between ESA's and vouchers is part of that process.

A flurry of legislation throughout the Mountain States has made it difficult to track everything that’s going on. In Washington state, for example, nearly 1,700 new laws have been introduced. In Montana, it has exceeded 1,400. If you are interested in education choice, it is hard to make heads or tails as to what’s happening. Here’s a state-by-state rundown, as of today. Idaho SB 1038 – Universal Education Savings Accounts for all children · Passed committee 6-3 on February 15th · Failed in Senate 12-23 on February 27th · Status: Likely dead (Note other pending proposals: On Thursday, March 2nd, we’re expecting three additional proposals creating an ESA or something similar.) Montana HB 549 – Authorizing establishment of public charter schools, with limitations · Passed committee 11-2 on February 24th · Passed in House 79-21 on March 1st · Status: Still alive HB 562 – Authorizing “Community Choice” schools · Passed committee 8-5 on February 24th · Passed in House 63-37 on March 1st · Status: Still alive SB 118 – Revise aggregate limit on tax credit scholarship program · Has not moved since January 12th · Status: Likely dead SB 393 - Establish the Students with Special Needs Equal Opportunity Act · Passed in committee 9-4 on February 22nd · Awaiting floor action · Status: Still alive SB 390 – Provide freedom in school choice Education Savings Accounts · Tabled in committee February 27th · Failed to advance directly to floor 21-29 February 28th · Status: Likely dead Washington HB 1615 – Creating students first Education Savings Accounts · Has not moved past committee on February 2nd · Status: Likely dead Wyoming HB 194 – Creating Wyoming freedom scholarship account · Has not moved past committee on February 7th · Status: Likely dead SB 143 – Wyoming freedom scholarship act · Passed out of committee 4-1 on January 30th · Passed Senate 17-14 on February 2nd · House will not introduce bill · Status: Likely dead

Idaho agriculture, along with the rest of the country, endured many negative impacts from the COVID-19 pandemic. Other than health care, agriculture may be the most important sector in a time of national illness. What needs to be done to protect Idaho's Ag community from future health emergencies? Idaho legislators are intent on finding out. They have introduced Senate Concurrent Resolution 102, which would establish an interim committee to study the impact of the COVID-19 pandemic on Idaho’s agricultural economy. The objective of the six-person committee is to make policy recommendations to protect Idaho’s agricultural sector from future pandemics and find remedies to the negative impacts of Covid-19. The cost to the Idaho taxpayers would be $15,000 to cover the travel and other committee expenses. Undoubtedly, Idaho agriculturalists experienced some bumps and bruises over the last three years. Is it worth $15,000 from Idaho taxpayers to look at the effects of COVID-19? Any farmer or ag-business worker participating in agriculture during 2020-2022 can easily speak to the business discomforts and challenges faced repetitively over this timeframe. Supply chain disruptions, labor shortages, and cost run-ups were common, not just in Idaho but throughout the country. However, through it all the Idaho agricultural economy not only weathered the storm but grew. Supply chain disruptions were immediate throughout Idaho agriculture. The closure of restaurants decreased the demand for many goods, like butter and onions. These two ingredients alone had a profound impact on Idaho dairy producers and onion growers. A sudden stop to butter and cream purchases created a glut in the milk market, plummeting prices received at the farm gate. Onions suffered excess supplies, with 2019’s harvest of onions rotting in storages with no one willing to buy and consume them. These two goods were only the start of the troubles. Over the next two years, every producer felt supply chain disruptions, along with every industry in the world. Even consumers grappled with these supply chain issues, facing empty grocery shelves. Fertilizer and chemical inputs were often difficult to find. At one point hay producers were searching the region for baling twine in the middle of the summer! Difficulties were compounded with the ability to find labor to plant, grow, and harvest crops. A pre-existing challenge was worsened by confusing and changing regulations that made it difficult to secure enough labor to accomplish necessary tasks. Increasing the complexity of the pandemic, costs rose quickly, with diesel being the most notable. Despite these challenges Idaho grew their on-farm cash receipts by 6% in 2020, to $8.5 billion. The agricultural industry added $10 billion (13%) to Idaho’s GDP and accounted for 1 out of 8 jobs in the state (123,000). Even with complaints of increased costs, data from 2020 shows that total expenses decreased by 2% and net farm income increased by 38%. This excludes any government support payment that was dispersed with COVID relief monies. Two years later farm income has continued to grow with 2022 estimates at $11 billion, 29 percent higher than 2021 (also setting a new record). Expenses also set new records in 2022, at $8.9 billion (20 percent higher than 2021). Almost every area of expenses saw cost increases. Most farmers agree that 2022 brought about similar net incomes as normal years. What information will the new committee be able to generate outside of already created resources? We'll have to find out. The most valuable part of the exercise may be the help in educating lawmakers about Agricultural issues. The topic of COVID-19 and agriculture is frequently researched by public and private entities, and many resources are easily available online. Two resources include University of Idaho (U of I) and the United States Department of Agriculture (USDA).

Parents should be the ultimate authority when it comes to the education of their child. Too often, politicians look the other way while school districts attempt to subvert parental oversight. That could be about to change in Idaho. House Bill 163 has been introduced by Rep. Judy Boyle and Sen. Ben Toews, with the backing of state Superintendent Debbie Critchfield. The "Parental Bill of Rights," as it's called, would add parent and guardian rights that are not currently found in Idaho state law. The bill requires that schools notify parents about changes to a child's mental, emotional or physical health. The legislation also requires parents are informed regarding: Student’s academic and health-related information; School-offered health and wellness services; Notification and parent permission for surveys that could determine a student’s personal information such as sexuality, religion, political beliefs or family financial details; Notification of contact with law enforcement in the school setting; and Reasonable access to observe school activities The bill has already passed unanimously out of the House Education Committee. Co-sponsors include the chairs of both the House and Senate Ed committees. It's disappointing that some school districts don't already do this voluntarily. If it takes a state law to make it happen and put parents back in charge, so be it.

It produced some eye-opening numbers that got the attention of media including the Idaho Statesman and KTVB. But a new blog from the Idaho Center for Fiscal Policy on Idaho Senate Bill 1038 should be considered with major caution, even as it appears to predict education choice would be wildly popular. The center claims the cost of the Education Savings Account program in Idaho would be $363.8 million in 2025 and beyond. The author claims 12% of public school students – or 37,850 – would participate, at a cost of $225.2 million. The center further predicts that 75% and 95% of private school and homeschooling participants, respectively, would sign up for a total cost of $133.5 million. In examining these claims, let’s first separate the public school students from the private and homeschooling students. As of 2020-21, the state of Idaho State Department of Education financial summaries show an allocation of roughly $7,500 per student, per year. These are just state funds – local and federal dollars are counted separately. Under the ESA proposal introduced in Senate Bill 1038, 80% of that state per student fund would stay with the student and their family for education, while the remaining 20% would stay with the public school where the child lives. While there is little evidence to suggest 12% of public school students would opt-in to the program, the Idaho Center for Fiscal Policy piece suggests the $225.2 million is new spending. It is not. The state will be spending that cash whether it passes an ESA program or not. That money is already in the “system.” (It’s worth noting the fiscal note of 1038 calls for $45 million in spending for 6,600 students, but those numbers could change depending on the number of public school students who participate.) If ICFP’s claims are true and 12% of current public school students would take advantage, overcrowding in state public schools would dramatically decline and the amount of money the state spends, per student, on K-12 would actually increase, as 20% would stay with the public school. On the private school and homeschooling side, again there is little evidence to show that 75-95% of current private and homeschooling students would sign up for the program. First of all, universal programs like the one proposed in SB 1038 are fairly new. There is no way to accurately determine the number of private and homeschooling students who will take advantage. Second, the state of Idaho does not regulate private or homeschooling, so it is difficult to know the number of students participating. The Idaho State Department of Education estimates private schooling accounts for about 11,700 students in Idaho. The ICFP claims there are more than 15,000. Assuming the Idaho State Department of Education data is correct, ICFP’s projected cost claim (assuming 75% enrollment) is off by millions of dollars – not just a rounding error. Third, it’s worth considering the language in the bill. If the ICFP projections of 22,400 homeschooling and private school students participating is correct, the school districts where those students live would automatically see an increase in state funding. Why? Because 20% of the state allocation of $7,500 stays with the local school district – granting districts another $33 million. But a review across previous state programs finds no evidence of enrollment reaching or even approaching those percentages. Current data from the program in Arizona shows the number of students participating at 47,200 – half from public schools, half from private schools. Arizona’s student population is roughly four times larger than Idaho, yet ICFP claims Idaho’s enrollment in an ESA would reach 60,304 – far exceeding Arizona’s. It's also worth noting that 58% of students in Arizona using choice programs are special needs – an important consideration in predicting how many students may participate in the future. Before Arizona’s expansion, there were six states that offered Education Savings Accounts. The total student population using those accounts was 22,000. The fiscal note for the Arizona legislation assumed 20% participation of homeschoolers in three years. The research in MSPC’s Education Choice Improves Outcomes concluded: "There is no official census of homeschool students. According to U.S. Census Bureau projections, Idaho’s estimated 2022 population is 1,939,033. The estimated school age population (age 5-17) is 362,600. Combined public and private school enrollment is approximately 328,724. The gap between the total school age population and those enrolled in public or private schools is 33,876. According to the 2020 Census Bureau Household Pulse Survey, 10.3% of Idaho families homeschool, but each family may have multiple students. The true number of homeschooling students may be greater or less than these estimates." With the widespread skepticism in the Idaho homeschooling community regarding any government program, it is difficult – if not impossible – to understand the data behind a projection of 95% participation. The ICFP – and the media – have a responsibility to explain the numbers in greater detail. We requested the data from ICFP but have yet to receive any response. The data is not available on their website. Bottom line - if the total number of students participating in the program truly reaches 60,304, it would make Idaho’s ESA the most popular and successful of any state in the nation. And it would also show intense demand by parents looking to improve educational outcomes for all children. It would be something to celebrate, not to fear.

Last fall, the Idaho Legislature lowered the state income tax to a flat rate of 5.8%. This legislative session, Montana is considering lowering its income tax rate below 6.0%. The rate adjustments in Montana and Idaho reflect a national movement to lower state income tax rates to help working families and keep states competitive. The one state that seems to be bucking that trend is Washington, which has adopted a new state income tax starting with capital gains income. Bringing the rates in Idaho and Montana below 6% is a wise move, but there is still room to lower the rate even more. As the Tax Foundation points out today, the majority of states now have lower income tax rates. In the mountain west, Idaho and Montana's income tax rates are the highest. Among states that have cut their income tax rates since 2021, there are only five states that have kept their rates higher than Idaho. It is clear, if Idaho and Montana are going to remain competitive (especially in the west), they need to consider further lowering their income tax rates, which are still relatively high. One pro-growth policy to consider is tying income tax rates to revenue growth. For example, if the state revenue consistently comes in at a rate higher than expected, the tax rate would automatically be lowered. This could negate the need for any special or extraordinary sessions of the legislature to address tax reductions as they would kick in at certain revenue levels. The exact revenue percentage over expectations, the time required to make sure it is consistent, and the corresponding income tax rate reduction would all need to be set by lawmakers. But adopting this type of policy would send a clear message that Idaho and Montana will continue to lower the income tax burden it is placing on families and businesses. And the more the economy booms, the lower the rate. About a dozen states have tax triggers. The Tax Foundation says, “well-designed triggers limit the volatility and unpredictability associated with any change to revenue codes, and can be a valuable tool for states seeking to balance the economic impetus for tax reform with a governmental need for revenue predictability.” Additional Resources: · The race to lower state income tax rates · States inaugurate a flat tax revolution

Today the United States Supreme Court will hear oral arguments in Gonzalez v. Google, a case that could critically undermine free expression on the internet. The question presented in Gonzalez is whether online services like Google may be held liable under Section 230 of the Communications Decency Act of 1996 for recommending relevant third-party content to their users. Mountain States Policy Center and eleven other free market organizations filed an amicus brief in support of Google in this case last month, explaining that Section 230's liability shield is critical to protect the free marketplace of ideas on the internet. If the Court shrinks Section 230’s liability shield for recommending third-party content, online services will face severe financial penalties for hosting speech which challenges mainstream political ideas. Further, exposing online services to liability would mainly hurt small, newer internet platforms, preventing them from competing with the largest companies today. Mountain States Policy Center President Chris Cargill issued the following statement today: “Section 230 is the bedrock of a free and open internet for all Americans and provides the opportunity for individual expression and thought. Removing the law would severely limit the ability for online services of all sizes and functions to host any content that could be deemed inflammatory or dangerous, including something as simple as a negative review expressed on a website. Further, eliminating Section 230 protections would devastate the digital economy, especially startups and small businesses, which rely on algorithms to drive customers to their storefronts. The Court should rule in favor of protecting freedom of expression online by keeping Section 230 intact." ADDITIONAL RESOURCES: Mountain States Policy Center: Why we're joining arguments on a case before the U.S. Supreme Court Mountain States Policy Center Amicus Brief in Gonzalez v. Google

Montana is joining the ever-growing list of states cutting its state income tax rate. The state legislature has given final approval to SB 121, and the measure will be signed by Governor Gianforte. The bill calls for two brackets for income tax rates starting in January of 2024 - 4.7% and 5.9%. Montana's income tax rate was previously as high as 6.75%. Last fall, Idaho lowered its income tax rate to a flat 5.8%. 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 and Montana's 5.9%, however, are still relatively high. Montana's neighbor, North Dakota, is also looking at cutting its income tax rate. Policymakers in the Mountain States shouldn't stop now. It is clear, if Idaho and Montana are going to remain competitive (especially in the west), they need to consider further lowering their income tax rates, which are now relatively high. We have previously written about an idea to tie the income tax rate to revenue growth. This pro-growth policy would trigger automatic reductions in the rate so long as excess revenue is consistent. One thing is clear: Idaho and Montana lawmakers shouldn’t be content with state income tax rates near 6.0%. They should continue to look at ways to lower the burden. About a dozen states have tax triggers. The Tax Foundation says, “well-designed triggers limit the volatility and unpredictability associated with any change to revenue codes, and can be a valuable tool for states seeking to balance the economic impetus for tax reform with a governmental need for revenue predictability.”

It's hard to make sense of the strategy in advancing additional education choice options in the Idaho legislature - if there even is one. Senate Bill 1038 - which would have provided universal Education Savings Accounts - was defeated in the Senate on Monday. During that lengthy discussion, many legislators who ultimately voted no said they were in favor of education choice, but thought the bill went too far, too fast. They wanted to see other proposals as well. "It's a journey," Senate Education Chairman Dave Lent said during the floor debate. The journey hit roadblocks in the House on Thursday. We were expecting three new bills to be introduced in the House education committee. But two of the proposals were pulled from the agenda before the meeting - one that would have created a 529 ESA proposal, another that would have expanded the popular Empowering Parents program. We don't know what is going to happen with those proposals going forward. Perhaps we'll learn in the coming days. The third - a very modest, thoughtful proposal by Rep. Lance Clow to create Education Savings Accounts - couldn't even advance from a routing slip to become an actual bill and get a hearing and public comment. "All I am asking for is to give us a chance to have a hearing," Rep. Clow said in his comments. That didn't happen. Some lawmakers suggested they had already heard feedback via emails and phone calls. Others said they were concerned if they voted to introduce the bill, it would be assigned to another committee. The 17 members of the committee seemed to have 17 different opinions. In the discussion, Rep. Jack Nelsen said he wasn't aware of data that showed improvements. We have much of that data posted here. Some legislators (presumably based on numbers released by the Idaho Center for Fiscal Policy) say the program is unaffordable. As we've pointed out here, the study ICFP released last week is filled with major errors and deserves scrutiny. We've asked the ICFP for more information on where they got their data, but they haven't responded. They have a duty to explain how they achieved their numbers - especially if legislators are going to depend on it to make their decision. It's important to note that, under several ideas introduced so far, any prediction of the amount of public school students who would participate will, in reality, cost the state little to nothing. Why? The state will be spending that cash whether it passes an ESA program or not. That money is already in the “system.” Any students in private or homeschool who may take advantage of the program would cost the state funds, but under the several proposals put forward thus far, 20% of their amount goes back to a local public school - whether they attend that school or not. Thus, the amount of spending per student, per year in Idaho public schools would actually increase under these scenarios. Legislators also questioned the accountability of Rep. Clow's proposal, but as he rightly pointed out "if a public school scores are low, we don't take any money away from them." Several legislators made the mistake of calling ESA's "vouchers." As we have previously pointed out, there is a big difference between the two. Where things go from here is unclear. Education choice improves outcomes, and legislators would be wise to continue to work to advance a bill that can get broad support. But it is difficult as of right now to see that happening with so many lawmakers pulling in so many different directions. Additional education choice options have stymied lawmakers in Idaho for several years now. Legislative leaders may want to start thinking about creating a joint legislative panel or work group that can hash out a concrete proposal in the interim, and have it ready to be introduced in the 2024 legislative session. In the meantime, families will continue to wait.

Idaho residents may be coveting Utah’s property tax laws that account for market value increases. Utah exempts 45% of the market value from property taxes. Whereas, Idaho caps their exemption at $125,000 or up to 50% of the assessed market value of the home. The cap was raised from $100,000 to $125,000 in 2021. Five years ago, this was a non-issue as Idaho home values averaged $222,464.25 and the 50% of market value property tax exemption was similar to the cap of $100,000, at $111,232.13. However, the difference between the market value of the homes and the exemption cap quickly increased. In 2022, the difference between the 50% of market value exemption and the cap was $109,114.04. This is an 871% increase in the difference between the two values. Property taxes for an average home in Idaho, in both rural and urban areas, have increased by 65% in the last five years. Rates for 2022 are unavailable. If the assessment rate in 2022 is the same as 2021, then the property tax for Idaho home values will have almost doubled since 2017. Idaho property tax relief can no longer adjust for market changes, unlike neighboring Utah. Utah exempts a lower percentage of the home value from property taxes at 45% versus Idaho’s 50%, but does not cap the exemption. Though even Utah’s property tax program is not without is flaws in implementation, with recent attention paid to unfair reassessment practices at the local level. Very few states have programs that mitigate for market value changes. Only 18 states have caps to the growth in assessed value. These laws mostly follow the 1978 passing of California’s Proposition 13, which limits assessed value growth by 3%. Colorado recently repealed its cap in 2021. Utah is the only state that has an exemption based on market value that is uncapped. Other states such as Louisiana and Minnesota have some relief built into their systems but can’t fluctuate with high market values. However, caps to assessed value growth were common with some of the highest property tax rates per capita. Washington, D.C. is ranked 1st, Connecticut 3rd, New York 5th, Texas 12th, and California 13th for per capita tax rates. Utah is ranked 36th and Idaho is ranked 41st per capita. These numbers were based on tax-rates in 2019, which excludes the run-up in real estate values in Idaho. In the last five years, Idaho was almost double the national average increase of home values at 16%. Idaho residents need a relief option accounting for housing market changes. Leaving assessable values untethered from market price changes allows local government spending to increase too rapidly. Obviously, Idaho’s local governments have excessive access to property tax funds when forgone amounts in 2022 reached $145 million dollars. These are dollars the local governments chose not to tax but had the opportunity to tax within Idaho code. Local governments can have these funds made available to them at later dates. As Idaho’s property tax system remains dependent to market value shifts, it can potentially change this low tax state into a higher tax region. A fair property tax program protects against market run-ups and encourages fiscally conservative practices at the local government level. (Photo Credit: Photo by Tierra Mallorca on Unsplash)

In the sometimes-heated debate over bringing more education choice options to the region, Republicans, Democrats, and some in the media are falling into the trap of labeling Education Savings Accounts “vouchers.” For Republicans, its likely an unconscious slip. For the media, it’s probably a lack of understanding. For Democrats and activists opposed to education choice, it is a strategy. Polling shows “vouchers” are very controversial and don’t have a lot of support. Education Savings Accounts, however, are much more likely to be looked upon favorably. The reality is not many folks – including our lawmakers – could tell you the difference between the two. In fact, some have started to use the term “ESA voucher.” In an Idaho House education committee meeting last week, members of both parties used that term. The trouble is there’s no such thing as an “ESA voucher.” A voucher program would only let parents use taxpayer dollars to pay for tuition at a private school approved by the state. Typically, the state writes a check to a school in the name of a student to cover tuition. An Education Savings Account is much different. First, money is held in an account by the state - it is not given directly to schools. Second, an ESA allows parents to use a portion of state funding on a variety of education services. Yes, it can include private school tuition, but it can also include tutoring, special needs services, curriculum, mental health treatment and much more - so long as it is for an educational purpose. In the end, ESA's are given to parents via a state fund, whereas vouchers are given to schools or a specific institution. Education Savings Accounts are popular with parents. In fact, more than $335 million has been allocated to ESA’s across the country, and several more states including Utah, Iowa, Arkansas and Texas are considering or have already passed ESA’s this year. The language of various education choice bills in Idaho, Montana and Washington calls for ESA’s – not vouchers. No one who supports or opposes education choice or covers the topic should use the term “voucher” unless a voucher bill is introduced. Doing so is simply inaccurate and on such an important topic, the clarity is crucial.

Workers' compensation is defined by the United States Centers for Disease Control as, “systems [that] were established to provide partial medical care and income protection to employees who are injured or become ill from their job.” Workers’ compensation was established to incentivize employers to reduce injury and illness to their employees. While the federal government has established this overarching definition of workers’ compensation and its purpose, each state government is responsible for creating its own system and regulation for workers’ compensation. This has led to some stark differences in the workers’ compensation systems of varying states. Washington and Wyoming, for example, are two of just four states (North Dakota and Ohio are the others) with a monopoly worker’s comp system. This top-down control without any competition has led to increasing rates and questionable customer service. Meanwhile, in Idaho and Montana, employers can choose to purchase their worker’s compensation from the state, from private companies, or can self-insure, leading to declining rates. While there is some debate about which system – private or state-controlled – works best, there is ample research to suggest the private model uses the free market to improve coverage, lower costs and protect workers. READ OUR FULL STUDY HERE >>

The quest for affordability sometimes comes with unexpected costs. Over the last five years, as Idaho became one of the most demanded real estate areas, its property value growth led the nation. Unfortunately, for Idaho taxpayers there is no limit to the growth of property taxes on assessed value. Old and new residents alike are facing higher than expected property taxes, in the state where affordability was once a huge attraction. In the last five years, the average Idaho home value increased by 16.3% with a spike of 34.13% in 2021. A combination of new residents increasing demand and a low supply of houses drove home value upwards. Unfortunately for Idaho residents, the only cap on property taxes is with budget increases. Despite many taxing districts decreasing property tax rates during this time frame, averaging from 1.129% in 2020 to 1.043% in 2021 (urban areas), residential property owners still saw an overall increase. Last year (in 2022), Idaho property owners experienced a 43.7% increase in the value of their assessed property totaling $332.1 billion. In 2021, there had been a 20.2% increase over 2020. These rapid increases have not been seen before in the state of Idaho. Idaho is not the only state in the mountain region that has seen an increase in home values. Over the last five years, Idaho, Montana, Utah, and Washington, were within the top ten states for home value growth. Wyoming ranked 43rd with only 6.79% growth. Even with property value increases, Idaho had the second lowest property tax as a percentage of income in the mountain states at 76.4% of the national average for fiscal year 2020. Nevada was the lowest percentage of income and is able to subsidize lower property tax rates with other tax sources (i.e., casinos). More recent data is still unavailable. Idaho and Utah are similar in their per capita property tax and Washington is only slightly higher. Wyoming is higher than the national average but much of this can be attributed to the state's high assessment of mineral production. The effective tax rate on owner-occupied homes ranks in the lowest of ten states. Montana, without a sales tax, relies heavily on property taxes at a state and local level to fund education and other municipal services. Utah, with similar tax rates and property value escalations as Idaho, does not have the same constituent demands for property tax relief. What is the difference? Utah state code has property tax relief that accounts for market changes. By exempting 45% of the market value of the primary residential property, homeowners are protected from sudden run-ups in market value. Secondary homes are taxed at 100 percent. In contrast, Idaho, recently removed similar protection. From 2006 to 2016, Idaho residents were able to exempt 50% of the market value of their house, but it was capped at the Federal Housing Price Index. Legislators tightened the relief in 2016 by capping the exemption at $100,000. It was later increased to $125,000 in 2020. This cap has quickly diverged from the HPI and Idaho homeowners are suffering the consequences. (Picture Credit: Photo by Towfiqu barbhuiya on Unsplash)

It appears taxpayers in Washington state and the Spokane area are about to get stuck with a bill to renovate Spokane’s Avista Stadium. Spokane County Commissioners are meeting Tuesday to likely approve a deal that would almost guarantee taxpayers cover the vast majority of the total cost of around $22 million. The money will be used to renovate the stadium, per a demand by Major League Baseball if Spokane wants to keep the Indians baseball team. While the Indians say they’ll pay $2 million in construction costs, they want government to cover the rest. They’re asking the Washington state legislature to pitch in, as well as pinning hopes on federal funds. The city of Spokane Valley has also offered $2 million. But no matter where they get it – local, state or federal - the money still belongs to taxpayers. In addition to the $2 million the Indians say they’ll pitch in for construction, the club has offered to pay a rent of about $8,333 per month, or $100,000 per year. At that pace, it would take almost 200 years for taxpayer to recoup the rest of their money. The only way taxpayers get more is via a $1 per ticket revenue sharing agreement on any tickets above an attendance total of 250,000. The Indians have never attracted that many fans. Last season, the team saw about 234,000 attendees, meaning if the revenue sharing agreement had been in place, taxpayers wouldn’t have seen a dime. If attendance hits 250,001, taxpayers get an extra dollar. This doesn’t seem like a very good deal. Assuming the baseball club doesn't pull in any other private funding, taxpayers get stuck with about 91% of the cost. Spokane County Commissioners seem resigned to accepting the deal. But they don’t have to be. Baseball is not a core function of government and shouldn’t be treated as such. Boise faced similar demands several years ago. It didn’t comply, lost its MLB affiliation, but kept baseball with the addition of a Pioneer League team. Baseball didn’t disappear in the City of Trees. Taxpayers didn’t get stuck with a bill.

One of the most disappointing parts of the government's response to the COVID-19 pandemic was the prolonged use of emergency powers by executives across the nation. There is no doubt there was an overreach at both the federal and state levels. In fact, federal emergency powers are still in place, leading The Washington Post to proclaim that presidents gain too much power when emergencies hit. In a real emergency, the executive - both presidents and governors - need broad powers to act fast. Legislative bodies take time to assemble, so they can temporarily transfer their powers to the executive in an emergency. But when problems do last for extended periods, it is the responsibility of the legislatures to debate risks, benefits and trade-offs of various long-term approaches. Lawmakers may end up passing the very policies a governor would prefer, but they do it after deliberation as representatives of the people and do it in a public process. Lawmakers across the region are now introducing legislation to ensure that they have a role in future emergency power proclamations. In Idaho, new Senate Bill 1104 would limit the governor to one 30 day extension of a previous 30 day emergency order. That means after 60 days, the legislature would need to be called back into session and concur that the emergency extension should be approved. This is not unusual. In Wisconsin, for example, a state of emergency cannot exceed 60 days unless it is extended by the Legislature, and in Minnesota, a governor must call a special session if a “peace time” emergency lasts longer than 30 days. The Idaho Legislature has had previous fights with Governor Brad Little over emergency powers. The National Conference of State Legislatures has a great tool to compare and contrast emergency powers in the states. If Idaho lawmakers decide to move forward with SB 1104, they will want to make some changes. Section 2 of the bill references the governor can petition the legislature with "reasonable justification," but does not define what that may be. One lawmaker's idea of reasonable justification may not be another lawmaker's. In the end, it is the Legislature - not the Executive branch - that should make the laws we live under, and the governor – no matter the state or the person – is supposed to implement only laws passed by the Legislature. Reforming emergency powers was one of the 10 policy recommendations Mountain States Policy Center made before the legislative sessions began.