House Revenue & Taxation Committee

2003 Minutes

January 13, 2003
January 14, 2003
January 15, 2003
January 16, 2003
January 16, 2003 - Subcommittee
January 20, 2003
January 20, 2003 - Subcommittee
January 21, 2003 - Subcommittee (Corrected)
January 22, 2003
January 23, 2003
January 28, 2003
January 29, 2003
January 30, 2003

February 3, 2003
February 4, 2003
February 5, 2003
February 6, 2003
February 11, 2003
February 12, 2003
February 13, 2003
February 17, 2003
February 19, 2003
February 20, 2003
February 24, 2003
February 25, 2003
February 25, 2003 - Subcommittee
February 26, 2003
February 27, 2003

March 3, 2003
March 4, 2003
March 5, 2003
March 6, 2003
March 10, 2003
March 11, 2003
March 12, 2003
March 13, 2003
March 17, 2003
March 19, 2003
March 20, 2003
March 21, 2003
March 24, 2003
March 25, 2003
March 26, 2003
March 27, 2003
March 31, 2003
March 31, 2003 - Subcommittee

April 1, 2003
April 1, 2003 - Subcommittee
April 2, 2003
April 3, 2003
April 4, 2003
April 8, 2003
April 9, 2003
April 15, 2003
April 17, 2003
April 21, 2003
April 22, 2003
April 23, 2003
April 24, 2003
April 25, 2003
April 28, 2003 - Morning Meeting
April 28, 2003 - Afternoon Meeting

CORRECTED

DATE:	January 21, 2003
TIME:	9 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Smith, Representatives Barrett, Denney, McKague Henbest
ABSENT/EXCUSED:
GUESTS:	Jim Husted, Ted Spangler State Tax Commission
	Chairman Smith called the meeting to order. The Chairman recognized Jim Husted State Tax Commission to present Idaho sales tax and use tax administrative rules 35.01.02, Docket No. 35-0102-0201, Docket No. 35-0102-0202: Idaho County option kitchen and table wine tax administrative rules 35.01.09, Docket No. 35-0109-0201: Idaho cigarette and tobacco products tax administrative rules 35.01.10, Docket No. 35-0110-0201: Idaho beer tax administrative rules 35.01.12, Docket No. 35-0112-0201. See attached detailed rule changes.
MOTION:	Idaho sales tax and use tax administrative rules was presented by Mr. Husted. Representative Denney moved to accept the proposed rule amendments to IDAPA 35.01.02, Docket No. 35-0102-0201 and to present it to the full committee for approval. Motion passed unanimously on a voice vote. Mr. Husted addressed the additional Docket No 35-0102-0202, sales and use tax administrative rules.
MOTION:	Representative Denney moved to accept the proposed rule amendments to IDAPA 35.01.02, DOCKET No. 35-0102-0202 and to send it to the full committee for approval. Motion passed on a voice vote. Mr. Husted continued the presentation with the Idaho County option kitchen and table wine tax administrative rules 35.01.09, Docket No. 35-0109-0201. Discussion followed from committee members.
MOTION:	Representative Henbest moved to accept the proposed rule amendments to IDAPA 35.01.09, Docket No. 35-0109-0201 and to present it to the full committee for approval. Motion passed. Next on the agenda was Idaho cigarette and tobacco products tax administrative rules 35.01.10, Docket No. 35-0110-0201. Mr. Husted presented a brief explanation of the rule.
MOTION:	Representative Denney moved to accept the proposed rule amendments to IDAPA 35.01.10, Docket No. 35-0110-0201 and to present it to the full committee for approval. Motion passed. Idaho beer tax administrative rules 35.01.12, Docket No. 35-0112-0201, was presented by Mr. Husted. Discussion followed.
MOTION:	Representative Barrett moved to accept the proposed rule amendments to IDAPA 35.01.10, Docket No. 35-0112-0201.
ADJOURN:	Chairman Smith adjourned the meeting at 9:30 p.m.

DATE:	January 22, 2003
TIME:	10:30 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/EXCUSED:	Representative Schaefer
GUESTS:	Representative Trail; Representative Anderson; Representative Clark
	Chairman Crow called the meeting to order at 10:30 a.m. and requested a silent roll call. Representative Kellogg moved to accept the minutes of the meeting held on January 21, 2003 as written. Motion carried on a voice vote.
RS12436	Chairman Crow announced the first item on the agenda was RS12436. She asked Representative Trail to acquaint the members with the proposed legislation. Representative Trail gave a brief overview of the objective for this proposed legislation is to reduce the sales tax from five percent to four percent and broadly spread Idaho's taxes. The proposed bill enacts the "Idaho Economic Recovery and Tax Reform Act of 2003." He yielded to Representative Anderson, co-sponsor, to explain the specifics. Representative Anderson stated that the proposed legislation has primarily three directions. One, the proposed bill provides for quarterly payment of income tax estimates by wage earners required to make estimated payments to the Internal Revenue Service in the approximate sum of $80 million. Two, total sales tax exemptions estimated to be $955,308,000, recoverable estimate of $799,597,000 resulting in a gain from removing certain sales tax exemptions in the sum of $45,705,000. There were seventeen sales tax exemptions in 1965, now there are seventy sales tax exemptions. Three, total income tax credits in the amount of $183,293,000, recoverable estimate of $120,891,000 resulting in a gain of $45,705,000. (See attachment #1 for detail list of expenditures and exemptions.) This bill will result in an increase in revenue to the State of Idaho of approximately $131.2 million commencing September 1, 2003. Additionally the payment of quarterly estimates will increase the revenues by the approximate sum of $80 million which will be received on June 15, 2003. This may reduce or eliminate the need for any further hold-backs in FY2003.
MOTION:	After a question and answer period, Representative Denney moved to return RS12436 to the sponsors. Explaining his motion, Representative Denney stated that this proposed legislation is quite lengthy and expensive to print. The proposed legislation removes economic tax credits from businesses that are important tools for expansion. If there is a problem with sales tax exemptions perhaps the Speaker of the House needs to appoint a task force to study the issue.
ROLL CALL VOTE:	Voting AYE - Representatives Kellogg, Raybould, Barrett, Ridinger, Moyle, Field, Smith, Collins, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Crow. Voting NAY - Representatives Henbest, Martinez, Ringo. Motion passed, 15-3-1
RS12626:	The Chairman announced the next item on the agenda was RS12626 and asked Representative Clark to explain the proposed legislation. Representative Clark said this proposed legislation will amend Idaho Code 63-3638 (9) deleting thirteen and three quarters percent and inserting One hundred eight million, five hundred thousand dollars. This amendment will establish the amount to be distributed from the sales tax to the revenue sharing account and to fix that amount equal to the FY02 appropriations amount.
MOTION:	Representative Smith moved to introduce RS12626.
ROLL CALL VOTE:	Voting AYE - Representatives Raybould, Barrett, Moyle, Field, Smith, Collins, Roberts, Wood, Denney, McKague, McGeachin, Crow. Voting Nay - Representatives Kellogg, Ridinger, Ringo, Martinez, Henbest, Cuddy. Motion passed, 12-6-1.
ADJOURN:	There being no business to come before the Committee, Chairman Crow adjourned the meeting at 11:00 a.m.

DATE:	January 23, 2003
TIME:	10:30 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Moyle, Schaefer, McKague, Cuddy
GUESTS:	None
	Chairman Crow convened the meeting at 10:30 a.m. and requested a silent roll call. Representative Ridinger moved to accept the minutes of the meeting held on January 22, 2003 as written. Motion carried on a voice vote. The Chairman turned the gavel to Assistant Vice Chairman Raybould to conduct the meeting on the Idaho State Tax Commission Rules. Chairman Raybould asked for a report from Representative Field, Chairman of the Subcommittee on the Idaho Tax Commission Income Tax Rules. Representative Field reported that the subcommittee had reviewed 35.01.01 and 35.02.01 and recommend the rules be approved.
MOTION:	Representative Field moved to accept the Idaho State Tax Commission Rules: IDAPA 35.01.01 - Income Tax Administrative Rules; Docket No. 35-0101-0201. Motion passed unanimously.
	Chairman Raybould asked Representative Roberts, Chairman of the Subcommittee to review the Idaho State Tax Commission Property Tax Administrative Rules reported the committee approved all rules in 35.01.03.
MOTION:	Representative Roberts moved to accept the Idaho State Tax Commission Rules: IDAPA 35.01.03 - Property Tax Administrative Rules; Docket No. 35.-0103-0201; Docket No. 35.0103-0202; Docket No. 35.0103.0203; Docket No. 35.0103-0104; Docket No. 35.0103-0105. Chairman Raybould asked Representative Smith, Chairman, submit his subcommittee report. He reported that the subcommittee reviewed the Idaho State Tax Commission Rules in the following categories: Sales Tax Administrative Rules, Idaho County Option Kitchen & Table Wine Tax Administrative Rules, Idaho Cigarette and Tobacco Products Tax Administrative Rules, Idaho Beer Tax Administrative Rules and Tax Commission Administration and Enforcement Rules. The subcommittee recommends approval of the rules.
MOTION:	Representative Smith moved to accept the Rules in IDAPA 35.01.02 - Idaho Sales and Use Tax Administrative Rule; Docket No. 35-0102-0201; Docket No. 35-0102-0202. Motion carried unanimously.
MOTION:	Representative Smith moved to accept the Rules in IDAPA 35.01.09 - Idaho County Option Kitchen & Table Wine Tax Administrative Rules; Docket No. 35-0109-0201. Motion carried unanimously.
MOTION:	Representative Smith moved to accept the Rules in IDAPA 35.01.12 - Idaho Beer Tax Administrative Rules; Docket No. 35-0112-0201. Motion carried unanimously.
MOTION:	Representative Smith Moved to accept the Rules in IDAPA 35.02.01 - Tax Commission Administrative and Enforcement Rules; Docket 35-0201-0201. Motion carried unanimously. Chairman Raybould returned the gavel to Chairman Crow.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:40 a.m.

DATE:	January 28, 2003
TIME:	10:30 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Schaefer
GUESTS:	Representative Clark; Dan John, Idaho State Commission, Jerry Nicolescu, Department of Agriculture, Ted Spangler, Idaho State Tax Commission
	Chairman Crow called the meeting to order at 10:30 a.m. and requested a silent roll call. Representative Ridinger moved to accept the minutes of the meeting held on January 23, 2003 as written. Motion carried with a voice vote.
RS12637C1:	The Chairman announced the sponsor of RS12437 was not present and the Committee would now consider RS12637C1. She asked Mr. John to explain the proposed legislation. Dan John, State Tax Commission, stated that this is the annual bill to update references to the Internal Revenue Code. It conforms the Idaho Income Tax Act to changes made to the Internal Revenue Code after January 1, 2002. It includes the federal Job Creation and Worker Assistance Act of 2002 and excludes the special "bonus depreciation" allowance. There are five new major changes in the 2002 IRS Code. First, makes technical corrections in the pension plans, 401 (k) and a follow up which has already been adopted. Second, extended some expiring credits which do not impact Idaho taxation. Third, changes the net operating loss carry back from two years to five years Idaho has it's own carry-back provision and should not impact Idaho. Fourth, provides a deduction to teachers and counselors for out-of-pocket expenses for purchase of books and supplies up to $250. Fifth, special allowance for 30% first year "bonus depreciation" permitted by subsection (k) of section 168 of the Internal Revenue Code. This bill does not include the "bonus depreciation" allowance. For computing Idaho taxable income the adjusted basis of depreciable property and capital gains or losses will be modified to reflect the disallowance of the federal bonus depreciation.
MOTION:	It was moved by Representative Ridinger to introduce RS12637C1.
	There were several questions relating to teachers out-of-pocket expenses and receiving a tax allowance. Mr. John replied by saying the average tax savings would be $15. If supplies are donated, the teacher or counselor could claim a charitable deduction if they file itemized deductions.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to return RS12637C1 to sponsor and draft another RS without the allowance for books and supplies.
ROLL CALL VOTE:	Voting on the Substitute Motion- AYE -Representatives Raybould, Barrett, Moyle, Collins, Roberts, Wood, Denney, McKague, McGeachin, Crow. NAY - Representatives Kellogg, Ridinger, Field Smith, Ringo, Martinez, Henbest, Cuddy. Motion passed, 10-8-1
RS12437:	The Chairman announced the Committee item on the agenda was RS12437 and asked Representative Clark to explain the proposed legislation. Representative Clark stated that in 1996 legislation was passed that provided property tax relief to all the citizens of Idaho. A portion of the school maintenance and operation property tax levy was replaced with state sales tax receipts. The purpose of this proposed legislation is to provide a fixed amount of dollars to be distributed as property tax relief for school support. This proposed legislation will provide fixed annual amount to be distributed for school support. He stated that this proposed legislation will not affect the property tax what-so-ever.
MOTION:	After a brief question and answer period, Representative Moyle moved to introduce RS12437. Motion carried on a voice vote. Representatives Ridinger and Ringo requested to be recorded as voting NO.
H0082:	Chairman Crow announced the next item on the agenda was H0082 and recognized Mr. Nicolescu. Jerry Nicolescu, Department of Agriculture, stated that this bill revises 63-3024B to remove the sunset clause and re-authorize the Natural Resources Income Tax Credit, the sunset date was January 1,2003. The re-authorization would define terms and provide for review and approval of qualified expenditures. He provided a hand-out depicting the Natural Resources Conservation Credit. (Attachment #1) This bill provides an extension of the tax credit for voluntary implementation by private landowners and users of conservation and resource enhancing efforts on the ground. The efforts to put on the ground is in four priority areas: Meeting total maximum daily loads, addressing threatened and endangered species issues in ESA; enhancement riparian areas through fencing in an appropriate manner and addressing fish passage barriers. All work requires a plan of management to carry out and be recognized for inclusion in the program. He detailed conservation measures that were approved and unapproved. He said the maximum return per person cannot exceed $2,000. There is a cap on how much can be given in credit.
MOTION:	Representative Roberts moved to send H0082 to the floor with a do pass recommendation.
PRO:	Chairman Crow recognized Kent Foster, Executive Director, Idaho Association of Soil Conservation Districts (IASCD), to testify. Mr. Foster spoke in favor of H0082 stating that last year HB 555 included language to remove the sunset clause on this tax credit where it was contained in conservation district law. HB 555 passed the legislature and was then unexpectedly vetoed by the Governor on the final day. The bill was not vetoed because of the tax credit portion of the bill rather a concern with some language in district law. The tax credit has been an incentive for landowners to do conservation work. Conservation program dollars and the landowners labor are not counted toward the credit. Conservation work is putting dollars into the local economies of the state by utilizing federal, state and operators funds.
PRO:	Larry Ragains testified that he was a farmer that has participated in the conservation program and has received the tax credit for improving water for people downstream from him, not just for his benefit.
	The motion to send H0082 to the floor with a do pass recommendation passed on a voice vote. Representatives Crow, Moyle and McKague requested to be recorded as voting NO. Representative Roberts will sponsor the bill on the floor.
H0088:	The Chairman announced the item on the agenda was H0088 and recognized Mr. Spangler to present the bill. Ted Spangler, State Tax Commission, testified that this bill changes two provisions of the Idaho Sales Tax Act relating to the credit or refund allowed retailers for bad debts. The bill provides that the seller who paid the tax to the state must claim the credit or refund for sales taxes remitted on bad debts. It provides that the three-year statute of limitations on claims for credit or refunds resulting from bad debts will begin on the date the debt becomes worthless for income tax purposes.
MOTION:	Representative Cuddy moved to send H0088 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Barrett will sponsor the bill on the floor.
ADJOURN:	There being no further business to come before the meeting, Chairman Crow adjourned the meeting at 11:35 a.m.

DATE:	January 29, 2003
TIME:	11:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Moyle and Denney
GUESTS:	Dan John, Idaho State Tax Commission; Noel Hales, Canyon County Clerk
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Kellogg moved to accept the minutes of the meeting held on January 28, 2003 as written.
RS12677:	The Chairman announced the first item on the agenda was RS12677 and asked Mr. John to explain the proposed legislation. Dan John, Idaho State Tax Commission, stated that this RS repeals the two-dollar credit allowed for filing tax returns with the State Tax Commission electronically. Taxpayers are filing electronically anyway and the incentive is mute. This repeals the automatic credit.
MOTION:	Representative Kellogg moved to introduce RS12677. Motion passed on a voice vote.
RS12722:	Chairman Crow announced the next item on the agenda was RS12722 and recognized Mr. Hales to explain the proposed legislation. Noel Hales, Canyon County Clerk, stated he was representing the Idaho Association of Counties. He said that Idaho's forty-four counties are required to record documents for public records. The fees that the Clerks are authorized to charge are set by state statute and have not been increased, even for changes in inflation, since at least 1987. The lack of increase has resulted in at least thirty-one counties without a self-supporting recording office. Of the nine counties that reported self-sufficiency, the income was less than $100,000. Idaho's counties have spent an increasing amount of money updating their recording offices with changes in technology. For example, counties are shifting from recording books and microfiche to scanning and this has caused an increase in costs to the recording office. This proposed legislation would allow the Clerks to charge $5.00 per page for recording every instrument paper or notice, $15.00 for recording every town plat or map for the first 100 lots or less and $15.00 for issuing and filing of marriage licenses. Counties are currently experiencing at least a two million dollar negative difference between what they can charge and what it costs to efficiently manage the recording office.
MOTION:	After a question answer session, Representative Cuddy moved to introduce RS12722 with a corrected spelling error on the Statement of Purpose. Motion carried on a voice vote. Representatives Barrett, Wood and McKague requested to be recorded as voting NO.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 11:18 a.m.

DATE:	January 30, 2003
TIME:	11:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Collins
GUESTS:	Don Pischner
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Kellogg moved to accept the minutes of the meeting held on January 29, 2003 as written. Motion carried on a voice vote.
RS12725:	Chairman Crow announced the first item on the agenda was RS12725 and asked Mr. Pischner to explain the proposed legislation. Don Pischner stated he was representing a planned organization of small retailers. He said this proposed legislation eliminates unfair competitive advantages now enjoyed by Tribal tobacco retailers in direct competition with non-Tribal businesses operating in Idaho. This proposal does not change the existing distribution formula and keeps the tax at twenty-eight cents per pack. The proposed legislation will do the following things: Require a cigarette revenue stamp be affixed to each pack of cigarettes sold in Idaho. Impose a tax to be pre-collected on all cigarettes sold in Idaho. Designate responsibility for tax collection. Provide for remittance of cigarette tax to the State of Idaho. Allow Tribal members their federally protected rights to not be taxed for cigarettes they purchase on reservations for their personal consumption.
MOTION:	Representative Moyle moved to introduce RS12725. Motion carried on a voice vote. Representatives Kellogg, Barrett, Ringo and Martinez requested to be recorded as voting NO.
RS12736:	The Chairman announced the next item on the agenda was RS12736 and called upon Representative Raybould to present the proposed legislation. Representative Raybould explained the purpose of this proposed legislation is to make amendments to Section 63-602FF and restore elements of HB488 that was inadvertently deleted from the original house bill by HB488a as passed in the second regular session of the fifty sixth legislature. When the exemption was taken away it made it difficult for assessors to administer the law. This proposed legislation specifies the eligibility for the exemption, the requirement for an application for exemption to be filed, the effective date of the exemption, the events that will terminate eligibility, the exemption from the requirement for total land area defined in Section 63-604 (a) and the amendment to 63-604 providing exceptions for the implementation of this act. Also defining terms used in the act and declaring an emergency with retroactive application.
MOTION:	Representative Smith moved to introduce RS12736. Motion passed on a voice vote.
HCR11:	Chairman Crow announced the next item on the agenda was HCR11. She conveyed the request by Representative Trail to withdraw HCR11 and asked for unanimous consent to HOLD HCR 11. Unanimous consent to HOLD HCR11 was granted.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 11:25 a.m.

DATE:	February 3, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Schaefer
GUESTS:	Mike McDowell, Kootenai County Assessor; John Watts and Jan Wall, Idaho Library Association
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to accept the minutes of the meeting held on January 30, 2003 as written. Motion passed on a voice vote.
RS12744:	The Chairman announced the first item on the agenda was RS12744 and asked Mr. McDowell to explain the RS. Mike McDowell, Kootenai County Assessor, stated that currently Assessors are required to revalue twenty percent of the properties within their county each year and completing the entire process every five years. This proposed legislation allows County Assessors five percent flexibility within their five-year revaluation process of properties. Varying physical and economic characteristics of the forty four counties in Idaho such as degree of complexity of appraisals, physical landscape, high volume of new construction and loss of appraisal staff can make it difficult for Assessors to complete exactly 20% of the properties each year. Other years, Assessors may be able to complete more than 20%. This proposed legislation would allow the Assessor to set a plan based on the needs and resources of the individual county while still guaranteeing that the process is complete within five years but allowing flexibility.
MOTION:	Representative Wood moved to introduce RS12744. Motion carried on a voice vote. Representatives Barrett, Moyle and McKague requested to be recorded as voting NO.
RS12714:	Chairman Crow announced the next item on the agenda was RS12714 and recognized Mr. Watts to explain his proposed legislation. John Watts, representing the Idaho Library Association, stated he had four proposals dealing with library districts. He said this proposal would allow a library district to consolidate if they do not share a common boundary. Consolidation procedures presently set out in statute for contiguous consolidation would be required including hearings and actions by county commissioners. In response to questions from the Committee Mr. Watts said consolidation would allow for increased economy of scale, such as purchases of books, equipment and supplies. It provides for efficiencies in administration and more expertise in technical personnel for better library services. In response to an inquiry relating to mill levies , Jan Wall, Idaho State Library, said Library Districts are subject to statutory levy limits.
MOTION:	After a question and answer period, Representative Henbest moved to introduce RS12714.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Roberts to return RS12714 to sponsor.
ROLL CALL VOTE	Voting Aye - Representatives Barrett, Moyle, Collins, Roberts, Wood, Denney, McKague. Voting Nay - Representatives Kellogg, Raybould, Ridinger, Field, Smith, McGeachin, Ringo, Martinez, Henbest, Cuddy, Crow.. Motion failed, 7-11-1. Original motion to introduce RS12714 passed.
RS12715:	The Chairman announced the next item on the agenda was RS12715 and told Mr. Watts to continue with his proposals. Mr. Watts stated that if city residents vote affirmatively to join a library district this proposal clarifies that the city library budget in effect on the date of the election is the budget to be used to determine a total district budget. This budget is used to calculate the first annual assessment rate.
MOTION:	Representative Kellogg moved to introduce RS12715. Motion carried on a voice vote. Representatives Raybould and Barrett requested to be recorded as voting NO.
RS12716C1:	Chairman Crow announced the next item on the agenda was RS12716C1 and asked Mr. Watts to continue. Mr. Watts said this proposal deletes statutory authority of the Idaho State Library Board to require compliance with outdated population and budget standards to initiate proceedings to establish a library district. The proposal requires the State Library Board to promulgate rules in place of the deleted standards and requires any proposed district to demonstrate how it would meet the promulgated standards before going forward with the public petition process for any establishment. The criteria would go to the professionals to review and be sure all the pieces are in place in order to go forward. The people can decide and then go to the county commissioners to make the decision to be voted on. There were several questions relating to making rules rather than legislating by Code.
MOTION:	It was moved by Representative Cuddy to return RS12716C1 to sponsor. Motion carried on a voice vote.
RS12739:	The Chairman announced the next item on the agenda was RS12739 and recognized Mr. Watts. Mr. Watts explained that this proposed legislation allows library district to add geographic territory as a result of action taken by a city adding to its territory if the city is presently part of an established library district. Under current statute no territory of an incorporated municipality can be divided simultaneously inside and outside of a library district. This proposal also allows established city libraries to consolidate with established but non-contiguous library district. Under the current statute, library districts and city libraries cannot consolidate unless they share a common boundary. Non-contiguous consolidation would follow the current statutory requirements for inclusion of new territory.
MOTION:	Representative Smith moved to introduce RS12739. Motion passed on a voice vote. Representative Barrett requested to be recorded as voting NO.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:50 a.m.

DATE:	February 4, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Field
GUESTS:	Representative Gagner; Grant Kingsford, Ada County Commissioner; Dan John, Idaho State Tax Commission
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Raybould moved to accept the minutes of the meeting held on February 3, 2003 as written. Motion carried on a voice vote. The Chairman introduced the new member Betty Schaefer who has been appointed to take her husband, Robert Schaefer's, place temporarily.
H0082:	Chairman Crow informed the Committee that H0082 had been withdrawn from the floor and will be held in Committee for more information.
RS12351:	Chairman Crow announced the first item on the agenda was RS12351 and asked Representative Gagner to explain the proposed legislation. Representative Gagner stated that Eastern Idaho Technical College (EITC) is the only free-standing higher education institution not receiving specific executive and administrative compensation. In order to correct this inequity, an amount equal to $150,000 shall be appropriated from the liquor Fund and shall be distributed to the Eastern Idaho Technical College Fund. He briefly outlined the liquor distribution formula and the increased profits due to refinancing the liquor warehouse. In response to a question whether this proposal was an attempt to become a Community College and in the future ask for full state funding, he replied absolutely not. There were questions regarding the language on page 1, lines 36 through 38, which transfers $150,000 from the general fund.
MOTION:	Representative Wood moved to introduce RS12351.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Roberts to return RS12351 to the sponsor. Roll call was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Raybould, Barrett, Ridinger, Moyle, Schaefer, Collins, Roberts, Denney, McKague, McGeachin, Martinez, Henbest, Cuddy, Crow. Voting Nay - Representatives Kellogg, Smith, Wood, Ringo. Motion to return to sponsor passed, 14-4-1
RS12749:	Chairman Crow announced the next item on the agenda was RS12749 and asked Mr. Kingsford to explain the proposed legislation. Grant Kingsford, Ada County Commisser, representing the Idaho Association of Counties, stated that currently taxpayers must file appeals of property tax assessment by the fourth Monday in June. The county boards of equalization must meet from the fourth Monday in June through the second Monday in July for the purposes of equalizing assessments. With the number of appeals being filed this three-week period has become an insufficient period of time in which to conduct the business of the board of equalization, including scheduling meetings between the county assessor and the taxpayer to solve issues without the necessity of a formal board of equalization hearing. To correct this problem, this legislation moves the filing deadline to the third Monday in June. Although this reduces the time frame for filing appeals by one week, it allows county boards of equalization more time to adequately conclude their duties and still allows sufficient time for the property owner to file an appeal while encouraging the negotiation of solutions outside of the board of equalization process.
MOTION:	Representative Smith moved to introduce RS12749. Motion passed on a voice vote.
H0130:	Chairman Crow announced the next item on the agenda was H0130 and recognized Mr. John to present the bill. Dan John, Idaho State Tax Commission, testified that this bill repeals the two-dollar credit allowed for filing tax returns with the State Tax Commission electronically. When this credit was initiated, it was meant to be an incentive to file electronically. However most individual income tax returns are filed electronically anyway and the credit has become very expensive.
MOTION:	Representative Roberts moved to send H0130 to the floor with a do pass recommendation. Motion passed unanimously on a voice vote. Representative Roberts will sponsor the bill on the floor.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:30 a.m.

DATE:	February 5, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Senator Kennedy
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Martinez moved to accept the minutes of the meeting held on February 4, 2003 as written. Motion carried on a voice vote.
H0081:	Chairman Crow informed the Committee that the State Tax Commission requested that H0081, transfer of certain tax credits, be held and a new RS drafted. She asked for unanimous consent to  HOLD H0081. Unanimous consent was granted.
RS12571:	The Chairman announced the first item on the agenda was RS12571 and asked Senator Kennedy to explain the proposed legislation. Senator Kennedy, stated that the purpose of this proposal is to provide for an annual cost of living adjustment on the $50,000 upper limit of the homeowner property tax exemption. The percentage used for adjustment would match that used for the income threshold for the "circuit breaker," which is the national Consumer Price Index. If the CPI was two percent in the first year the upper limit on the exemption would increase by $1,000. There would be no change in the percentage of the exemption for 50% of the assessed value of residential improvements. Residential values have been rising faster than the values of other kinds of property. Once the homeowner reaches the upper limit at about $120,000 market value there is no longer mitigation for inflation. So taxes increase at an accelerated rate. Since 1990 total residential property taxes in Idaho have increased by 164.5 percent while the total for all non-residential property has increased by 77.3 percent. The current maximum homeowner's exemption was established in 1983 and has never been adjusted for inflation. Cities, counties and other local taxing districts could collect the same amount under the budget cap. Annual increases in property tax collections going to schools as a result of inflation in the market value of a home affected by this change increases by five percent. The increase in taxable value would be $5,500 rather than $6,500 and the increase in money for schools would be $16.50 rather than $19.50. It increases by ten percent, the increase for schools would be $33 rather than $39.
MOTION:	Representative Cuddy moved to introduce RS12571. Motion carried on a voice vote.
RS12572:	Chairman Crow announced the next item on the agenda was RS12572 and asked Senator Kennedy to continue. Senator Kennedy explained the purpose of this proposed legislation is to protect homeowners, over age 65 or disabled veterans, from increased property taxes resulting in increases in taxable value. Beginning in taxable year 2005 if household income before taxes is less than $35,000, and the resident qualified for the homeowner exemption in the previous year, they could apply with the assessor for a freeze on the taxable value of the home and residential lot. The freeze would continue so long as they continue to meet the qualifications and own and live in the home. Beginning in 2005 the impact on the general fund would be a reduction in the amount of state funds for the "circuit breaker" program, an estimated $775,000 in the first year. Most who qualify for the exemption also qualify for the "circuit breaker." There would also be a reduction in the state funds going for property tax replacement for schools, an estimated $110,000 in the second year. There would be no reduction in the amount of property tax collected by cities, counties or other local government entities. The annual increases for schools resulting from inflation in residential values would be less. Based on recent rates of inflation, the difference would be $505,000 in the second year.
MOTION:	Representative Henbest moved to introduce RS12572 with a corrected Statement of Purpose and Fiscal Impact. Motion passed on a voice vote.
RS12676:	Chairman Crow announced the next item on the agenda was RS12676 and asked Senator Kennedy to continue. Senator Kennedy stated that much of Idaho's population resides outside of metropolitan areas and that many of the residents in these rural areas receive fire protection from volunteer fire departments. This proposed bill would amend the Idaho Code to allow fire protection districts to impose and collect a fee from the residents of the district to defray the cost of equipping and maintaining the district. Currently fire protection districts are funded through a maximum 2.4 mill levy on all taxable property within the district. Any fee imposed would be in lieu of and not in addition to any tax levy. This proposal would give fire protection districts the flexibility in raising revenue currently enjoyed by recreation districts.
MOTION:	Representative Kellogg moved to return RS12676 to sponsor. Motion passed on a voice vote.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:37 a.m.

DATE:	February 6, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Dan John, Idaho State Tax Commission; Sherry Morgan, Ada County Deputy Prosecuting Attorney; Senator Goedde; Senator Bunderson
	Chairman Crow called the meeting to order and requested a silent roll call. Representative McGeachin moved to accept the minutes of the meeting held on February 5, 2003 as corrected. Motion carried on a voice vote.
RS12883:	The Chairman announced the next item on the agenda was RS12883 and explained that this RS replaces the original State Tax Commission annual Internal Revenue Code conformity bill without the teachers allowance for supplies. She recognized Mr. John. Dan John, Idaho State Tax Commission, said that this bill replaces the original annual update references to the Internal Revenue Code with the changes talked about at great length in a prior hearing . It conforms the Idaho income tax to changes made to the IRC after January 1, 2002, including the federal "Job Creation and Worker Assistance Act of 2002." However, no Idaho deduction will be allowed relating to: 1. The special allowance for 30% first year "bonus depreciation" permitted by subsection (k) of section 168 of the IRC would not be deductible in computing Idaho taxable income. For computing Idaho taxable income, the adjusted basis of depreciable property and capital gains or losses will be modified to reflect the disallowance of the federal bonus depreciation. 2. Expenses of elementary and secondary teachers for purchase of classroom supplies otherwise allowable under the IRC would not be deductible.
MOTION:	Representative Wood moved to introduce RS12883. Motion passed on a voice vote. Representatives Ridinger and Ringo requested to be recorded as voting NO.
RS12750:	Chairman Crow announced the next item on the agenda was RS12750 and asked Ms. Morgan to explain the proposed legislation. Sherry Morgan, Ada County Deputy Prosecuting Attorney, representing the Idaho Association of Counties, stated this proposal removes the 3% property tax limitation in order to recover the shortfall in revenues to ambulance and emergency medical services created by the federal prohibition. This proposed legislation would allow by 66 2/3% voter approval counties or districts responsible for these services to increase the levy limit to meet these needs. Federal government Medicare payments do not adequately cover the costs of providing ambulance and emergency medical services. New federal regulations prohibit counties from seeking reimbursement from Medicare patients for these services. Limitations on property tax increases do not allow the collection of sufficient funds within the county or district to cover these costs.
MOTION:	After a lengthy question and answer period, Representative Ringo moved to introduce RS12750.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to return RS12750 to sponsor. Roll call vote was called for.
ROLL CALL VOTE:	Voting Aye- Representatives Raybould, Barrett, Schaefer, Collins, Roberts, Wood, McKague, McGeachin, Crow. Voting nay - Representatives Kellogg, Ridinger, Moyle, Field, Smith, Denney, Ringo, Martinez, Henbest, Cuddy. Motion failed, 9-10-0. Original motion to introduce RS12750 passed on a voice vote.
RS12657C2:	Chairman Crow announced the next item on the agenda was RS12657C2 and asked Senator Goedde to present the RS. Senator Goedde explained that this proposed legislation authorizes certain resort counties to adopt local option sales taxes to implement and collect such tax. The bill requires that the measure be put to the voters and obtain a minimum of sixty percent approval; sets forth specific purpose; set for a period of time, ten years or less; sets the rate of taxation and that rate shall not exceed one percent. The measure allows for county commissioners in such counties to propose to the voter the opportunity for an additional sales tax. Not less than fifty percent of the revenue generated would be applied to reduce existing property taxes and the balance of such revenues used to provide needed services which would otherwise be paid for by general fund revenues.
MOTION:	Representative Kellogg moved to introduce RS12657C2. Motion passed on a voice vote. Representatives Barrett, Wood and McGeachin requested to be recorded as voting NO.
RS12655C1:	Chairman Crow announced the next item on the agenda was RS12655C1 and recognized Senator Bunderson. Senator Bunderson explained that this proposed legislation repeals the special sales and use tax exemption on tangible and personal property sold by tribally-owned businesses section 63-3622Z. It moves the definition clause of section 37-2732A. It is critical that these sales and use tax exemptions are repealed for the following reasons. Combines with other tax exemptions and special privileges, this law gives tribal businesses unfair and potentially massive competitive price advantages and favoritism over Idaho retail businesses that are required to collect taxes. The exemption causes unwarranted loss to the general fund and unnecessarily exposes the general fund to significant additional losses. For example, Tribal businesses may under the existing law, operate any retail business, including automobile, truck and heavy equipment dealerships and not collect and remit state sales and use taxes. Idaho citizens purchasing vehicles from a Tribal dealership would be required to register and license their vehicle with the state but under existing law would be exempt from paying the use tax. This proposed legislation puts retailers on a level playing field.
MOTION:	Representative Wood moved to introduce RS12655C1. Motion carried on a voice vote. Motion passed on a voice vote. Representatives Kellogg and Ringo requested to be recorded as voting NO.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 11:00 a.m.

DATE:	February 11, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Senator Stennett; Senator Keough; Dan John, State Tax Commission
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Kellogg moved to accept the minutes as written of the meeting held on February 10, 2003. Motion passed on a voice vote.
RS12615:	Chairman Crow announced the first item on the agenda was RS12615 and asked Senator Stennett to explain the proposed legislation. Senator Stennett said the issue of land valuation of homesites in Blaine County has been worked on for several years. The intent of this proposed legislation is to separate the home site as farm and ranch operation from speculative sale. He passed out a copy of a resolution approved by the Idaho Cattle Association. (Attachment #1) This proposed legislation provides that each homesite on an otherwise recognized farm or ranch under 63-602HH, Idaho Code would be considered agricultural property. This proposal provides that the assessed market value for qualifying homesites which exceeds $30,000 shall be exempt from property taxation. In response to a question relating to the Fiscal Impact Statement he said there would be no fiscal increase, it would shift to other property. There were several questions as to the restriction of one hundred contiguous acres on page l, line 27 of the RS.
MOTION:	Representative Cuddy moved to return RS12615 to sponsor to rework the RS. Motion passed on a voice vote.
RS12598:	Chairman Crow announced the next item on the agenda was RS12598 and recognized Senator Keough to present the RS. Senator Keough stated that the purpose of this proposed legislation is to repeal the Estate and Transfer Tax effective January 1, 2005. This section of Idaho Code is tied to the federal credit that is being eliminated and will be totally gone in 2005. In response to inquiries from the Committee Dan John, State Tax Commission, said the Idaho State death tax credit is fully phased out for individuals that die during 2005. When this happens the state will receive no money from the inheritance tax or state death tax credit.
MOTION:	Representative Wood moved to introduce RS12598 with a corrected Statement of Purpose.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Moyle to return to sponsor to correct the effective date.
AMENDED SUBSTITUTE MOTION:	An amended substitute motion was made by Representative Field to introduce RS12598C1 with the effective date of January 1, 2006. Motion passed on a voice vote.
RS12647:	Chairman Crow announced that RS12647 would be heard next and asked Senator Keough to continue. Senator Keough said the purpose of this proposed legislation is to amend the Estate and Transfer Tax to allow for an exemption from the tax for families. Currently an estate tax or "death tax" is levied on the estates of those who die. This proposal would provide for an exemption for families.
MOTION:	Representative Moyle moved to return RS12647 to sponsor. Motion carried on a voice vote.
RS12641:	Chairman Crow announced the next item on the agenda was RS12641 and asked Senator Keough to explain the proposed legislation. Senator Keough, stated that the purpose of this proposal is to more accurately reflect where sales taxes are being collected in Idaho. Currently companies doing business in more than one county within Idaho report sales tax figures to the State Tax Commission directly without regard to the county in which the sales have been generated. In response to questions relating to data collected by the State Tax Commission, Dan John said reports are made by some companies on a multi-county and multi-state basis. He said that when a piece of equipment is sold it would be reported at the point of sale and not the destination. He also said that Revenue Sharing is based on a formula and this bill would not affect the distribution.
MOTION:	Representative Smith moved to introduce RS12641.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Cuddy to return RS12641 to sponsor. Roll call was called for.
ROLL CALL VOTE;	Voting Aye - Representatives Kellogg, Raybould, Barrett, Ridinger, Moyle, Field, Schaefer, Collins, Roberts, Wood, Denney, McKague, McGeachin, Ring, Martinez, Henbest, Cuddy, Crow. Voting Nay - Representative Smith. Motion passed, 18-1-0
RS12645:	Chairman Crow announced the next item on the agenda was RS12645 and recognized Senator Keough. Senator Keough said the purpose of this proposed legislation is to ensure that the homeowner's exemption is being taken by those who actually live and work in another state and have second homes in Idaho. This proposal would give the assessors a tool to address the issue.
	It is projected that income from property taxes would increase as people who are inappropriately claiming the homeowner's exemption would pay their full share of those taxes. This, in theory, would require less taxes from other property taxpayers to pay the bills of our schools and counties as well as lessen the draw on the state's general fund for public education dollars.
MOTION:	Representative Moyle moved to introduce RS12645. Motion carried on a voice vote.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:54 a.m.

DATE:	February 12, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Moyle, Field and Denney
GUESTS:	Representative Tilman; Dan John, Idaho State Tax Commission
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Cuddy moved to accept the minutes as written of the meeting held on February 11, 2003. Motion passed on a voice vote.
H0121:	The Chairman advised the members that Representative Trail presented a letter requesting that H0121 filed as a personal bill, be withdrawn. She asked for unanimous consent to HOLD H0121. Unanimous consent was granted.
RS12848:	Chairman Crow announced the first item on the agenda was RS12848 and asked Representative Tilman to explain the proposed legislation. Representative Tilman said the purpose of this proposed legislation is to provide that property used for public charter school purposes is exempt from taxation. This proposal is a small matter of state policy of exempting all public schools from property taxes. For a number of years there have been public charter schools and there are three or four situations where charter schools lease their facilities. This proposed legislation would exempt the portion used for educational purposes from property taxes.
MOTION:	Representative Barrett moved to introduce RS12848. Motion passed on a voice vote.
H0194:	Chairman Crow announced the next item on the agenda was H0194 and recognized Mr. John to present the bill. Dan John, State Tax Commission, testified that this is the annual bill to update references to the Internal Revenue Code (IRC.) It conforms the Idaho income tax to changes made to the IRC after January 1, 2002, including the federal "Job Creation and Worker Assistance Act of 2002." However, this bill will carve out the two major exceptions as listed below: 1. The special allowance for 30% first year "bonus depreciation" permitted by subsection (k) of section 168 of the IRC would not be deductible in computing Idaho taxable income. For computing Idaho taxable income, the adjusted basis of depreciable property and capital gains or losses will be modified to reflect the disallowance of the federal bonus depreciation. 2. Expenses of elementary and secondary teachers for purchases of classroom supplies otherwise allowable under the IRC would not be deducible.
MOTION:	Representative Wood moved to send H0194 to the floor with a do pass recommendation. Motion passed with a voice vote. Representatives Ridinger, Ringo and Martinez requested to be recorded as voting NO. Representative Wood will sponsor the bill on the floor.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:14 a.m.

DATE:	February 13, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Roberts
GUESTS:	Representative Eskridge
	Chairman Crow called the meeting to order at 10:00 a.m. and requested a silent roll call. Representative Martinez moved to accept the minutes as written of the meeting held on February 12, 2003. Motion carried on a voice vote.
RS12847:	Chairman Crow announced the first item on the agenda was RS12847 and asked Representative Eskridge to explain the proposed legislation. Representative Eskridge stated that there are five wood pellet manufacturing companies located in Idaho that are prohibited from fully participating in the State's sales and use tax exemption afforded to all other manufacturing companies. This presents a competition problem in that it penalizes the Idaho manufacturer who is in competition with manufacturers outside Idaho. They compete with Montana, Washington and Oregon who qualify fully for their respective state sales and use tax exemptions. This RS corrects the competitive problem. In response to a question relating to the deletion of language on page 3, lines 28 through 30, Dan John, State Tax Commission, stated the RS was very narrowly drafted and changes needed to be in two sections of Code.
MOTION:	Representative Barrett moved to introduce RS12847 with a corrected Statement of Purpose to reflect the purpose of the proposed legislation.
SUBSTITUTE MOTION:	A substitute motion was made by Representative McGeachin to return RS12847 to sponsor. Motion failed on a voice vote. Original motion to introduce RS12847 passed on a voice vote. Representatives Crow, Kellogg, Schaefer, McKague, McGeachin and Henbest requested to be recorded as voting NO.
RS12944:	Chairman Crow announced the next item on the agenda was RS12944 and recognized Representative Cuddy to explain the proposed legislation. Representative Cuddy said the purpose of this legislation is to further clarify the definition of occupancy of a house after construction. In some instances the current definition is causing the assessors some difficulty.
MOTION:	Representative Kellogg moved to introduce RS12944. Motion passed on a voice vote.
RS12987:	Chairman Crow announced the next item on the agenda was RS12987 and asked Representative Cuddy to explain the proposed resolution. Representative Cuddy said the purpose of this resolution is to urge all communities, businesses, schools and residents of the State of Idaho to help with efforts to provide the 2003 Christmas Tree for the United States Capitol.
MOTION:	Representative Field moved to introduce RS12987C1 changing the term "Holiday Tree" to "Christmas Tree" and recommend it be referred directly to second reading. Motion passed on a voice vote.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:22 a.m.

DATE:	February 17, 2003
TIME:	9:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Moyle, Field, Wood, Denney, Cuddy
GUESTS:	Dan John, Idaho State Tax Commission
	Chairman Crow called the meeting to order at 9:00 a.m. and requested a silent roll call. Representative Ridinger moved to accept the minutes as written of the meeting held on February 13, 2003. Motion carried on a voice vote.
H0131:	Chairman Crow announced the first item on the agenda was H0131. She said a copy of a letter from the Idaho Association of Counties was before the committee. The letter requested the committee to "Hold" the bill in committee. The letter contained comments on issues raised during the committee hearing. (Attachment #1)
UNANIMOUS CONSENT:	The Chairman asked for unanimous consent to HOLD H0131. Consent was given.
H0148 and H0193:	Chairman Crow announced the next two items on the agenda were H0148 and H0193. H0148 relates to extending the time for county boards of equalization to meet. H0193 relates to removing the 3% property tax limitation to recover the shortfall in revenues to ambulance and emergency medical services created by the federal prohibition. The Chairman assigned the bills to the Raybould Subcommittee for more study.
H0225:	Chairman Crow announced the next item on the agenda was H0225 and recognized Mr. John to present the bill. Dan John, State Tax Commission, testified that legislation was passed in the 2001 Legislative Session creating two new credits and did not specify the number of times they could be transferred. One was an "incentive tax credit" and the second credit was for "Income Tax Credit for Investment in Broadband Equipment" and both credits could be transferred. In the case of the "broadband" credit the taxpayer who earned the credit may make the transfer through an intermediary. The "incentive credit" was for only one year and the "broadband " credit was for five years. This proposed legislation limits the transfer of the "broadband" credit two times. This RS replaces H081 which specifically limited the transfer to one time, this was too restrictive on "broadband."
MOTION:	Representative Roberts moved to send H0225 to the floor with a do pass recommendation. Motion carried on a voice vote. Representative Moyle will sponsor the bill on the floor.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 9:13 a.m.

DATE:	February 19, 2003
TIME:	9:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Don Pischner; Larry Echohawk, Professor of Law at Brigham Young University; Bill Roden; Blaine Edmo, Shoshone-Bannock Tribe; Donna Lynn Simon; Ernie Stensgar, Coeur d'Alene Tribe; Phillip Hernandez, Shoshone-Bannock Tribe; Samuel Penny, Nez Perce Tribe; Lee Kniffin, Shoshone-Bannock; Karleane Allen, Idaho Wholesale Marketers; Cheryl Shepherd, Coeur d'Alene; Terry Gibson, Duck Valley
	Chairman Crow called the meeting to order at 9:00 a.m. and requested a silent roll call. Representative Ringo moved to accept the minutes as written of the meeting held on February 18, 2003. Motion carried on a voice vote.
H0135:	Chairman Crow outlined the rules for testimony. She recognized Mr. Pischner to present the bill. Don Pischner said his support of this legislation was on behalf of an organization of Idaho retailers made up of small businesses that sell cigarettes. The businesses operate convenience stores, grocery stores, smoke shops and others. This legislation simply asked that all, not just slightly more than half, of the cigarettes sold in Idaho be subject to a product tax. The bill provides for an exemption for smokers on Indian reservations. He said perhaps a different but equally fair approach to this issue would be legislation that in fact exempts all cigarettes sold in Idaho from a product tax. Cigarettes sold at Idaho Tribal outlets are tax exempt from Idaho Tobacco Product, Idaho Code 39-5704. The goal of this legislation is to reduce sales of cigarette to minors, permitting inspection and educational programs to promote compliance with the law. There are several tax inequities and the cigarette tax exemption exclusive to Tribal sales of cigarettes is one of the more blatant. He handed out a graph depicting the twelve year history of Idaho cigarette sales. (Attachment #1) There are 1,921 retail cigarette outlets throughout the state that pay Idaho cigarette tax and eleven Tribal outlets are tax exempt and free of compliance from the Idaho Tobacco Product law. Tribal sales of cigarettes are 40% of all Idaho cigarette sales. Wholesalers reported to the Idaho State Tax Commission 57.5 million packs of tax exempt cigarettes were sold in 1999 which is up from 14.5 million packs in 1991. Tribal sales on Indian Reservations increased by 43 million packs. Wholesalers report 86.4 million packs of taxed cigarette packs were sold in 1999 which is up from 81.6 million packs in 1991. non-tribal tobacco retail outlets increase less than 5 million. Tribes are now beginning to wholesale cigarettes and the state has limited information about internet activities. Web advertisers now offer "keep full" service and "discount cigarette buyers club." All schemes are for smokers to lower their state cigarette tax to zero. The cigarette tax statute is not clear as to who bears the legal incidence of the tax in the context of Indian sellers. Idaho cigarette tax law needs to be amended to clearly place the legal incidence of the tax on the consumer with a duty to collect by the wholesaler.
CON:	Chairman Crow recognized Mr. Echohawk to testify. Larry Echohawk stated he is a Professor of Law at the Brigham Young University and teaches federal Indian law. He spoke in opposition to H0135. Idaho has never sanctioned tobacco sales on Indian reservations. The Idaho Supreme Court has addressed this issue in a case entitled Mahoney vs State Tax Commission and ruled that it is not lawful for the Tax Commission to collect tax on cigarettes within Indian reservations. In 1980 the U.S. Supreme Court ruled that a state could impose its cigarette tax on non-Indians purchasing cigarettes within Indian reservations. Since then the Idaho Legislature as a matter of good tax policy has rejected several attempts to impose a state tax on tribal cigarette sales. In 1978 Fort Hall embarked on economic development to create jobs and relied on longtime tax immunity. The unemployment rate is 60% at Fort Hall compared to 5.7% national average and is the real issue. This bill is bad tax policy and will hurt the economic development in its infancy. The tribal governments provide primary services on reservations, including roads, schools, police and more. To change this law would "upset the apple cart" and change the status quo of providing vital services. The need for services and the need for jobs would still be there. Mr. Echohawk said this issue is a very complex matter and the legislature should not act on impulse. The tribes called for a legislative study to look at how revenues and service play out on Indian lands. The issue needs careful study of every reservation.
CON:	Chairman Crow recognized Mr. Roden to testify on the bill. Bill Roden said that Idaho has never taxed cigarettes on Indian reservations. He delineated technical issues in the bill. Section 1 on legislative intent. on Page 1, lines 9-11­"It is the intent of this act to eliminate unfair competitive business advantages now enjoyed by Indian tobacco retailers in direct competition with non-Indian business." This language may be problematic when facing a constitutional challenge in state or federal court. The question is the power to tax, not non-Indian businesses concern over competition. Idaho businesses on the Washington/Oregon border do not object to their tax advantage over Washington retailers. He questioned whether a tax advantage is an unfair advantage. Page 1, line 15-18 "Legislature intends to require that cigarettes sold to non-Indian purchasers on an Indian reservation must have an Idaho cigarette stamp affixed even if sold by an Indian or an Indian enterprise." Contrary to only requiring the stamping of cigarettes for sale to non-Indians, the other provisions of the Act require the stamping of cigarettes for sale to Indians as well. Section 2, Page 1, lines 12-23 ­ Purpose. To levy a tax on cigarettes used, consumed or purchased for any purpose other than resale in the regular course of business. A sale to any business for the purpose of resale would be tax exempt. A sale to Costco or Albertson's would not be taxable, because the sale to Costco or Albertson's was for "resale." Arguably the wholesaler is also exempt from the tax because he purchased the cigarettes for resale. However, the wholesaler has a duty to pre-collect the tax from somebody other than a person who purchased cigarettes for resale. Section 3, paragraph (1)-Page 1, lines 28031. Imposition of a Tax. " A tax upon the purchase, storage, use for any purpose other than the resale in the regular course of business, consumption or use is hereby imposed at the rate ----------." The language mirrors the language of the purpose section, which states that a purchase for the purpose of resale is not subject to tax. A retailer purchases only for resale. The term "precollected" is not defined. Section 1, lines 23-25, provides for "precollection" from the person who first sells, receives, handles or distributes the cigarettes. That person would be the wholesaler, not the retailer. Paragraph 2, page 2, line 5. The tax imposed does not apply to cigarettes sold to an Indian retailer for resale to members of a tribe. But, non-taxable cigarettes must have a tax stamp on them, paid for by the wholesaler. Query: If the sale to the Indian retailer for resale to Indians is exempt, how does the Indian retailer get a return of tax paid if the wholesaler has pre-collected the tax from the retailer who was tax exempt? The wholesaler obviously did not pre-collect the tax from the consumer because the wholesaler had no relationship with the consumer. Paragraph 3, Lines 10-16 Wholesalers making sales to the Indian retailers may apply to the commission for authorization to deduct taxes paid on cigarettes sold by the retailers to members of an Indian tribe. Why would the wholesaler make such an application? The wholesaler has been paid for the tax by the retailer and is included in the price. As written the tribe or Indian retailer was not liable for it in the first place. This is a clear violation of the prohibition of taxation on Indian tribal sales to tribal members. In addition, to claim the deduction on the tax return that is not filed by the wholesaler until the 15th of the month following the transaction the wholesaler has to have had permission for the sale from the Tax Commission prior to the sale or the right to the deduction by the wholesaler is lost. Paragraph 4, lines 17-31 Allocation process. The first sentence seems to make an allocation statewide and limits the amount of deduction allowed to all wholesalers based on the "average annual allocated consumption of cigarettes for all Indian tribes located in Idaho." In other words, if there are six thousand tribal members on reservations in the state and the total allocation of all of the tribes is one pack a day per member, (2,190,000), if one tribe used the entire allocation the remaining tribes would not have an exemption for their tribal members. The second sentence, line 21, seems to say something different but changes the area in which the tribal population is determined, from "reservation" to "tribal service." A tribal service area, under federal law, may be larger than the reservation boundaries. In the case of the Coeur d'Alene tribe the tribal service area for health care purposes is approximately a 100-mile radius from its reservation boundaries. It extends into Montana and Washington. As written, the tribal allocation would include Indian members within that radius, although they may not be members of the Coeur d'Alene tribe. The allocation shall also be based on the national cigarette consumption per capita average for the most recently completed "calendar year" or "fiscal year" ­which one? And whose data? Or the allocation may be based on the cigarette consumption per capita average for a federally recognized Indian tribe based on a calendar year. Which year as used in the prior standard? Paragraph 5, lines 32-34. How does the wholesaler show to the commission that the economic benefit of the proposed deduction has been passed by the retailers to whom the sales were made. Is it a refund of the entire tax? The tax is not separately stated on the invoices to retailers. Mr. Roden summarized his testimony by saying there is no way that distributors could comply with this bill.
CON:	Chairman Crow recognized Blaine Edmo who spoke in opposition to H0135 saying that he was the Chairman of the Fort Hall business Council, the governing body of the Shoshone-Bannock Tribes, which is located on the Fort Hall Indian reservation in southeast Idaho. He said the Indian Affairs Council had met yesterday and voted eight to one to recommend that the committee hold H0135 and create a committee to analyze the economic effect that H0135 would have on the tribes. He strongly opposed House Bill 135 which is being proposed for enactment by the Idaho Legislature in an attempt to authorize the State Tax Commission to collect taxes on cigarettes sold to non-Indians on the Indian reservations in Idaho. Historically, federal law has prohibited taxation in Indian country. The current state statute, in effect since 1974, conforms to the federally recognized law in this area. In addition the Idaho Supreme Court has found in Mahoney v. State Tax Commission, in a strongly worded opinion, "In the absence of "Congressional consent, the Idaho State Tax Commission has no jurisdiction to tax the on-reservation sale of cigarettes by an Indian seller, whether the purchasers were Indians or non-Indians." The decision makes a strong statement for Indian sovereignty in Idaho and the Idaho Supreme Court has not changed their ruling in recent years. Responsible law making requires careful analysis before taking action. Therefore, the leaders of the Shoshone-Bannock Tribes urge the members of the Idaho Legislature to oppose the enactment of House Bill 135. Full written testimony is attached. (Attachment #2)
PRO:	Donna Lynn Simon, Owner, Robs Seafood & Burgers, appeared before the committee to testify in support of H0135. She said H0135 is about equality and fairness, nothing else. All over Idaho and Washington cigarettes are sitting on the shelves of grocery and convenience stores collecting dust. Why, because cigarette buyers have found alternative ways and places to purchase cigarettes tax-free, such as tribal web sites and tribal smoke shops. A tax paying cigarette retailer cannot compete. Non-tribal smoke shops are at a $6.00 a carton disadvantage, including sales tax, on fourth tier cigarettes. These are the cigarettes that don't pay into the Master Settlement Agreement and are illegal for non-tribal retailers to sell. This is a huge market. The State of Idaho does not receive any Master Settlement Agreement money from the sale of these cigarettes. The disadvantage on all other cigarettes is $4.00 a carton including sales tax. It is not uncommon for a customer to order 10-20 or more cartons of cigarettes at a time. They come from all over Washington and buy cigarettes for everyone in the neighborhood. It is a regular occurrence for a customer to come to our store and ask for a price quote on our cigarettes and then ask "how do I get to the Indian reservation," without buying a cup of soup, sandwich or even a drink. We lose the sale and so does the State of Idaho. We don't want to put anyone out of business and we don't want to be forced out of business. There are enough cigarette buyers out there for everyone. She concluded saying that all things equal let us share in the profit. We are a member of the Idaho Tobacco Retailers Association. Please vote yes on house Bill 135.
CON:	Ernie Stensgar, Tribal Chairman of the Coeur d'Alene Tribe, spoke in opposition to H0135. He testified that HB135 would result in the loss of hundreds of thousands of dollars annually to the Coeur d'Alene Tribe. The legislation would harm small businesses and result in the loss of precious jobs on the Coeur d'Alene Reservation. It would result in an enormous administrative burden on already-struggling small business. The bill is illegal and will ultimately be struck down in the courts. Mr. Stensgar concluded his remarks by saying that this is bad legislation, bad for working people, bad for small businesses, bad for tribal governments, schools, health care programs and other services funded by our cigarette tax revenues. He urged that the State and the Tribes work together on this and other taxation issues to reach agreement that all governments can live with. Let's not turn this issue into another divisive, expensive Tribe/State battle. Let's take the opportunity to cooperate as sovereign governments acting in the best interest of all the people of Idaho and the Indian Nations here. He repeated Mr. Edmo's report of the Indian Tribal Council's decision to analyze the economic effect of House Bill 135 on the Tribes. Full written testimony attached. (Attachment #3)
CON:	Phillip Hernandez identified himself as the manager of the Trading Post Grocery Store, one of the enterprises that is owned and operated by the Shoshone-Bannock Tribes. He provided written testimony in opposition to House Bill 135. (Attachment #4) He said that any attempt to impose tobacco taxation on Indian Reservations by the State can only cause a burden to the Tribe and the State. This tax will also cause animosity between the Tribal and State governments be construed as racial hostility and burden the courts with needless litigation. He encouraged the House Revenue and Taxation Committee to not support House Bill 135 and to maintain a respectable relationship between the State of Idaho and Idaho Tribes as well as helping Idaho Tribes to continue to become more self-sufficient.
CON:	Samuel Penny, Nez Perce Tribal Executive Committee, appeared before the committee to testify in opposition to H0135. He stated that in 1989, as in previous years, a similar effort was made to impose the state cigarette tax on tribal sales, but in the face of great public outcry reason prevailed and the exemption continues with no major negative impact to the overall economy of Idaho. Claims that the exemption was driving competitors into bankruptcy proved to be completely unfounded. The Nez Perce Tribe as a sovereign nation imposes its own tax on tobacco sales on its reservation. He cited several programs that are funded from this tax. Without these social programs the Nez Perce tribal members who rely upon these services would be applying for State assistance. While the idea to increase state revenue may sound tempting at first glance the committee needs to consider all of the economic impacts of this bill. The bill would cost more to administer than it would ever generate in revenue. The bill would violate a 1974 Idaho Supreme Court ruling that says that imposition of a state tax on tribal cigarette sales is an impermissible tax on commerce with Indian tribes. Tax on tribal cigarette sales is an unlawful interference with Indian commerce. Copy of the full text is attached. The issue needs to be studied further. (Attachment #5)
CON:	Lee Kniffin appeared before the committee to speak in opposition to H0135. He submitted printed testimony see attachment. (Attachment #6) He stated that there are problems with the formula as to the allowable exemption of enrolled membership and how the State would pay back to the Indians. Cross border sales have not been addressed and the whole bill does not hold water. He said most of his points had been addressed by previous presenters.
CON:	Karleane Allen representing the Idaho Wholesale Marketers Association, appeared before the committee in opposition to H0135. She said wholesalers are confused as to how to implement this legislation. She cited several problems relating to affixing the stamps and how to implement the bill. Concluding her remarks she urged the committee to hold H0135 and work out something with wholesalers.
PRO:	Cheryl Shepherd, Coeur d'Alene, Idaho, appeared before the committee testifying in support of H0135. She exhibited two cartons of cigarettes with no stamps affixed to the packages. The cigarettes were purchased last week, one at the Coeur d'Alene Tribal Casino near Worley and the other at Adeline's Smoke Shop also near Worley on Highway #95. No questions asked by the sales person, these Marlboro cigarettes were purchased by Weston O'Brien. Weston was born March 11, 1986. He is 16 years old. She stated that she is a mother against underage teen smoking. Although she might not understand all the laws, she believed that if the tribes had to pay cigarette tax that might afford an opportunity for controlling their abuse of cigarette sales to minors.
CON:	Terry Gibson representing the Shoshone-Pauite Tribe located in Duck Valley appeared before the committee in opposition to H0135. He testified that the reservation is located on 290 acres and their government works like the State government. The Shoshone-Pauite Tribe is the only self-governing Tribe in Idaho. This bill offends the sovereignty of Tribes. The status of this sovereignty cannot be changed until the U. S. Government says otherwise. For years the Federal and State government has held that the Tribes will be self sufficient and be determined to develop revenue. This bill is unfair and is a broken promise for the development of Tribal business to be self sufficient. This proposed remedy should not apply to all Tribes. Any remedy should be crafted to particular problems. He concluded his remarks by urging the committee to hold H0135 to fully analyze the economic impact.
MOTION:	Representative Kellogg moved to hold H0135.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Roberts to introduce H0135 with a do pass recommendation.
AMENDED SUBSTITUTE MOTION:	An amended substitute motion was made by Representative Raybould to hold H0135 time certain for one week. Roll call was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Raybould, Ridinger, Moyle, Field, Schaefer, Roberts, Wood, McKague, McGeachin, Cuddy, Crow. Voting Nay - Representatives Kellogg, Barrett, Smith, Collins, Ringo, Martinez, Henbest. Amended substitute motion to Hold H0135 time certain for one week passed, 11-7-1
ADJOURN:	There being no further business to come before the committee, Chairman Crow adjourned the meeting at 11:05 a.m.

DATE:	February 20, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Ted Spangler, Idaho State Tax Commission
	Chairman Crow called the meeting to order at 10:00 a.m and requested a silent roll call. She assigned H0280, relating to tax expenditure limitation and HJR02, relating to the "Taxpayer's Bill of Rights" constitutional amendment, to the Kellogg Subcommittee for further study.
H0076:	Chairman Crow announced the only item on the agenda was H0076 and asked Mr. Spangler to present the bill. Ted Spangler, Idaho State Tax Commission, testified that this legislation provides that when the State Tax Commission petitions a court for a writ of possession as an aid to collection of delinquent tax assessments the sale can be performed by the State Tax Commission. The duty to take possession of property and the sale of property is usually performed by the county sheriff. This legislation will transfer the responsibility of the sale to the State Tax Commission. He said the Tax Commission believes they could get more money for the property which would be a benefit to the taxpayers to satisfy the lien. This takes the burden from the sheriff and will reduce the Tax Commission's fee cost paid to the sheriff
MOTION:	Representative Moyle moved to send H0076 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative McGeachin will sponsor the bill on the floor. Representatives Barrett, Wood, McKague and Ringo requested to be recorded as voting no.
ADJOURN:	There being no further business to come before the committee, Chairman Crow adjourned the meeting at 10:20 a.m.

DATE:	February 24, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Raybould and Wood
GUESTS:	Senator Goedde; Ron Rankin, Idaho State Property Owners Association; Dick Panabaker, Kootenai County Commissioner; John Robideaux, Businessman; Rocky Watson, Kootenai County Sheriff; Suzan Scott, Coeur d'Alene Chamber of Commerce; Pete Skamser, National Federation of Independent Business; Randy Nelson, Associated Taxpayers of Idaho; Denise Brennan, Automobile Dealers Association; Senator Compton; Steve Ahrens, Idaho Association of Commerce and Industry; Pam Eaton, Idaho Retailers Association; Jane Gorsuch, Intermountain Forest Association
	Chairman Crow called the meeting to order and requested a silent roll call. She announced the only item on the agenda was HB192 and recognized Senator Goedde to present the bill.
HB192:	Senator Geodde stated that he was here to asked support of this legislation which alleviates a huge problem now faced by Kootenai County property taxpayers, citizens who placed their faith on the actions of our legislature in 1996 but are now caught between a Supreme Court ruling and the legislatures prior actions. In 1996 our contemporaries passed a bill that allowed local option sales tax for specific counties. Based on the actions of the 1996 legislature, Kootenai County Commissioners acting in good faith and with legislative approval brought to the voters a proposal to build a jail employing a half cent sales tax. That measure passed with 62% approval and the county obligated itself to construct the jail and pay it off over ten years using the proceeds of one half of the local option sales tax collected. The other half, $3.4 million, as required in the legislation went to a reduction in property taxes. In 2002 the Idaho Supreme Court found that the statute passed in 1996 was unconstitutional because it was written in a manner that only one county could avail itself of local option. The citizens of Kootenai County are now in a dilemma. The annual payment on our jail is $1.4 million. Last year's property tax reduction was $3.4 million increase. The following year the increase will total $4.8 million or a 22% increase in property taxes. We must have some relief from this burden. What is before you today is not a tax increase measure. Its passage would offer the citizens of Kootenai County the opportunity to again vote for alternative financing of the jail project. Remember that to qualify a local option measure it must gain 60% voter support. The measure has to be written for a specific duration not to exceed ten years in length; must be written for a specific purpose; state the exact rate of taxation and fifty percent of the proceeds from local option tax must apply to property tax relief. Changes from the legislation passed in 1996: The language defining a resort county has been altered to reflect a population base of 17,000 and employment base of 10% tourism related jobs. According to the data provided by the Department of Commerce this will allow six counties in the state to use local option as an income source and property tax reduction mechanism The new legislation is more restrictive in that, in addition to the sideboards in the first bill this one contains a maximum taxation rate of 1%. Senator Goedde stated that when he last appeared before this committee questions were asked about the 60% voter approval: Why not 66 2/3rd% as found in other code sections. The answer is fairly straightforward. Local option does not create a general obligation bond situation which would require the higher approval rate thus could be passed with a simple majority. It is familiar in nature to school plant and facilities levies that carry a sliding scale of approval as low as a simple majority. Reflect on the number of school bonds that have failed in Idaho; 60% is a high bar to jump. Put another way, if committee members had to gain 60% for successful election seven members of this committee would not have survived their primary and be sitting here today. Senator Goedde said he also did not gain 60% of the vote and would be here presenting this measure. Senator Goedde passed out a copy of letter from the Idaho Tax Commission on the issue of simplified Sales Tax. The key to compliance with Simplified Sales Tax is the collection device. Should the legislature pass the Simplified Sales Tax measure the only thing needing to be changed in local option is the collection point. It would need to move from the county to the state level. (Attachment #1) Resort County local option would have no bearing on local option city taxes as that is dealt with in another section of code. Cities gain no additional taxation rights if they are located in a resort county. In the original passage of the first local option sales tax a good deal of concern was raised on the burden on business, not only to collect the tax and remit it, but also because an additional one half-cent would make them non-competitive in the area marketplace. He provided several letters from businesses in the area refuting those concerns. (Attachments #3) In summation he said that HB192 offers the narrowest window they could construct to solve the huge problem now faced by Kootenai County property taxpayers who placed their full faith on the actions of the legislature. He asked the committee to send this to the floor with a do pass recommendation.
PRO:	Ron Rankin representing the Idaho State Property Owners Association and Ron McIntire appeared before the committee testifying in support of HB192. He stated that the jail in Kootenai County was understaffed and overcrowded and their was a demand to increase the size. A committee was set up to study how much the jail would cost and how to finance the project. The legislature passed in good faith a statute authorizing a local option county sales tax which Kootenai county used to build a jail.
PRO:	Dick Panabaker, Kootenai County Commissioner, stated he was representing the Idaho Association of Counties. He testified in support of HB192 saying he had lobbied to pass a resort county option bill to fund the counties infrastructure costs. Their was no reason that Kootenai County should not have a voter approved jail project under the resort county local option sales tax. The jail project seemed perfect to save property taxes for Kootenai County property owners. He reiterated Senator Goedde's testimony that the proposal to build the jail passed by 62% and sunsets in ten years. This bill is very important to Kootenai County to pay the $1.4 million annual payment. They do not know what they will do if it does not pass. Voters feel the sales tax is a painless way to pay for the jail which has been a tremendous success. Detractors of the sales tax are now supportive. In response to questions, Mr. Panabaker stated that the jail project started in 1999 and the jail is now over half full. The one-half cent sales tax is used for property tax reduction.
PRO:	John Robideaux appeared before the committee in support of HB192 stating he has 30 different businesses and his experience was favorable with the resort sales tax. The tax assessment did not create a challenge or loss of business with its implementation. The business community supports the resort sales tax and the collection of the tax is not a burden but there is significant benefit by reducing the property tax.
PRO:	Rocky Watson, Kootenai County Sheriff, speaking in support of the bill stated that Kootenai County is unique in the fact that the population goes from 30,000 to 50,000 during the summer. There are fourteen lakes in the area and fifty percent is public land. This creates many problems for the Sheriff department. It is important to collect sales tax from non-county residents.
PRO:	Suzan Scott representing the Coeur d'Alene Area Chamber of Commerce and the Postfalls and Hayden Chambers appeared before the committee in support of HB192. This important legislation allow local voters the right to raise local taxes for additional funds for programs and services. The Chambers firmly believe local voters should have the opportunity and not be restricted by state government. States are capable of creating their tax system and so are counties but you need know the level of limitation that is felt at the county level. Under the definitions of the Department of Commerce Kootenai County is a resort county. Kootenai County has approximately 2 million visitors annually. Local property taxpayers are already overburdened by extra services required by tourism. For instance, 30% of the County jail population are non-residents. Similar statistics also apply to resort county roads, parking, police and emergency services, parks, and utilities. This legislation not only allows counties with strong travel and tourism base to shift some of the tax burden to non-residents but also allow for property tax relief.
CON:	Pete Skamser, National Federation of Independent Business, appeared before the committee in opposition to HB192. He testified that the NFIB membership oppose local option tax. There are six counties that could qualify with 10% workforce. This bill creates various taxing districts. He urged the committee to hold H0 192.
CON:	Randy Nelson, Associated Taxpayers of Idaho, provided a hand-out depicting the resort county sales tax (Attachment #2); taxpayer impact example of property tax savings of $52.07 and sales tax increase of $65.60. (Attachment #2) Beginning on page 1 line 33 the bill describes a resort county as a county that "derives a major portion of its economic well-being from businesses catering to recreational needs and meeting needs of people traveling to that destination county for an extended period of time." The bill goes on to include other criteria such as over 17,000 population and 10% of workforce employed in recreation employment meeting certain North American Industry Classification System code. He forecasted and analyzed what the impact of the property tax relief fund could have been in Kootenai County continued for a 5-year period. Even with the county property tax relief the growing budgets of the other taxing districts and the taxpayers increasing property value will still cause the property tax bill to increase. In closing, Mr. Nelson stated that HB192 does attempt to identify and narrow the local option sales taxes to a few resort counties, but does miss resort counties such as Valley, Teton, Shoshone, Fremont, Custer, Camas, Boise, Bear Lake and Adams which have their residents bringing commerce dollars into population centers. He provided a hand-out listing option tax pros and cons. (Attachment #3)
CON:	Denise Brennan appeared before the committee representing the Idaho Automobile Dealers Association in opposition to HB192. She testified that local option taxes create an unfair competitive advantage to bordering, as well as other counties which do not impose such taxes. It is especially unfair in the case of large ticket purchases such as automobiles. As an example sales tax at 5% on a $20,000 vehicle purchase is $1,000; If certain counties were allowed the option to collect an additional 1%, the consumer would be paying an additional $200 on this amount. In these difficult times while we are trying to stimulate the economy statewide, granting authorization of local option sales tax to select counties offers the possibility of impeding growth in others.
PRO:	Senator Compton, co-sponsor of the bill, said that the last two speakers described problems that could be caused for dealerships. The disadvantage was debated when the original bill was passed. This has turned out not to be true and dealerships have seen that the resort tax has worked. The resort tax has worked well to fund roads and the jail and reduced property taxes.
CON:	Steve Ahrens, Idaho Association of Commerce and Industry, appeared before the committee in opposition to HB192. He stated that the secretary has a copy of his testimony for the record and he would be brief. See attachment for full testimony. (Attachment # 5) The business community has been consistent over the years in support of fair, stable and competitive system. A system that taxpayers, both individual and corporate, can understand and comply with. The House Revenue and Taxation Committee is the traditional guardian of the authority to tax in the State of Idaho. Members of this Committee have adhered to certain key principles in constructing and maintaining Idaho's tax system. The power to tax is an awesome power. IACI sees three primary objections to giving up tax authority to local government: First, the multiplication of local-option taxes will create a patchwork of taxation that will artificially distort business development and operations. That is precisely what happened in other jurisdictions across the country Second, allowing local-option sales tax authority flies directly in the face of efforts across the nation to simplify sales system, an area in which Idaho already has an advantage, unless we dilute it with bills like HB192. Third, it's proposed that sales tax revenues be sued for property tax relief. We do not believe property taxes will stay down. Taxpayers ultimately will find themselves paying both property tax and sales tax and it will be difficult to demonstrate that the property taxes are in fact lower.
CON:	Pam Eaton, Idaho Retailers Association, appeared before the committee in opposition to HB192 stating that the Association has long had opposition to local option taxes. There are five or six counties that could qualify to impose a local option tax, not just Kootenai County. Look at the complexity of the tax system in neighboring states, especially Washington.
PRO:	Jane Gorsuch, Intermountain Forest Association, appeared before the committee in support of HB192 saying that this bill represents an option for IFA lumber mills and lands. There are five lumber mills and six individual forest landowners who will potentially be affected by the passage of this bill and the opportunity to vote again on a local option sales tax to pay for their jail.
	Chairman Crow recognized Senator Goedde to wrap up the testimony. Senator Goedde said this bill is a tax shift targeting people who use county services to pay sales tax to support them. This bill is for a property tax relief of $3.4 million.
MOTION:	It was moved by Representative Ridinger to send HB192 to the floor with a do pass recommendation.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Roberts to HOLD HB192. Roll call was called for.
ROLL CALL VOTE:	Voting AYE - Representatives Barrett, Moyle, Field, Schaefer, Collins, Roberts, Denney, McKague, McGeachin, Crow. Voting NAY - Representatives Kellogg, Ridinger, Smith, Ringo, Martinez, Henbest, Cuddy. Motion to HOLD HB192 passed, 10-7-2.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 11:05 a.m.

DATE:	February 25, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Field Representative Kellogg
GUESTS:	Representative Langford
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to accept the minutes as written of the meetings held on February 19, 2003 and February 20, 2003. Motion carried on a voice vote.
RS12964:	Chairman Crow announced the first item on the agenda was RS12964 and asked Representative Raybould to explain the proposed legislation. Representative Raybould stated that this proposal changes the requirements for tax appeals. The legislation identifies the standard to be applied and the burden of proof in appeals of property tax assessments to the County Board of Equalization, the Board of Tax Appeals or the district court. This proposed legislation changes the legal standard from one that requires proof that an assessment is manifestly excessive, arbitrary and capricious or fraudulent and oppressive, to one that requires simply that the assessment is erroneous. It changes the burden of proof to satisfy that standard from a "clear and convincing" burden to the normal "preponderance of the evidence" standard applicable to most civil cases.
MOTION:	Representative Moyle moved to introduce RS12964. Motion passed on a voice vote.
RS12975:	Chairman Crow announced the next item on the agenda was RS12975 and recognized Representative Langford to explain the proposed legislation. Representative Langford stated that this proposed legislation is being done on the behalf of Teton County, the fastest growing small county in the State. When the 3% cap was imposed, being a conservative county, Teton County had a very low mill levy. This legislation amends Chapter 3, Title 63, Idaho Code by the addition of a new Section. It gives flexibility to counties of under 20,000 population and over 10% annual growth regarding the 3% cap for increases in county budgets.
MOTION:	Representative Ringo moved to introduce RS12975.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Moyle to return RS12975 to sponsor. Motion passed on a voice vote.
RS12998:	Chairman Crow announced the next item on the agenda was RS12998 and asked Representative Langford to continue. Representative Langford explained that this proposed legislation modifies the provisions of Idaho Code relating to land actively devoted to agricultural use as applied to counties with under 20,000 in population and an annual growth rate of more than 10%. This proposal adds a chapter which creates and defines the agricultural land preservation tax. It give the county commissioners certain powers in dealing with the new tax. It makes some technical corrections as well as provisions for collection of said taxes and administrative functions.
MOTION:	After a brief question and answer session, Representative McGeachin moved to return RS12998 to sponsor. Motion carried on a voice vote.
ADJOURN:	There being no further business to come before the committee, Chairman Crow adjourned the meeting at 10:30 a.m.

DATE:	February 25, 2003
TIME:	9:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Raybould, Collins, McKague, Martinez
ABSENT/ EXCUSED:	None
GUESTS:	Ada Commissioner Grant Kingford; Tony Poinelli, Idaho Association of Counties; Randy Nelson, Associated Taxpayers of Idaho; Russ Hendricks, Idaho Farm Bureau; Troy Hagen, Assistant Director Ada County EMS
H0148	Chairman Raybould recognized Ada County Commissioner, Grant Kingsford to present H0148. Commissioner Kingsford explained the purpose of the legislation is to move the filing deadline for appeals of property tax assessment by the fourth Monday in June to the third Monday in June. This does reduce the time frame for filing appeals by one week. It allows the County Boards of Equalization more time to adequately conclude their duties and still allow sufficient time for the property owner to file an appeal while negotiating solutions outside of the Board of Equalization process. Members of the committee inquired as to how this would benefit the taxpayer and counties. Commissioner Kingsford explained that the taxpayers, assessors and the Board of Equalization would all benefit.
PRO:	Chairman Raybould called upon Anthony Poinelli, Idaho Association of Counties to testify. Mr. Poinelli stated that Commissioner Kingsford had covered most of the questions asked by the committee members. He stated the purpose of the bill was to give additional time for the assessor and the taxpayers who file an appeal on the value of their property. This would reduce the number of individuals who would appear before the Board of Equalization. There may be some latitude for adjustment both ways on this time schedule. Of 31 counties reporting, there were 2,015 Board of Equalization filings and the number that went to hearing was 900. The assessors were able to reduce the numbers over 50%. This bill would give them some additional time to reduce the numbers.
CON:	Randy Nelson, Associated Taxpayers of Idaho, was recognized by Chairman Raybould. He echoed what Mr. Poinelli had said. Mr. Nelson stated that it is important to keep a one- month time frame and adjust the deadline dates for appeal. He agrees that negotiations would be helpful in adjusting the dates. Mr. Russ Hendricks, Idaho Farm Bureau, was called upon to present his testimony. He rose in opposition to H0148.
MOTION:	Representative Collins moved to return H0148 to the full committee to be HELD. Motion passed.
H0193	Chairman Raybould called upon Troy Hagen, Assistant Director Ada County EMS, to present H0193. Mr. Hagen explained neither the federal government Medicare payments nor state government grants provide adequate funding to cover the costs of providing ambulance and emergency medical services. In fact, the recent federal law prohibits counties from seeking reimbursement from Medicare patients for these services. Also limitations on property tax increases do not allow the collection of sufficient funds within the county or district to cover these costs. H0193 removes the 3% property tax limitation in order to recover the shortfall in revenues to ambulance and emergency medical services created by the federal prohibition. By 66 2/3% voter approval, counties or districts responsible for these services may increase the levy limit to meet these needs. Levy increases may result in counties or districts providing such services, where voter approval has been given. Questions from the committee followed. (Attachment #1 - Report and graph.)
PRO:	Ada Commissioner Grant Kingsford spoke in support of H0193. Commissioner Kingsford testified that after the April 2002 rule went into effect, the Commission has been closely monitoring their revenues. The rule changes have reduced Ada County EMS's gross revenue by 22%. Additionally, Medicaid and other insurance carriers responding to the same rule change have cut their reimbursements. Those additional cuts have served to reduce their revenues even further, with an overall loss of 23.91%. For Ada County EMS that translates to a loss of $1,588,972.00. In order to correct the problem H0 193 would give the voters an opportunity for a choice of tax and services. Toni Poinelli, Idaho Association of Counties, rose to speak stating that the bill doesn't cover just ambulance districts, it covers ambulance and emergency medical services. The bill does effect all services. This problem was caused by the Federal Government prohibiting entities that provide ambulance service from billing the remaining balance from Medicare recipients or insurance companies. The bill would require a 2/3's vote of the citizen's to exceed the 3% cap and would make it permanent. There was a concern expressed about making it permanent and we would be willing to work on this to develop some Legislative intent if the Federal Government would reinstitute the ability to bill Medicare recipients. We would be willing to sit down with the Tax Commission to develop that language. Randy Nelson, Association of Idaho Taxpayers, explained the 2002 levy year of the ambulance districts and counties with ambulance service. He presented a spread sheet and discussed the graphs with the committee showing expenses of the ambulance districts and counties. (Attachment #2)
MOTION:	Representative Martinez moved to return the bill to the full committee with a Do Pass. Motion failed 3-1.
MOTION:	Representative Collins moved to return the bill to the full committee without recommendation. Motion passed. Representative Raybould announced the bill will be returned to the full committee.
ADJOURN:	Meeting was adjourned at 9:55 a.m.

DATE:	February 26, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Kellogg
GUESTS:	Don Pischner
	Chairman Crow called the meeting to order and requested a silent roll call. She recognized Mr. Pischner, sponsor of HB135, to make closing comments of testimony heard on February 19, 2003.
HB135:	Don Pischner stated that there is a strong feeling in the Legislature that the problems raised with Indian cigarette tax exemptions could be solved in the same manner as it is handled with farmers and the gasoline tax; that is they pay the tax and then apply for a refund. In 1988 the Indian Affairs Committee members solved the problem in the State of Washington as follows: "Sales of cigarettes to non-members by Indian Tribes are subject to the cigarette tax. The wholesaler is obligated to make pre-collection of the tax. Stamped exempt cigarettes to Tribal members may be made only in such quantity as is approved in advance by the dependent related to evidenced demand." HB135 has an Attorney General's opinion that it meets the provisions of Idaho's Constitution. Idaho Statute 67-4007 limits the powers and duties of the Idaho Council on Indian affairs to "monitor, review and advise." Because this legislation is being proposed it requires no negotiation as the Tribes claim. In fact there is presently nothing to negotiate. HB135 is not a new tax, not a tax increase but is about tax avoidance. If cigarettes are taxed it might well set the stage for regulation and control of matters impacting risk to health and substance abuse, provide protection from racketeering and crime and promote goals of the Idaho Tobacco Products law. The primary goals of this bill are to reduce sale to teens and about fairness.
MOTION:	Representative McGeachin moved to HOLD HB135 time certain for one week.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Smith to send HB135 to the floor with a do pass recommendation.
AMENDED SUBSTITUTE MOTION:	An amended substitute motion was made by Representative Barrett to HOLD HB135 for the parties involved in disagreement to study the problems and the bill held subject to the call of the Chairman. Roll call was called for.
ROLL CALL VOTE;	Voting Aye - Representatives Crow, Raybould, Barrett, Ridinger, Field, Collins, McKague, Ringo, Martinez. Henbest, Cuddy. Voting Nay - Representatives Moyle, Schaefer, Smith, Roberts, Wood, Denney, McGeachin. Amended substitute motion passed, 11-7-1.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:23 a.m.

DATE:	February 27, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Kellogg
GUESTS:	John Watts, Patricia Younger, Heather Clark, Jan Wall representing the Idaho Library Association
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to accept the minutes as written of the meetings held on February 24, 25 and 26, 2003. Motion carried on a voice vote.
HB139:	Chairman Crow announced the first item on the agenda was HB139 and recognized Mr. Watts to present the bill. John Watts, Idaho Library Association, testified that there are forty-nine district libraries; fifty public community libraries and nine university and college library districts in Idaho. He distributed a handout depicting Idaho public libraries and pointed out small districts that would benefit from this legislation. This proposal would allow library districts to consolidate if they do not share a common boundary. Consolidation procedures presently set out in statute for contiguous consolidation would be required including hearings and actions by all affected county commissions. The consolidation would allow non-contiguous boundaries to consolidate their budgets and merge to create a new budget. The consolidation would reduce administration cost and there would be less overhead. In response to an inquiry as to how many library districts straddled county boundaries, Jan Wall said that there are two; Kootenai and Shoshone and Nez Perce, Lewis and Idaho.
MOTION:	After a short discussion relating to non-contiguous boundaries, Representative Henbest moved to send HB1139 to the floor with a do pass recommendation.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to HOLD HB 139. Roll call vote was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Raybould, Barrett, Ridinger, Moyle, Field, Collins, Roberts, Wood, McKague, McGeachin. Voting Nay - Representatives Schaefer, Smith, Denney, Ringo, Martinez., Henbest, Cuddy. Substitute motion to HOLD HB139 passed, 11-7-1.
HB140:	Chairman Crow announced the next item on the agenda was HB140 and asked Mr. Watts to continue his testimony. Mr. Watts said that if city residents vote affirmatively to join a library district this proposal clarifies that the city library budget in effect on the date of the election is the budget to be used to determine a total district budget and then calculate the first annual assessment rate. Mr. Watts distributed a copy of a letter from the Association of Idaho Cities supporting HB 140 and HB141. (Attachment #1)
MOTION:	Representative Martinez moved to send HB140 to the floor with a do pass recommendation. Motion passed on a voice vote. Representatives Crow, Raybould, Barrett and Wood requested as voting NO. Representative Martinez will sponsor the bill on the floor.
HB141	The Chairman announced the next item on the agenda was HB141 and recognized Mr. Watts. Mr. Watts stated that this proposal allows a library district to add geographic territory as a result of action taken by a city adding to its territory if the city is presently part of an established library district. Under current statute no territory of an incorporated municipality can be divided simultaneously inside and outside of a library district. In response to a question relating to annexation, Mr. Watts stated this legislation does not deal with the annexation laws. When the city grows the library district will expand. This proposal also allows established city libraries to consolidate with established but non-contiguous library districts. Under the current statute, library districts and city libraries cannot consolidate unless they share a common boundary. Non-contiguous consolidation would follow the current statutory requirements for inclusion of new territory.
PRO:	Patricia Younger, Idaho Library Association, appeared before the committee in support of HB141. She said that Idaho Code 33-2703 Subsection (2) "The territory of the district shall be continuous, and no territory of an incorporated municipality shall be divided" is a potential problem for residents of some cities and in some cases, those who reside outside city limits as well. The City of Meridian lies within the boundaries of the Meridian Library District. Both the east and west city limits lines match the east and west boundaries of the library district. She distributed a copy of " Meridian Areas of City Impact." (Attachment #2) There are no current plans to expand the city at either of these boundaries. However due to the recent development of the North Meridian area expansion to the west between Ustick and McMillian could occur. The most eminent potential problem at this time lies south of the city in an area called "Meridian Area of City Impact Referral Area." When this area becomes a part of the City of Meridian, two things could happen if 33-2703 (2) remains as written. First is because a city cannot be divided, all of the City of Meridian would lose library service because the area within the city limits could no longer be a part of the library district. Second the added territory which presently lies with Kuna Library District and Ada Community Library District would also lose library service. Residents of all the areas under discussion presently have library services provided by library districts and are taxed by the districts.
PRO:	Heather Clark, Idaho Library Association, appeared before the committee in support HB141. She testified that Garden City is unique in that is almost surrounded by the City of Boise. Garden City has no school district of its own so students go to Boise, Eagle, and Meridian even though borders do not necessarily touch. While students may attend Meridian schools, because of the wording of HB141 our library would not be allowed to join the Meridian Library District. Why should our district want to join the Meridian District? Combining libraries will save money by consolidating acquisitions, cataloging and administrative staff costs. Fewer offices will be needed for this staff so the space may be used as additional public space without the cost of building additions. Combining libraries would improve public service while providing it with more efficiency. Rather than each library requiring a director there would be only one. The rest would be branch managers who because they are relieved of administrative duties could spend more time enhancing patron services where they are needed. Duplications in the collections of each library would be reduced. Each library could instead focus on the specific needs and wants of their area. The public would be informed and a vote would be required before the combining could take place. Consolidating library districts would better serve the public and the levy would be lower. The city levy rate is higher than the district levy rate.
PRO:	Jan Wall, Idaho Library Association, appeared before committee in support of HB141 stating that the mission of the Library Association is to assist librarians. Consolidation would give customers of communities more choices with a wide variety of videos and books being made available to small libraries. This bill tells libraries how to go about consolidating and what process to go through. Consolidation of small libraries would be a benefit to the citizens in smaller disticts.
MOTION:	Representative Ringo moved to send HB141 to the floor with a do pass recommendation.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Roberts to HOLD HB141. Roll call vote was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Raybould, Barrett, Moyle, Collins, Roberts, Wood, Denney, McKague, McGeachin. Voting Nay - Representatives Ridinger, Field, Schaefer, Smith, Ringo, Martinez, Henbest, Cuddy. Motion to HOLD HB141 passed, 10-8-1.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:50 a.m.

DATE:	March 3, 2003
TIME:	9:30 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Kellogg and Barrett
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to accept the minutes as written of the meeting held on February 27, 2003. Motion carried on a voice vote. Chairman Crow asked Representative Raybould to submit his subcommittee report.
SUBCOMMITTEE REPORT:	Representative Raybould stated that the Subcommittee had met on February 25, 2003 and heard testimony on HB 148 relating to changing the time frame for appeals of property tax assessments. The members of the Subcommittee felt that changing the time period from four to three weeks created a hardship. Testimony for HB193 relating to allowing a budget increase above the three percent cap for ambulance districts. It was moved to return the bill back to the full committee "without recommendation."
MOTION:	Representative Raybould moved to HOLD HB148. Motion carried on a voice vote.
HB264:	Chairman Crow announced the sponsor was not present for the first item on the agenda, the Committee would now consider HB264. She recognized Representative Cuddy to present the bill. Representative Cuddy stated that the purpose of this legislation is to further clarify the definition of occupancy of a house after construction. Sometimes a home may have some things not completed longer than necessary. There may be boats, recreational vehicles placed on the property. The owner is using all the services of the county and they are not paying their fair share.
MOTION:	Representative Martinez moved to send HB264 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Cuddy will sponsor the bill on the floor.
RS13084:	Chairman Crow announced the next item to be considered was RS13084 and recognized Representative Moyle to address the proposed legislation. Representative Moyle explained that this proposed bill allows taxpayers who make new personal property investments in Idaho, on and after January 1, 2003, the opportunity to forego the income tax investment tax credit (ITC) by electing instead an exemption from personal tax on the property for two years. Taxpayers who are in a loss situation are not able to claim the ITC because they have no tax liability to offset. This proposal will allow taxpayers who have suffered losses to elect to be exempt from property tax on personal property on new personal property acquisitions or investments for two years in lieu of the ITC.
MOTION:	Representative Field moved to introduce RS13084. Motion passed on a voice vote.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 9:37 a.m.

DATE:	March 4, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Kellogg, Moyle and Denney
GUESTS:	John Mackey, United Heritage Financial Group; Troy Hagen, Ada County Emergency Medical Services;
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to accept the minutes as written for the meeting held on March 3, 2003. Motion carried on a voice vote.
RS13104:	Chairman Crow announced the first item on the agenda was RS13104 and recognized Mr. Mackey to present the proposed legislation. John Mackey, United Heritage Financial Group, explained that the mutual insurance holding company system in Idaho was created by the Idaho Legislature in 1997. This system provides mutual insurance companies with access to capital markets and opportunities for greater growth, which in turn, benefits the job market and economy of Idaho. Unfortunately the legislation that created the mutual insurance holding company system overlooked a state tax issue which makes it difficult if not impossible for a company operating within the system to transfer capital between said companies. Non-Insurance Holding Companies in Idaho pay no federal or state tax on Inter-Company Capital transfers. Mutual Insurance Holding companies with subsidiaries who pay premium tax, as well as subsidiaries who pay income tax, are not able to transfer capital between companies without paying a tax. This legislation, if enacted would correct this oversight and allow mutual insurance holding companies the opportunity to grow as was intended by passage of original legislation in 1997.
MOTION:	Representative Ridinger moved to introduce RS13104. Motion carried on a voice vote.
HB193:	Chairman Crow announced the next item on the agenda was HB193 and recognized Mr. Hagen to present the bill. Troy Hagen, Assistant Director for the Ada County Emergency Medical Services, testified that the purpose of our proposed legislation is to allow ambulance districts to go to the voter for approval to increase the ambulance district property tax levy. The reason for this legislation is that the Federal Government via its Medicare rule making authority has significantly reduced reimbursement for Medicare eligible patients. In 1998 at the direction of Congress Medicare began creating a new ambulance reimbursement fee schedule. The intent of this new fee schedule was to reduce costs for Medicare patients. However, the new fee schedule has also had a dramatic negative affect on ambulance service providers. Under the new Medicare fee schedule all ambulance providers in Idaho must accept assignment on Medicare claims. That is providers in Idaho must accept what Medicare pays as payment in full. The district is no longer allowed to "balance bill"" the patient for the difference between the billing charges and what Medicare pays for ambulance services. Since April 2002 when the rules went into effect they have been closely monitoring their revenues. The rule changes have reduced Ada County EMS's gross revenue by 22%. Additionally Medicaid and other insurance carriers responding to the same rule change have cut their reimbursements. Those additional cuts have served to reduce our revenues even further with an overall loss of 23.91%. For Ada County EMS that translates to a loss of $1,588,972. Idaho Code Title 32-Chapter 39 delegates responsibility for providing an ambulance service to the respective counties of the State. The Code goes on to declare that operating revenues can come from property tax and fees for service. It also authorizes creation of an ambulance district which allows for a property tax levy of not to exceed four hundredths percent of market value for assessment purposes. Most ambulance districts around the state, there are 18, have their rates set well below the maximum allowed by law. In Ada County the rate for 2003 is .000117687 or less than one-fourth of the maximum levy rate.
	Ada County EMS receives funds from property tax, sales tax, sale of license plates and fee for service Tax revenues from all taxes amount to about 35% for funding, 65% come from fee for service. Unlike most businesses they cannot arbitrarily cut services that they provide. When someone calls 9-1-1 and asks for medical help they must go. If they are forced to cut their budget 23% they will have to reduce the number of field medics and operate fewer ambulances resulting in significantly longer response times. This legislation gives ambulance districts the ability to go to the voter and ask them to approve adjusting the property tax levy up to the maximum allow by law of .04%. The vote to do so must pass by a majority of 66 2/3% of the voters within the ambulance district. Mr. Hagen past out copies

DATE:	March 5, 2003
TIME:	9:30 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Wood
GUESTS:	Russell Westerberg, New Horizons Development Corporation; Mitch Jacobs, Rancher; Greg Nelson; Idaho Farm Bureau Federation; Alex La Beau, Idaho Association of Realtors; Mike Ferguson, Developer; Dave Gunderson, Ball Ventures; Max Vaughn, Minidoka County Assessor; Representative Clark; Randy Nelson, Associated Taxpayers of Idaho
	Chairman Crow called the meeting to order at 9:30 a.m. and requested a silent roll call. She announced the first item on the agenda was HB136 and recognized Representative Raybould to present the bill.
HB136:	Representative Raybould stated that HB136 is an amendment to HB488a passed in the 2002 legislature. The original HB488 as passed in the House of Representatives was amended in the Senate in the last days of the session. The amended version excluded many of the requirements of the original HB488 that was negotiated with county assessors and many members of the House. HB136 restores the elements of HB488 that were promised to get the original bill passed in the House and clarifies the intent of the original legislation that granted a tax break for "agricultural" land platted in a rural sub-division until each individual parcel or lot is sold. The Senate objections to the House Bill were that it did not include a provision that the parcel would lose the agricultural land designation if (1) the parcel was built upon by the owner of the sub-division for his own use and title of the parcel did not change or (2) the developer would lease the parcel for building of any kind and the title did not change. Also the Tax Commission voiced their concern that HB488 may be unconstitutional in creating a special assessment rate for an otherwise defined class of property. To correct these objections the Tax Commission offered to write an amendment that would address these concerns. The amendment created by the Tax Commission, although addressing the Senate problems, left out of the new Senate bill several of the essential elements of the original legislation passed by the House. These elements of the original bill were agreed to by several members of the House, assessors, county commissioners and developers. It is now necessary to correct the Senate amendments to satisfy the commitment made to the above people. HB488a did not provide a definition of "Improvement." It may have been construed to have applied to the whole sub-division thus making each parcel ineligible for the agricultural tax rate. This needed to be clarified. HB488a did not provide a definition for "Improvement" although this is the event that triggers the loss of the exemption. HB488a also left out the definition of "Intended Owner Occupant" and "Rural Home Site." The amendment in HB136, in addition to the definition of "Plat" and "Rural home site development plat," clearly defines "Improvement" this makes it applicable to only the individual parcels and not the sub-division as a whole, thus preserving the exemption to undeveloped or unsold lots. Also defined is "owner", "Parcel" and "Sale." All of these definitions are essential to clarify the intentions of the original HB488 legislation. HB488 amended 63-604 relieves the five acre of income- producing requirement from the parcels in the sub-division. Without this amendment to 63-604 no parcel or lot would be eligible for the agricultural tax rate. HB488a omitted this amendment to 63-604. Without restoring this qualification for the qualifying sub-divisions no parcel or lot would be eligible for the exemption. HB136 amends 63-604 to allow for parcels of less than five contiguous acres, producing less than $1,000 gross income, or producing 15% of the owners annual gross income to be eligible for the agricultural exemption. This is a major reason to amend HB488a. HB136 provides that the loss of exemption does not take place until January 1 of the year following the event that causes the agricultural exemption to be lost. Both HB488 and HB488a left the loss of exemption to be determined by the assessor after a sale of the parcel or after improvements are made. Under the present law it is probable that, because of the gray areas of eligibility, every claim for exemption could wind up in court. Some court cases are now pending because of the ambiguity of the present law.
CON:	Russell Westerberg stated he was appearing before the Committee on behalf of his client New Horizons Development Corporation, a family owned corporation, in opposition to HB 136. He distributed handouts to be referred to in his testimony. (Attachment 1) HB136 as currently drafted is unfair, unnecessary and is a significant public policy departure from HB488 as approved by this committee and from HB488aas and approved overwhelmingly by the House last year. HB488aas was also signed into law by the Governor and was included in the list of 58 tax relief bills he has said he was proud of approving during the first four years of his administration. The list referred to is contained in Item #1 in the handout. Mr. Westerberg stated he was honored to participate in the crafting of HB488 with Representative Raybould last year and appeared in tandem with him before this committee in support of HB488. The purpose of HB488 was to encourage economic development in some of Idaho's forgotten rural areas by allowing the owner of agricultural property outside the limits of an incorporated municipality to attempt to develop that property for residential or recreation use without risking financial ruin before the lots created by the subdivision could be developed and sold. Higher taxes that usually followed reclassification as a result of the owner's efforts to develop that property. Item 2 of the handout is a copy of HB488 as originally approved by this committee and the full House and sent to the Senate. Beginning on line 26 in subsection (3) it is clear that the intent of this committee and a majority of the members of the House last year was to require the County Assessor to continue to assess property in rural areas for which a plat had been filed as agricultural property until that property had been subdivided, developed and transferred to an owner whose intended use of that property is as a residential or recreational home site. In the new section 63-318 created by HB488 the House's intent that land treated for tax purposes as agricultural land continue to be treated as such until such time as each individual parcel created by the rural home site plat was sold to an intended owner occupant is very clear. The intent of HB488 was obvious that members recognized that land in a rural subdivision could not continue to be farmed at the same time the initial improvements including access roads and utilities necessary to attract potential owner occupants to the property were taking place. Further evidence that the House version never intended to require a rural home site development to continue to meet the definition of agricultural property as HB136 would require, found on page 2 line 44, is where it says "except as provided in section 35-318." Item #3 in the hand out is a copy of HB488 as amended in the Senate. It is clear in HB488aas that the Senate agreed with the House's intention that parcels within a rural home site development were to continue being assessed for tax purposes as agricultural land until that property had been subdivided, developed and transferred to an owner who intended to make it his or her recreational or residential home site. HB488aas is current law in Idaho. Idaho property owners who are attempting to use the law believe that it was the stated intent of the legislature in enacting HB488aas to require each parcel or lot within a rural home site development platted on land previously eligible for tax assessment as agricultural property to continue to be appraised or be reappraised and assessed as agricultural property until improvements defined as the "construction of structures", not including utilities, roads, septic systems or similar site developments, are built upon the parcel regardless of whether or not the parcel continues to meet the definition of agricultural property. Mr. Westerberg stated it was their interpretation of HB488aas has been affirmed in part by temporary rules developed by the Tax Commission after HB488aas became law. Note the underlined language 01 section c. in item #4. HB136 makes two fundamental policy reversals to this premise. It strikes the word previously and allows the exemption only on land actively devoted to agriculture on or after January 1, 2002. It was always his understanding and the understanding of his client that one of the fundamental purposes of HB488 was to provide some relief to those existing rural developments whose parcels were being taxed as residential property even though the parcels had not been sold nor any improvements had been constructed on them. Eliminating the word "Previously" in HB136 is an attempt to make the law consistent with the Tax Commission's temporary rule which seeks to draw a line in the sand of time and allow the exemption to only those subdivisions platted on land actively devoted to agriculture in 2001. They believe the Tax Commission's temporary rule and the like requirement in HB136 is inconsistent with Idaho's constitution which in Article 7 section 5 requires uniformity of taxation. For this reason, his client and other land owners attempting to seek relief under HB488aas are challenging this rule in court. He suggested that HB136 be held or send it to a subcommittee and craft a new amendment to 630602FF as proposed in item #8. This direct approach to remedying the slow selling rural residential developments from being made unprofitable by taxes before the lots can be sold eliminates the need of anyone to worry about whether or not a parcel should or should not continue to meet the requirements of agricultural classification. The suggested language in item #8 also recognizes the declining state of Idaho's economy in all counties and would apply consistent tax treatment of rural home site developments in all 44 counties. Mr. Westerberg concluded his testimony saying that if the committee believed refinements to the current law are necessary, they would welcome the opportunity to sit at the table with members of this committee and County Assessors and see if we can work out our differences.
CON:	Mitch Jacobs appeared before the committee in opposition to HB136. He said he was in the livestock business and the economic climate is not good for agriculture. His operation is in Fremont county and has developed final plans for an Island Park subdivision. The Assessor assessed the value of the lots so high it is causing him to sell lots at fire sale prices to pay the property tax. HB488 was an incentive to help the economics and growth in eastern Idaho. He had put millions of dollars to develop the subdivision and the county assessor is putting him out of business.
PRO:	Greg Nelson, Idaho Farm Bureau Federation, appeared before the committee in support of HB136. He stated that after HB488 went into effect there were lots of ambiguities in the bill. This bill tightens the law for the agricultural exemption created by HB488 which was broader than intended.
PRO:	Alex LaBeau representing the Idaho Association of Realtors, appeared before the committee in support of HB136 stating that when HB488 was originally proposed we supported the measure because we were under the impression that agricultural land was being taxed unfairly. It was their impression that if property is being used as agriculture property even if it is subdivided and small lots are being sold, that the rest of the property should qualify for the agriculture exemption if it is still being used as agriculture property. The trigger is "use.," If not being used as agriculture it is something else. We understand the concerns of the opponents of this bill and we share their concerns. However we believe the concerns they express can be best served by an old law that was originally passed by this body several years ago. It was called the "developer discount." Unfortunately the law was held unconstitutional. It is their belief that all of the interested parties could get together to review the ruling to see if there is a way to fix it. We have already had offers from county representatives to do just that. This would address the issues raised by the opponents and be the cleanest way to deal with the problems. In the mean time we believe that HB136 should be passed as written. It is an appropriate clarification to the law and taxation of subdivided agriculture land. We ask you to support it with a do pass recommendation to the House floor.
CON:	Mike Ferguson appeared before the committee in opposition to HB136 saying the intent of the legislation in HB488 was to create economic development in rural Idaho. In 1996 his agricultural property in Fremont County was used for range and was assessed at $1 per acre. The assessors reassessed the property before it was platted for recreational projects. In 1998 a plat was filed and was assessed at $3,000 per acre. The property tax was $300,000 and he cannot sell a lot a year to pay the property tax. It cost a lot of money for infrastructure to get this property developed. HB488 allowed us to pick up the exemption. HB 136 eliminates the possibility of economic development. Many million dollar homes are being built that will have higher property taxes to bring more money into the county. HB488 was good for developers and urged the committee not to pass HB136 because the timing is not right. He said HB488 has not had enough time to work.
CON:	Dave Gunderson, Ball Ventures, appeared before the committee in opposition to HB136 saying that the reins are too tight in HB136. He urged the committee to work out problems before changing the law. HB488 is now in litigation which should be decided before the issue is settled.
PRO:	Max Vaughn, Minidoka County Assessor and President of the Idaho Association of County Assessors, appeared before the committee in support of HB136. He stated this bill restores the intent and purpose of HB488 which was changed when it was amended in the Senate. The original HB488 stated there was no fiscal impact to the State General Fund and counties would have only the increase in the assessed value of unsold lots deferred. The final fiscal impact to the State General Fund and to counties would have only the increase in the assessed value of unsold lots deferred. The final fiscal impact as a result of the amendment to HB488 was a $30 million loss in assessed value, shifting property taxes to other property owners. This year the schools will lose $120,000. This impact would have been substantially higher if not for the narrow interpretation of Rule 645 promulgated by the State Tax Commission. Rule 645 is now being challenged in Court. HB136 may reduce any fiscal impact to school districts imposed by HB488 as amended. From the House Revenue and Taxation Committee minutes of last year testimony in support of HB 488 indicated quote, "The act before you will remove one very significant barrier to rural economic development by eliminating the requirement of the county assessor to reclassify agricultural property simply because the owner of that property has notified the county of his or her intentions to develop that property by the filing of a subdivision plat in accordance with and as required by law." There is no such requirement for assessors in Idaho Code. There may have been a few assessors that disallowed the agricultural exemption in a platted subdivision for some reason. However the vast majority of the assessors continued to grant the exemption if the subdivision met the requirements of 63-604 I.C. which defines Land Actively Devoted to Agriculture. To prevent such a misinterpretation Section (2) (1) (a) of House Bill 136 states: "provided however, that the recording of a plat of a subdivision shall not by itself cause such failure," referring to the agricultural exemption. This provision therefore clarifies that the Assessor may not revoke the agricultural exemption on property solely because the subdivision was platted. The agricultural exemption was passed by the legislature so Idaho farmers and ranchers could be economically competitive with surrounding states with similar exemptions. Agriculture is one of Idaho's major economic resources and needs to be preserved. Section 63-602FF, I. C., as added by Section 2, Chapter 341, Session Laws of 2002, eroded the agricultural exemption. HB 136 is good legislation and policy and will restore integrity to the agricultural exemption.
	Representative Raybould reiterated his statement that under present law it is probable that because of the gray areas of eligibility, every claim for exemption could wind up in court. Some court cases are now pending because of the ambiguity of the present law.
MOTION:	Representative McGeachin moved to send HB136 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative McKague requested to be recorded as voting No. Representative Raybould will sponsor the bill on the floor.
HB96:	Chairman Crow announced the next item on the agenda was HB96 and recognized Representative Clark to present the bill. Representative Clark testified that this legislation will amend Idaho Code 63-3638 relating to sales tax distribution. This amendment freezes the amount of revenue sharing to counties and cities at a fixed amount equal to the FY 02 appropriations level. Representative Clark provided hand outs of spreadsheets containing five sheets. Each sheet contained a different aspect of the sales tax distribution formula as follows: (1) Schedule (1) reflects county by county the county portion of the revenue sharing distribution, Actual FY2002 distribution of $30,597,111.92, Adjusted FY2002 distribution of $29,890,824.12 with a decrease of $796,287.80. Schedule (2) reflects the city portion, city by city, of the revenue sharing distribution; Actual distribution for FY2002 of $30,597,111.92 , Adjusted distribution $29,890,824 a decrease of $706,287.78. (3) Schedule of the counties base and excess portion,FY2002 distribution, Actual distribution $21,361,426.93, Adjusted FY2002 distribution $21,16,043.73 decrease of $196,383.20. (4) Schedule of the city's base and excess portion of the distribution, actual FY2002 distribution, adjusted distribution $16,889,461.39 a decrease of $427,863.20. (5) Schedule of special purpose taxing districts base and excess portion of the distribution, actual FY2002 distribution $8,354,734.19, adjusted distribution $8,346,455.89 a decrease of $7,094.22. Representative Clark expounded the fact that the foregone balances for all local government entities increased from 2001 to 2002 by 17.63%. Attached charts reflect the foregone balances and a chart listing the balances individually. Charts reflecting the property tax budgets and the formula used for the distribution of revenue sharing monies effective for the September 2001 distribution. Also a list of authorized additional property tax budget authority above the 3% cap. He concluded his presentation by saying the committee has the ability to freeze revenue with a savings of approximately $ 5 million a year. He suggested that the bill be amended to sunset in four years.
	Randy Nelson, Associated Taxpayers of Idaho, appeared before the committee to provide statistical data relative to revenue sharing. He distributed a handout and explained the comparison of 1996-2000 State and Federal revenue sharing. (Attachment #2) Mr. Nelson stated he could see longer-term property tax increases without the future increasing growth of the sales tax revenue source. There might be more of Idaho's many taxing districts seeking more options to raise taxes and fees without this revenue source growing. Many parts of Idaho do not enjoy the normally stronger economy that Idaho's state sales tax comes from and preserving revenue sharing in its current formula is a way to share some of that growing revenue source. Revenue sharing helps keep stability in our tax system. In times like these he could see why the state might need the growth of this revenue for state appropriations such as school funding which also makes its way back to local communities.
MOTION:	It was moved by Representative Roberts to report HB 96 back with amendments attached to be placed on General Orders. The amendment would be to include a sunset clause in four years.
SUBSTITUTE MOTION:	A Substitute motion was made by Representative Ridinger to HOLD HB 96. Roll call was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Kellogg, Raybould, Barrett, Ridinger, Field, Smith, McGeachin; Ringo, Martinez, Henbest, Cuddy. Voting NY - Representatives Crow, Moyle, Schaefer, Collins, Roberts, Denney, McKague. Substitute Motion to HOLD HB 96 passed, 11-7-1
ADJOURN:	Chairman Crow announced that time had run out and would continue the agenda tomorrow. She adjourned the meeting at 10:50 a.m.

DATE:	March 6, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Kellogg
GUESTS:	Senator Burkett; Representative Clark, Phil Homer, Idaho School Administrators; Archie N. Banbury, Valley County Assessor
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to accept the minutes as corrected of the meeting held on March 4, 2003.
RS13097:	Chairman Crow announced the first item on the agenda was RS13097 and asked Senator Burkett to explain the proposed legislation. Senator Burkett stated that the purpose of this proposed legislation is to require individuals who are required under federal law to pay income tax quarterly be also required to pay state income tax quarterly. Currently self-employed and professional taxpayers are required to pay state income tax once annually though they pay federal income tax quarterly. This proposed bill would bring Idaho into conformance with other states and the federal government in collection of income tax quarterly. Senator Burkett listed the following facts about quarterly payments. Only two states do not currently follow the national standard of collecting income tax quarterly. The United States government instituted quarterly payments in 1943 to provide a funding boost to help fund a wartime economy. Quarterly payments reduce the number of filings from five to four for most filers. Quarterly payments will even the flow of revenue to the state and is a more business-like approach to revenue collection. Quarterly payments alleviate the one-time "hit" experienced by taxpayers who must now pay an entire year's taxes at one time. This plan would provide the revenue needed in FY03 to balance the budget without sacrificing education and essential services.
MOTION:	After a brief question and answer period regarding the fiscal impact on individuals, Representative Smith moved to introduce RS13097.
SUBSTITUTE MOTION:	A Substitute Motion was made by Representative Barrett to return RS13097 to the sponsor. Roll call was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Crow Raybould, Barrett, Ridinger, Moyle, Collins, Roberts, Wood, Denney, McKague, McGeachin. Voting Nay - Representatives Schaefer, Smith, Ringo, Martinez, Henbest, Cuddy. Substitute Motion to return to sponsor passed, 12.6.1.
HB126:	Chairman Crow announced the next item to be considered was HB126 and recognized Representative Clark to present the bill. Representative Clark testified that in 1996 the Legislature passed the property tax relief bill for all the citizens of Idaho. A portion of the school maintenance and operation property tax levy was replaced with State sales tax receipts. He provided a handout reflecting the state public school property tax replacement yearly since 1996. In FY2003 the amount was $68.9 million and property assessment values increased 6.7% since 1996. The purpose of this legislation is to cap forever the dollar amount to $68.9 to be distributed as property tax relief for school support.
CON:	Phil Homer, representing the Idaho School Administrators, appeared before the committee in opposition. He said that one of his colleagues, Dr. Mike Friend, was asked to consolidate into one page the Education Change Initiatives that are becoming a part of the systemic change process in all public schools. Standards, Assessments and Accountability are all a part of this process to make sure that each child in our public schools reaches his or her potential. We have appreciated the willingness of the legislature to provide financial support in this effort and the hard work of teachers, administrators and State Department personnel in moving this process along. As a part of this change process, the federal government has entered the picture in an unprecedented way with their initiative, "No Child Left Behind." Yes, they have provided some funding, but will it be enough? Will it be targeted to a special group? Will there be flexibility in how the federal money is spent? No one can answer these questions at this time. However, if funding for this program follows the same financial pattern as that which was developed for federal mandates for special services, it will be minimal, it will be targeted and it will allow little flexibility. In fact the federal government agreed to provide 40% of the cost of our current special services programs but now provides approximately only 17% of this cost. That places a heavy burden on the state and the local school district. In many states where they have embarked on a similar reform movement, they have found it takes a 25-30 percent increase in state funding as reported by Bill Roberts who has done considerable research into this issue. An increase of this magnitude is certainly not an expectation in Idaho. However school districts need to continue to receive an increase in property tax replacement money into the future to offset costs that will result as these initiatives are implemented, as well as to maintain current operations. HB126 does the following: 1. Reduces the state's responsibility to follow through with property tax replacement in an on-going basis to local school districts. 2. Reduces the Districts' ability to capture the increased market value each year that was in place prior to Gov. Batt's property tax replacement bill. A district will lose twenty-five cents on each dollar of increased market value. 3. Another concern, besides the loss of money, is that HB126 could very well initiate a tax shift. Currently, 50 districts use the supplemental levy to provide financing for programs. Would the amount of those overrides increase to replace lost funds? Would more districts have to resort to supplemental levies in order to replace those lost funds?
MOTION:	Representative Ringo moved to HOLD HB126.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Roberts to HOLD HB 126 subject to call of the Chair.
AMENDED SUBSTITUTE MOTION:	An amended substitute motion was made by Representative McKague to send HB 126 to the floor with a do pass recommendation. Roll call was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Moyle, Smith, Wood, McKague. Voting No - Representatives Crow, Raybould, Barrett, Ridinger, Field, Collins, Roberts, Denney, McGeachin, Ringo, Martinez, Henbest, Cuddy. Amended substitute motion failed, 4.15.1.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Raybould, Barrett, Moyle, Field, Schaefer, Smith, Collins, Roberts, Wood, Denney, McKague, McGeachin. Voting Nay - Representatives Ridinger, Ringo, Martinez, Henbest, Cuddy. Amended Substitute Motion to HOLD HB 126 subject to call of the Chair passed, 13-5-1.
HB302:	Chairman Crow announced the last item on the agenda was HB 302 and recognized Representative Raybould to present the bill. Representative Raybould stated that this legislation identifies the standard to be applied and the burden of proof in appeals of property tax assessments to the County Board of Equalization, the Board of Tax Appeals or the District Court. This legislation changes the legal standard from one that requires proof that an assessment is manifestly excessive, arbitrary and capricious or fraudulent and oppressive, to one that requires simply that the assessment is erroneous. It changes the burden of proof to satisfy that standard from a "clear and convincing" burden to the normal "preponderance of the evidence" standard applicable to most civil cases.
CON:	Archie N. Banbury, Valley County Assessor, appeared before the committee in opposition to HB302. He stated that he was representing the Idaho Association of Counties and the Idaho Association of County Assessors. We have consulted legal counsel concerning the effects of this legislation and have been advised that it will have a major impact on county government. Lowering the burden of proof from clear and convincing evidence to the proposed standard of "a preponderance of the evidence" as proposed in this legislation will increase the volume of appeals to the Board of Equalization, to the Board of Tax Appeals and to the District Court. Further, he had been advised that this will cause the burden of proof to shift to the county government as soon as the above standard is met. The rule of law that has prevailed for the past 50 years is generally stated as follows: "The County Assessor's valuation of property for purposes of taxation is presumed correct and the burden of proof is on the taxpayer to show by clear and convincing evidence that the taxpayer is entitled to the relief claimed." Dilution of this standard will undoubtedly increase appeals and have a dramatic impact on the County Commissioners in their service as the Board of Equalization, the County Clerk in his or her ministerial role of recording the Board of Equalization's proceedings, the Prosecuting Attorney as the county's legal counsel in these matters and of course the Assessor and staff. The present law has served us well. The Board of Equalization and Board of Tax Appeals share an informal approach to resolving valuation and other assessment disputes. A lawyer is not required and in most cases is unnecessary. Valley County rarely relies on counsel in these matters and he thinks we get along pretty well. Generally the Assessor attempts to reach a settlement with appellant prior to appearing before the BOE. The taxpayer is provided with copies of the Assessor's entire file as well as other evidence that may have been requested to demonstrate comparable sales and other data. He urged the committee to seek their opinion on this matter. County and State government can ill afford the costs of increased litigation. At a time when funding is short we need to find processes that will reduce rather than increase litigation. Finally Mr. Banbury said it can be argued that it is unwise under any circumstances to lower the burden of proof as provided in this bill. There is no mandatory disclosure bill in Idaho making the Assessor's task difficult at best.
MOTION:	Representative Barrett moved to send HB302 to the floor with a do pass recommendation. Motion carried on a voice vote. Representative Ridinger requested to be recorded as voting No. Representative Raybould will sponsor the bill on the floor.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 11:00 a.m.

DATE:	March 10, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Randy Nelson, Associated Taxpayers of Idaho
	Chairman Crow called the meeting to order and requested a silent roll call. She advised the members that Representative Ringo, co-sponsor of HB101 relating to extending the "Circuit Breaker" to the disabled, requested that it be held in Committee. Senator Keough, sponsor of HB 249 relating to homeowner exemption for residents after two years, be held in Committee. Senator Keough also requested that HB250 be held in Committee relating to estate/transfer tax to be repealed.
UNANIMOUS CONSENT:	Chairman Crow asked unanimous consent to HOLD HB101, HB249 and HB250. Consent was granted.
RS13061C1:	Chairman Crow announced the first item on the agenda was RS13061C1 and asked Representative Field to explain the proposed legislation. Representative Field stated that she is a member of the American Heart Association and was presenting this bill on their behalf. The purpose of this proposal is to increase the tax on a pack of cigarettes by $1.00 per pack. She provided a hand-out depicting the current expenditure of the tobacco tax at $.28 per pack and the fiscal impact of increasing the tobacco tax by $1.28 per pact. (Attachment #1) The statement of purpose reflects that the increase would give smokers economic incentive to quit smoking. Other tobacco products receive a comparable tax increase. This proposal provides that approximately five percent of the tobacco tax revenues are targeted to fund six of the nine elements of a comprehensive tobacco prevention and control program recommend by the Center for Disease Control and endorsed by both the American Heart Association and the Coalition for a Healthy Idaho. The fiscal impact will increase tax receipts from tobacco sales from the current amount of $26,900,000 to $90,000,000. General fund revenues from the tobacco tax will increase from $9.2 million to more than $67 million. Four million dollars of the tobacco tax is also dedicated to six elements of a comprehensive tobacco prevention and control programs.
MOTION:	Representative Henbest moved to introduce RS13061C1. Roll call vote was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Raybould, Ridinger, Field, Wood, Ringo, Martinez, Henbest, Cuddy. Voting Nay - Representatives Crow, Kellogg, Barrett, Moyle, Schaefer, Smith, Collins, Denney, McKague, McGeachin. Motion to introduce RS113061C1 failed, 8-10-1
RS13066C1	Chairman Crow announced the next item on the agenda was RS13066C1 and recognized Representative Henbest to explain the proposed legislation. Representative Henbest provided the members with a copy of the U. S. Department of Health and Human Services "National Strategy for Suicide Prevention: Goals and Objective for Action." She said Idaho is the only state without a comprehensive suicide prevention plan. The purpose of this proposed legislation is to appropriate a portion of the tax levied on tobacco for one year to develop a state suicide prevention plan. There will be a one time decrease in revenue of $5,500 from the Public School Income Fund and a decrease of $5,500 from the department of Juvenile Corrections.
MOTION:	Representative Smith moved to introduce RS13066C1 with a corrected Statement of Fiscal Impact.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to return RS13066C1. Roll call vote was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Barrett, Moyle, Schaefer, McKague, Crow. Voting Nay - Representatives Kellogg, Raybould, Ridinger, Field, Smith, Collins, Wood, Denney, McGeachin, Ringo, Martinez. Henbest, Cuddy. Motion to return to sponsor failed, 5­13­1.
	Original motion to introduce RS13066C1 passed on a voice vote. Representative Barrett requested to be recorded as voting no.
HB193:	Chairman Crow announced the next item on the agenda was HB 193 and explained she had requested this bill be returned to the Committee for further information. The bill increases the budget cap for ambulance and emergency medical services. She recognized Mr. Nelson to present his testimony as previously given to the Raybould Subcommittee.
	Randy Nelson, Associated Taxpayers of Idaho, provided a hand-out with statistical data on ambulance districts and counties with ambulance services. The property tax for ambulance districts and county ambulance service for 2002 was $11,179,030. The potential for the 2002 budget, had HB193 been effect would have been $21,541,2723. He stated that this data reflects the potential impact if all ambulance districts and county ambulance services passed with 2/3rd vote to increase their budgets to the maximum. The last sheet of the handout depicted the taxing entities with levies with local option to go outside the 3% plus growth.
MOTION:	Representative Barrett moved to HOLD HB193.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Ridinger to send HB193 to the floor with a do pass recommendation. Roll call vote was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Kellogg, Ridinger, Field , Smith, Ringo, Martinez, Henbest, Cuddy. Voting Nay - Representatives Crow, Raybould, Barrett, Schaefer, Collins, Roberts, Denney, McKague, McGeachin. Motion for a do pass failed, 8-9-2. Original motion to HOLD HB193 passed on a voice vote.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:40 a.m.

DATE:	March 11, 2003
TIME:	9:15 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Senator Kennedy; Alex LaBeau, Idaho Association of Realtors; Max Vaughn, Minidoka County Assessor; Randy Nelson, Associated Taxpayers of Idaho.
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Kellogg moved to accept the minutes as written of the meetings held on March 5, 2003 and March 6, 2003. Motion passed on a voice vote.
HB135:	Chairman Crow announced the first item on the agenda was HB135 requiring that the cigarette tax be collected on cigarettes from non-tribal members sold on Indian reservations. She submitted that the bill has been before this Committee twice and once on the second floor. She declared that the bill was before the Committee.
MOTION:	Representative Barrett moved to HOLD HB135.
SUBSTITUTE MOTION:	After a lengthy discussion relating to the Indians sovereignty and the fairness issue. Chairman Crow brought out the issue of State infrastructure across certain Tribal reservations and the possibility of fairness issues as seen by the Tribes.. Representative Denney moved to send HB135 to the floor with a do pass recommendation. Roll call vote was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Raybould, Moyle, Field, Schaefer, Smith, Collins, Roberts, Wood, Denney, McKague, McGeachin, Cuddy. Voting Nay - Representatives Crow, Kellogg, Barrett, Ridinger, Ringo, Martinez, Henbest. Substitute motion with a do pass recommendation passed, 12-7-0. Representative Denney will sponsor the bill on the floor.
HB172:	Chairman Crow announced the next item on the agenda was HB172 and recognized Senator Kennedy to present the bill. Senator Kennedy testified that the purpose of this legislation is to provide for an annual cost of living adjustment of the $50,000 upper limit of the homeowner property tax exemption. The percentage used for adjustment would match that used for the income threshold for the "circuit breaker" the National Consumer Price Index. If the CPI was two percent in the first year, the upper limit on the exemption would increase $1,000. Residential values have been rising faster than the value of other kinds of property. Once the homeowner reaches the upper limit, at about $120,000 market value, there is no longer mitigation for inflation. So taxes increase at an accelerated rate. Since 1990, total residential property taxes in Idaho have increased by 164.5 percent while the total for all non-residential property has increased by 77.3 percent. The current maximum homeowner's exemption was established in 1983 and has never been adjusted for inflation. Cities, counties and other local taxing districts could collect the same amount under the budget cap. Annual increases in property tax collections going to schools as a result of inflation in residential values would be less than without this change. If five percent, the increase in taxable value would be $5,500 rather than $6,500 and the increase in money for schools would be $16.50 rather than $19.50. If it increases by ten percent, the increase for schools would be $33 rather than $39.
CON:	Alex LaBeau, representing the Idaho Association of Realtors, appeared before the committee in to opposition of HB172. He testified that this bill is a tax shift and it also exacerbates existing problems. The time frame of when the homeowner receives the 50-50 exemption is the following year and pays the full brunt while his neighbor has the exemption. Mr. LaBeau agreed with Senator Kennedy that residents are pushed around because of the different classification. However this is not the right way to go at this time.
CON:	Max Vaughn, Minidoka County Assessor, stated he was appearing before the committee in behalf of the Association of County Assessors in opposition to HB172. The definition of this exemption is a definite tax shift to other classifications of property.
	Randy Nelson, Associated Taxpayers of Idaho, distributed an analysis of HB172 which he reviewed in detail. (Attachment #1) He testified that owner-occupied Idaho housing units grew 34% between 1990-2000 based on U.S. Bureau of Census data. Assume five-year growth was half this amount or 17%. For this analysis assume the 5-year, 2000-2005 growth in owner-occupied housing units is only 12%. That would result in 380,703 owner-occupied homes and if an estimated 39.5% of those have value over $120,000 the estimated 2005 owner-occupied units valued $120,000+, would be 150,378. Reduced school property taxes reduce the total property tax budget by $451,110 but the overall tax rate goes from 1.454% to 1.456% a .138% increase. The owner-occupied residential and all other property tax rates also will increase by .138%. Although there are less overall property taxes collected, this does not offset the $150,378,000 Homeowner exemption shift to other taxpayers.
	Senator Kennedy concluded his testimony by stating that the property from 1976 to 2002 for residential actual with homeowner exemption increased 797%; total non-residential property tax increased by 288.5%. If there had been no homeowner exception the residential property would have increased 904% and the total non-residential property would have increased 133.5%.
MOTION:	Representative McGeachin moved to HOLD HB172.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Ringo to send HB172 to the floor with a do pass recommendation. Roll call was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Ringo, Martinez, Henbest, Cuddy. Voting Nay - Representatives Crow, Kellogg, Raybould, Barrett, Ridinger, Moyle, Field, Schaefer, Smith, Collins, Wood, McKague, McGeachin. Motion for a do pass failed, 4-14-1.
	Original motion to HOLD HB172 passed on a voice vote.
ADJOURN:	Chairman Crow announced the committee was due on the floor and would hear HB207 on Monday, March 17, 2003. She adjourned the meeting at 9:50 a.m.

DATE:	March 12, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Moyle and Denney
GUESTS:	John Mackey, Dennis Johnson and Jack Winderl, United Heritage Mutual Holding Company; Dan John, Idaho State Tax Commission
	Chairman Crow called the meeting to order at 10:00 a.m. and requested a silent roll call. Representative Kellogg moved to accept the minutes as written of the meetings held on March 10, 2003 and March 11, 2003. Motion passed on a voice vote.
HB 327:	Chairman Crow announced the only item on the agenda was HB 327 and recognized Mr. Mackey to present the bill. John Mackey, United Heritage Holding Company and its subsidiaries testified that currently mutual insurance holding companies and their subsidiaries are taxed by the State of Idaho on inter-company capital transfers. Non-insurance holding company systems are not taxed on these transfers. This bill, when enacted, will treat mutual insurance holding company systems the same as non-insurance holding companies with respect to inter-company capital transfers. The Federal tax system does not treat insurance holding and non-holding companies differently with respect to inter-company transfers. This is a state matter. The bill will amend Section 41-3821 as stated on page one, lines 8-22 of the bill. This language reaffirms that insurance companies will continue to be subject to Idaho premium tax. It also states that a subsidiary insurance or other company may issue a dividend or distribution, which he had referred to as capital transfer, to the mutual holding company or an intermediate holding company within the mutual holding company system. Such dividend or distribution shall be excluded from Idaho taxable income of the recipient company just as it would be if the transfer were made in a non-insurance holding company structure. Such exclusion from taxation shall not apply if in the preceding year the subsidiary insurance company's liability for Idaho premium tax was less than the Idaho income tax would have been if the insurance subsidiary had been subject to Idaho income tax rather than premium taxation. This language results in zero fiscal impact to the State. Mr. Mackey concluded his testimony by saying to the best of his knowledge there is no opposition to this bill It was their understanding that the Sate Tax Commission and the Department of Insurance does not oppose this bill.
	In response to a question relating to the effective date, Jack Winderl, CPA, Executive Vice President of United Heritage Mutual Holding Company, stated the bill had been drafted for the enacting date of 2004 instead of 2003 because their fiscal year is on a calendar year. It was not their intention for it to be retroactive. He also stated that when the original bill was passed many years ago this problem was over looked. They were not aware of it until about a year ago.
	In response to a question, Dan John, State Tax Commission, stated that he was aware of only once that the problem had arisen. If this bill does not happen the companies will not make capital transfers.
	Dennis Johnson, CEO of the United Heritage Mutual Holding Company, appeared before the committee stating that the holding system has been in existence since 1934. He gave a briefing on how the holding company systems worked and of its expansion. They need the capability to transfer capital to allow for growth. This restriction only applies to insurance holding companies.
MOTION:	Representative Field moved to send HB 327 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Collins will sponsor the bill on the floor
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:15 a.m.

DATE:	March 13, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Cuddy
GUESTS:	Speaker Bruce Newcomb, Randy Nelson, Associated Taxpayers of Idaho; Phil Homer, Idaho Association of School Administrators; Dan Chadwick, Idaho Association of Counties; Dan John, Idaho State Tax Commission
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Raybould moved to accept the minutes as written of the meeting held on March 12, 2003. Motion carried on a voice vote.
HB 317:	Speaker Newcomb advised the members that these are tough times and good opportunity to relieve taxes for two years. This bill is unique giving businesses and prospective businesses an option to use the Investment Tax Credit (ITC) when they incur a loss. He stated that the ITC is meaningless when income tax has not been paid. This bill would allow companies who make new personal property investments in Idaho to forego the income ITC by electing an exemption from personal property tax for two years. Mr. Speaker noted that Idaho's market place is a long way from population centers and this would allow the ITC to be a useful purpose providing incentive for business to stay in Idaho. California, Oregon, Canada and other surrounding states are competing with Idaho for companies to come to here. This changes the statewide philosophy of the ITC to keep existing businesses and attract new growth. The Statement of Purpose reflects that taxpayers who are in a loss situation are not able to claim the ITC because they have no tax liability to offset. This bill will allow taxpayers who have suffered losses to elect to be exempt from personal property tax on new eligible property acquisitions/investments for two years in lieu of the ITC. In response to a question relating to the $665,000 cost to schools Dan John, State Tax Commission, stated the Tax Commission prepared the fiscal note but now find it is understated and should be about $1.8 million loss to schools for the second year.
	Randy Nelson, Associated Taxpayers of Idaho, appeared before the committee to provide statistical data on the fiscal impact of HB317. He distributed a copy of the information and explained in detail. (Attachment #1) He stated that the Idaho statewide estimate of 2003 personal property tax is an estimated tax shift of $7.2 Million. The statewide estimate of the 2003 levy year rates overall average is 1.46%. The first year statewide school district and tax shift impact would be $1,268,100 and the state property tax replacement impact would be $422,700 for a total of $1,790,800. The statewide property tax rate increase would be .9%.
	Phil Homer, Idaho Association of School Administrators, appeared before the Committee and voiced concerns about the tax shift that HB 317creates and the hit to public schools.
	Dan Chadwick, Idaho Association of Counties, appeared before the Committee saying that the Association is not taking a position on HB 317. He stated one of the most significant questions raised and clearly answered by HB 317 is whether the credit allowed is limited to only two years and once the taxpayer makes the election is forever barred from making the election again. If this legislation can be construed to be available beyond the two-year limitation there is then a real possibility that increases in value are "permanently" lost and a perpetual exemption is granted for personal property. What is the effect of a qualified investment in property that is not personal property under Idaho property tax law? Can a taxpayer somehow benefit from such an investment under the provisions of this bill? Will qualifying investment property truly be limited to personal property? Certain property such as construction and mining equipment may be moved from county to county and used in a variety of settings and locations. In such circumstance the "home" county will bear the burden of exempting the property but the investment in the property will operate to the economic benefit of other counties. How can this inequity be resolved? The income tax law includes provisions for the State Tax Commission to recapture the investment credit claimed if the property is sold, suffers early disposition or otherwise ceases to qualify for the credit. Is there a process in place to share the credit recaptured by the State Tax Commission with the counties and other taxing districts who have been deprived of the property tax revenue? Once the credit has been used what is the value of the personal property placed on the assessment rolls? House Bill 317 is silent as to what that value might be such as the original value or value at the time the credit ends or some other form of depreciated value. Finally this legislation provides that this relief is only available to a taxpayer whose Idaho taxable income in the second preceding year is negative. It is quite possible that although an individual taxpayer sustained a significant business loss, his non-business income, from investments for example, may cause his taxable income to be a positive figure. Is this legislation intended for corporations only? If intended for individuals or partners, shareholders in S-Corporations and beneficiaries of certain trusts, would it be more appropriate to specify a negative Idaho adjusted gross income? Is this legislation intended to deny relief to such a person?
	Speaker Newcomb reiterated that these are tough times and this bill gives us the opportunity to do something for business. When the economy turns around we need to think in the long term not the short term for future growth to build the economic base. Since we are a long way from population centers we need to provide tax incentives.
	Dan John, State Tax Commission, responded to inquires from the Committee saying this bill exempts property tax for two years on businesses that have new acquisitions and have chosen the option not to accrue the Idaho Tax Credit on any losses for income tax purposes.
MOTION:	Representative Denney moved to send HB 317 to the floor with a do pass recommendation. Roll call vote was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Kellogg, Raybould, Barrett, Moyle, Field, Schaefer, Collins, Wood, Denney, McKague. Voting Nay - Representatives Ridinger, Smith, Roberts, McGeachin, Ringo, Martinez, Henbest. Motion passed, 11-7-1.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:50 a.m.

DATE:	March 17, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Senator Kennedy; Randy Nelson, Associated Taxpayers of Idaho; Gene Kuehn, Canyon County Assessor; Michael Lindstrom, Balukoff Lindstrom & Co., P.A.; Debby McAllister, Idaho Laboratories Corp.
	Chairman Crow called the meeting to order at 10:00 a.m. and requested a silent roll call. Representative Martinez moved to accept the minutes as written of the meeting held on March 13, 2003. Motion carried on a voice vote.
RS13136:	Chairman Crow announced the first item on the agenda was RS13136 and asked Senator Kennedy to explain the proposed legislation. Senator Kennedy stated that this proposal is seeking alternate financing for fire protection districts. This proposed legislation would amend the Idaho Code to allow fire protection districts to impose and collect a uniform fee from property owners in the district to defray the cost of equipping and maintaining the district. Currently fire protection districts are funded through a levy on all taxable property within the district. The total amount of the uniform fees collected during any one fiscal year under this proposal could not exceed the total revenue that could have been collected as a result of the maximum levy authorized in Section 31-1420 Idaho Code. Any such fee imposed would be in lieu of, not in addition to, any tax levy. Except for the limitation imposed on the amount of the uniform fee that could be imposed, this proposed bill would give fire protection districts the same flexibility in raising revenue as is currently enjoyed by recreation districts.
MOTION:	After a brief question and answer period, Representative Barrett moved to return RS13136 to sponsor.
SUBSTITUTE MOTION:	A substitute motion was moved to introduce RS13136. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Smith, Roberts, Ringo, Martinez, Henbest, Cuddy. Nay - Representatives Crow, Kellogg, Raybould, Barrett, Moyle, Field, Schaefer, Collins, Wood, Denney, McKague, McGeachin. Substitute Motion failed, 6-12-1
	Original motion to return RS13136 to sponsor passed on a voice vote.
HB 207:	Chairman Crow announced the next item on the agenda was HB 207 and recognized Senator Kennedy to present the bill. Senator Kennedy testified that the purpose of this legislation is to protect homeowners over age 65 or disabled veterans from increased property taxes resulting from increases in taxable value. If household income before taxes is less than $35,000 and the resident qualified for the homeowner exemption in the previous year they could apply with the assessor for a freeze on the taxable value of the home and residential lot. The freeze would continue so long as they continued to meet the qualifications and own and live in the home. Senator Kennedy stated there would be no fiscal impact on the general fund in FY2004. It would reduce payments for "circuit breaker" relief of $775,000 in FY2005 and indexed thereafter. It would reduce payment of school replacement fund in FY2006 of $110,000. The property tax reduction to eligible households in 2005 would be $1.8 million. The reduced property tax and replacement funds to school districts beginning in 2006 would be $505,000. There would be no effect on other taxing districts' property tax revenues and $1.4 million would shift to remaining tax base in 2005. In response to a question relating to a tax shift, Senator Kennedy responded and agreed that it will cause a tax shift.
	Randy Nelson, Associated Taxpayers of Idaho, distributed a hand out documenting the effect of HB 207 on taxing districts. (Attachment #1) He said the reduced school property taxes reduce the total property tax budget by $382,467 but the overall tax rate goes from 1.454% to1.456% a .138% increase. The owner-occupied residential and all other property tax rates also will increase by .138%. Although there are less overall property taxes collected this does not offset the $127,489,000 homeowner exemption tax shift to other taxpayers. Assuming that the estimated disability population would be 127,938 the criteria for those to qualify under HB 207 the additional homeowners property tax exemption in 1005 would be $1,853,690. The reduced payments for "circuit breaker" relief are also assumed to be in the $775,000 range with the annual growth factor thereafter.
CON:	Gene Kuehn, Canyon County Assessor, testified in opposition to HB 207 saying this bill is a tax shift. Taxpayers have a couple of ways to seek property tax relief. There is the "circuit breaker" and if the property owner cannot pay his tax they can go to the county commissioners and may not have to pay for one year.
	Senator Kennedy said that older people need help or will end up in nursing homes.
MOTION:	Representative Henbest moved to send HB 207 to the floor with a do pass recommendation.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to Hold HB 207. A roll call was requested.
ROLL CALL VOTE:`	Voting Aye - Representatives Crow, Kellogg, Raybould, Barrett, Ridinger, Moyle, Field, Smith, Collins, Roberts, Denney, McKague, McGeachin. Nay - Representatives Schaefer, Wood, Ringo, Martinez, Henbest, Cuddy. Motion to Hold 207 passed, 13-6-0.
HB 279:	Chairman Crow announced the next item on the agenda was HB 279 and recognized Representative Gagner to present the bill. Representative Gagner stated that this legislation simplifies Idaho income tax withholding for small and medium sized employers. It will repeal the "split month withholding" for 75% of businesses affected by "split month withholding" adopted as a revenue acceleration measure in 1983 and still required of approximately 1,050 businesses as of 2003. Increasing the threshold in current statute will exempt approximately 750 employers from this requirement and return them to calendar month filers. Three hundred employers retain the "split month withholding" requirement, about the same number of employers affected when the legislation was enacted in 1983.
PRO:	Michael Lindstrom, CPA, Balukoff- Lindstrom & Co., appeared before the Committee in support of HB 279. He stated his clients call "split month withholding" is "busy work" for small businesses. This bill would simplify tax administration for the State Tax Commission and the small businessman.
PRO:	Debby McAllister, Idaho Laboratories Corp., appeared before the Committee in support of HB 279 saying she has worked as the payroll clerk, bookkeeper and office manager for the firm for more than 16 years. The "split monthly" status for payroll reporting is complicated and does not match with federal requirements. There used to be one ledger that contained all payroll related information for each year. Now the over-lapping quarters and different sets of standards to balance twelve and half months of withholding tax against twelve months of W2's. Hard copies in old files have to be accessed and thirteen months of reports that include information from three different calendar years has to be manually calculated to arrive at the correct totals for any inquiries. The "split monthly" system has been burdensome for all businesses and especially for the Tax Commission. She stated that she was certain there have been numerous reporting errors made. Their cross-check against the Federal quarterly and year-end reports no longer applies and now it's too easy to unintentionally submit the wrong information.
MOTION:	It was moved by Representative Field to send HB 279 to the floor with a do pass recommendation. Motion passed on a voice vote. Representatives Gagner and Kellogg will co-sponsor the bill on the floor.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:50 a.m.

DATE:	March 19, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Brian Whitlock, Office of the Governor
	Chairman Crow called the meeting to order and requested a silent roll call. Without objection the Chairman assigned HB 362 relating to cigarette tax to fund a suicide prevention plan.
RS 13175:	Chairman Crow announced the first item on the agenda was RS 13175 and recognized Mr. Whitlock to explain the proposed legislation. Brian Whitlock, Office of the Governor, stated that the two RS's before the Committee were outlined in the Governor's State of the State message. This proposed legislation increases the cigarette tax rate from $0.28 per 20 cigarette pack to $0.62 per 20 cigarette pack effective June 1, 2003. It makes adjustments to the distribution formula to cause all additional net revenue generated by this rate increase to go to the General Fund while holding all other recipients of cigarette tax distribution harmless. The compensation for affixing stamps is reduced from 5% to 2.4%. At the time of the Governor's address the national average of cigarette tax was an average $.062 per pack. Other states have since increased the cigarette tax and this is no longer the national average. The tax would go into effect on June 1, 2003 generating $28.7 million in revenue.
MOTION:	Representative Kellogg moved to introduce RS 13175. Motion passed on a voice vote.
RS 13183:	Chairman Crow announced the next item on the agenda was RS 13183 and asked Mr. Whitlock to continue. Mr. Whitlock stated this proposed legislation embodies an important element to make adjustments to the Governor's budget and not drastically reduce programs. This legislation increases the sales tax from 5% to 6.5% for the period May 1, 2003 through June 30, 2006. The last time the sales tax was increased was in 1986 and this proposal is different in that it is only a temporary increase for only 3 years. It modifies the sales tax distribution formula for the period June 1, 2003 through July 31, 2006 so that the percentage of sales tax distributed to revenue sharing is decreased from 13.75% to 10.6%, thereby distributing all of the additional revenue expected from the rate increase to the General Fund. It increases the annual permit fee for amusement devices from $35.00 to $45.00 for the period May 1, 2003 through June 30, 2006. This fee is in lieu of sales tax.
MOTION:	Representative Kellogg moved to introduce RS 13183. Motion carried on a voice vote.
HB 369:	Chairman Crow announced the next item on the agenda was HB 369 and recognized Representative Field to present the bill. Representative Field remarked that there are very few things in state government that produce great results and returns. There is an eighty percent success rate from the Drug Court and the Family Court Services. This legislation provides for a two percent surcharge on the sale of all liquor through the Liquor Dispensary in order to provide an ongoing dedicated source of funding for Drug Courts and Family Court Services in the Judicial Branch. These programs have been put at risk due to reducing general fund appropriations in the Judicial Branch budget. Representative Field distributed a copy of an Attorney General's opinion. (Attachment #1) She said the current statute for a fifteen percent surcharge is not being used and is deleted in this bill and adds a two percent surcharge to be designated as a dedicated fund. She also distributed a chart depicting the distribution of the liquor profits. (Attachment #2)
MOTION:	Representative Wood moved to send HB 369 to the floor with a do pass recommendation. Motion carried on a voice vote. Representatives Barrett, Schaefer, McKague and McGeachin requested to be recorded as voting NO.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting At 10:11 a.m.

DATE:	March 20, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Moyle and Denney
GUESTS:	Representative Eskridge; Representative Campbell
	Chairman Crow called the meeting to order and requested a silent roll call. Representative McGeachin moved to accept the minutes of the meeting held on March 17, 2003 as written. Motion carried on a voice vote.
HB 265:	Chairman Crow announced that the sponsor of the first item was not present and without objection the Committee would hear testimony on HB 265. She asked Representative Eskridge to present the bill. Representative Eskridge stated that this bill corrects an inequity in the Idaho manufacturing sales and use tax exemption. Lignetics Incorporated is a wood pellet and fire log manufacturing company in his district. They are at a competitive disadvantage with like companies located in neighboring states who sell the same product including sales in Idaho. There are five of these small companies in our state. Currently these companies receive only half of the exemption benefit. They are exempt from paying sales tax on raw materials used in the production process. They are not exempt from paying sales tax on any capital, repair or supply items used in the production process as are other manufacturing businesses in Idaho. The competition in the neighboring states receive the full advantage of their states' production exemptions, hence the competitive disadvantage. HB 265 provides wood pellet and firelog companies in Idaho full exemption under the Idaho manufacturing sales and use tax exemption. It provides the full exemption by striking out the reference to 63-3266G, heating materials, from existing legislation. Representative Eskridge said Idaho has already lost much of our forest related employment in his district. Passage of this bill would help to keep Lignetics and the four similar companies like it competitive and able to stay in business. Lignetics employs 51 people and in 2002 had a total payroll of $1,077,249. Not a large company by any means, but an important part of his district's economic base. With permission from The Chairman Representative Eskridge read the following remarks from Senator Keough, co-sponsor of the bill. "Although this appears to be giving a "new exemption", it really is not as other wood products companies receive the same exemption. Because Lignetics makes fuel pellets they somehow got carved out from the exemption". "The costs of losing the jobs and the subsequent tax dollars generated from those employees paying income tax, sales tax, property tax, etc is a far greater hit to Idaho's economy. In fact this is an investment that will more than pay for itself as a result of keeping the company here."
MOTION:	Representative McGeachin moved to HOLD HB 265. Motion carried on a voice vote. Representative Cuddy requested to be recorded as voting NO.
RS 13154:	Chairman Crow announced the next item on the agenda was RS 13154 and asked Representative Campbell to explain the proposed legislation. Representative Campbell stated that this legislation permanently exempts sales tax on food and raises the sales tax to 7%. The additional two percent of the increase would go into the general fund and not be distributed to revenue sharing to counties and cities. There was a discussion period relating to competition with bordering states and the fiscal impact was questioned.
MOTION:	Representative Kellogg moved to introduce RS 13154.
SUBSTITUTE MOTION:	A substitute motion was made by Representative McGeachin to return RS 13154 to sponsor. Roll call was requested.
ROLL CALL:	Voting Aye - Representatives Crow, Raybould, Barrett, Ridinger, Field, Schaefer, Collins, Roberts, Wood, McKague, McGeachin. Voting Nay - Representatives Kellogg, Smith, Ringo, Martinez, Henbest, Cuddy. Motion carried, 11-6-2.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:29 a.m.

DATE:	March 21, 2003
TIME:	9:00 a.m.
PLACE:	Gold Room
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Brian Whitlock, Office of the Governor; Vern Newby, Coeur d'Alene School District; Richard Hachtel, Associated Students of Boise State University; Duane Youngberg, Payette County Business Council; Julie VanOrden, Idaho PTA; Anne Newton; Kerry Holbret, Nampa, Idaho; John Franden, Boise State University; Dale Williamson, Mayor of Payette; Debbie Johnson; Kent Tingey, Idaho State University; Elaine Clegg, Idaho Smart Growth; Greg Jensen, Payette Business Council; Phil Homer, Idaho Association of School Administrators; Bea Black; Jon Barrett, Idaho Smart Growth; Wendy Cary and Judy Last, National Association of Social Workers; Bob Jackson; Elinor K. Chehey, League of Women Voters of Idaho; Jim Baugh, Comprehensive Adversity Disabilities; Mary Knodell, Church Women United; Ray Stark, Boise Metro Chamber of Commerce; Marty Peterson, University of Idaho; Patricia Scott, Developmental Disability Council; Marilyn Sword, Developmental Disability; Roger Sherman, United Vision for Idaho; Sue Stadler; Katherine Hansen Community Partnership; Kelly Buckland, State Independent Living Council; Denise Brennan, Idaho Automobile Dealers Association; Randy Nelson, Associated Taxpayers of Idaho; Jean Boyles; Deanna Smith; Pete Skamser, NFIB; Nancy Merrill, Mayor of Eagle; Alex Feldman, Boise State University; Steve Rodeltz, Idaho Benefits Planning Assistance Out Reach; Bobby Ball; Dr. Greg Nelson, Idaho Farm Bureau Federation; Katherine Gray; Janet Orndorf, Idaho School Board Association
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Kellogg moved to accept the minutes of the meeting held on March 19, 2003 as written. Motion passed on a voice vote. Chairman Crow addressed the guests setting guidelines for those testifying speak only to the subject matter of the bills and bring only new points from previous testimony. In order for everyone to be heard the testimony will be timed to one minute.
HB 379:	Chairman Crow announced the first item on the agenda was HB 379 and recognized Mr. Whitlock to present the bill. Brian Whitlock, Office of the Governor, said they have a young man in their office who is a history buff and he often teased him of being the font of all useless knowledge, but he did have some thoughts as he was preparing his testimony for the committee that he felt might be helpful. He reminded him of some of the teachings of Atilla the Hun. First, Atilla taught: "A wise chieftain never kills the Hun bearing bad news." Second, he said: " A wise chieftain kills the Hun who fails to deliver bad news." He said he did not relish the fact that he was there to deliver what he thought we all feel is bad news. Our economy in Idaho and the nation has been bouncing along the bottom now for almost two years. We have had a number of holdbacks, budget cuts, base reduction whatever you prefer to call them which have totaled nearly $200 million. We have borrowed from one-time sources of money to help get us through some of the difficult times, but now those sources are dry. The bad news is that whatever scenario plays out this legislative session, it appears with growing certainty that it will involve some type of revenue increase. Mr. Whitlock said HB 379 proposed a temporary increase in the sales tax of 1.5 cents. The increase is effective May 1, 2003 which sunsets on June 30, 2006 and generates an estimated $240,3 million in FY2004. The bill will help the state regain solid financial footing for both FY2003 and FY2004. Just as important , it also gives us stability and time prior to FY2007 to begin to make whatever structural and programmatic changes in state government necessary to ensure that the state budget is balanced when the temporary increase sunsets in June 2006. Some have suggested in this time of fiscal crisis that a preferred option would be to eliminate certain exemptions and broaden our tax base. House Bill 379 buys you the time to thoughtfully and responsibly do that. Still others have suggested that we need further structural changes on the expenditure side. House Bill 379 buys you time to thoughtfully and responsibly adjust budgets rather than order massive reductions that eliminate or hamstring services and programs that are needed and expected by the citizens of Idaho. As he mentioned to the committee on Wednesday, the last time the sales tax was increased was in April 1986, seventeen years ago. The conditions then were similar to what we are experiencing today. The legislative history for that time period shows the sales tax rate had remained at 3% since its inception in 1965 until the mid 1980's: it went from 3% to 4% in March of '83; then to 4.5% in June of '83; then back to 4% in July of '84; and ultimately to 5% in April of '86. In 1987 the Legislature affirmed the 5% sales tax. There were four changes in three years. Tax policy and the state budget were in a constant state of flux throughout that time. Those disruptions were not conducive to economic stability, much less growth.
	In assessing the daunting task of balancing a budget for FY2004 the Governor is not interested in half measures or precarious one-time fixes. The temporary increase called for in House Bill 379 from 5% to 6.5% is intended to accrue fully to the general fund instead of the sharing allocation that is experienced under the current 5% structure. As a result the Permanent Building Fund, revenue sharing to local government, Water Pollution Control and the Circuit Breaker Program will not be affected by the temporary increase addressed in this bill. One way to minimize the impact of this increase, particularly for those individuals in lower income brackets, is to increase the grocery tax credit which the Governor proposed in his Executive Budget recommendation for FY 2004. Our budget has incorporated the $5.5 million reduction in revenues based on expanding this tax credit. Mr. Whitlock said he knew there are a number of revenue generating proposals that are beginning to be discussed. Please keep in mind that this revenue proposal is based on a consumptive aspect of our economic model. It does not adversely affect the performance of investment strategies or incentive conditions. This proposal represents an opportunity to capture substantial nonresident economic impacts such as those experienced in the tourism industry. This sales tax proposal recognized that changing the base of current exemptions of the sales tax code would be problematic for many vendors as well as purchasers. This proposal does not change the relationship. Nor does it apply to services that have been previously excluded from sales tax coverage. HB 379 does not alter the sales tax paradigm on which the state has been based since 1986. It applies only to the rate being charged and to the point in time when the increase returns to its former 5% level. It does not require extensive record keeping to implement nor does it require documentation or record keeping after the sunset provision has been met. Outside of changing the rate and designating a total allocation of the increase to the general fund it does not require anything different of vendors. The exemptions, the reporting and the mechanics of collection remain exactly as they are today. Mr. Whitlock concluded his remarks saying that the intent of this measure is to allow the state to provide stability in our programs and services at a time they are needed most by our citizens. It is important and he would characterize it as imperative that we balance the budget with as much stability in tax structure and budget expenditures as possible. It is important to retain our standing in the bond markets so that state and local government can enjoy substantial cost savings for many years to come. It is important to retain Idaho's reputation as a state that provides an environment favorable to business and citizens through a strong system of education, public safety and infrastructure programs. House Bill 379 accomplishes these things.
PRO:	Vern Newby, Board member for the Coeur d'Alene School District, appeared before the Committee in support of HB 379 saying it is not possible to for school districts to meet the demand of state and federal mandates with out increased revenues.
PRO:	Richard Hachtel stated he was representing the Associated Students of Boise State University, appeared before the Committee in support of HB 379. He testified that our great state stands at a cross-road. We can either move forward with a budget that will continue to allow our state's government to be a positive and progressive force in its citizens lives by providing them with the services upon which they depend or the Legislature can do irrevocable harm in the ability of our state to educate its' citizens and keep them healthy and safe. ( See full text in Attachment #1.)
CON:	Duane Youngberg said he was representing the Payette County Business Council and was appearing before the Committee in opposition to HB 379. He stated when sales taxes are raised they never decrease. Businesses have had to make cuts so the state should make cuts. Raising taxes will not relieve the problem.
PRO:	Julie VanOrden, Idaho PTA, appeared before the Committee in support of HB 379 testified that education funding is the priority. A strong education system is important.
PRO:	Anne Newton appeared before the Committee in support of HB 379. She stated that occupational therapy for disabled children needed additional funding.
CON:	Kerry Holbret, Nampa, Idaho, appeared before the Committee in support of HB 379 saying he is disabled and lives on his social security disabled pension. Sales tax increases would hurt people like him on fixed incomes. He stated this bill is bogus.
PRO:	John Franden, Boise State University, testified in support of higher education and HB 379. BSU had a ten percent cut last year and had to raise student fees. They have to turn away students and reduced twenty-two facility and twenty-three staff members. He said higher education is an investment not an expenditure.
CON:	Dale Williamson, Mayor of Payette, appeared before the Committee in opposition to HB 379. He testified that he was representing the small businesses in the Southwest counties. Raising sales taxes shuts border counties off and businesses will dry up. When taxes are raised they will not normally go away.
PRO:	Debbie Johnson appeared before the Committee in support of HB 379 saying she is a parent of a daughter who is disabled. There have been budget cuts and there needs to be an alternate source for revenue. Every state has lost federal medicaid money and there is now a crisis.
PRO:	Kent Tingey, Idaho State University, appeared before the Committee in support of HB 379 stating that cuts have been made at ISU. There have been eighty positions cut and half of those positions were in administration. Classes are full and students are transferring to Utah State University. Young people desperately want to obtain a college education.
PRO:	Elaine Clegg, Idaho Smart Growth, testified in support of HB 379 and HB 378 saying she was afraid a thorough education would become a basic education without solid programs such as art and music.
CON:	Greg Jensen, Vice President Payette Business Council, appeared before the Committee in opposition to HB 379 saying sales tax kills business for the City of Payette.
PRO:	Phil Homer, Idaho Association of School Administrators, appeared before the Committee in support of HB 379 and HB 378. He stated their membership recognizes that revenue enhancements are going to be necessary to ensure that all state agency services are, at a minimum, maintained at the current level of operation. The measures before you today are important steps in providing that assurance. They further recognize that no tax increase is popular, however they also recognize that no one wants services reduced that are vital to the health, safety, education and welfare of Idaho citizens.
PRO:	Bea Black appeared before the Committee in support of HB 379. She supported a sales tax increase rather than cut education with unfunded mandates such as "no child left behind."
PRO:	Jon Barrett, Executive Director, Idaho Smart Growth, appeared before the Committee in support of HB 379 saying the sales tax increase will fund responsible programs. With rapid growing cities there is a need for funding infrastructure.
PRO:	Wendy Cary and Judy Last, National Association of Social Workers appeared before the Committee in support of HB 379 said they were social workers working with poor young families. Cuts in revenue have hit low income people.
PRO:	Bob Jackson appeared before the Committee in support of HB 379 stating medicaid optional programs cost less for people who cannot be left alone. Under funding these people will put them in danger.
PRO:	Elinor K. Chehey, League of Women Voters of Idaho, appeared before the Committee in support of HB 379 stating that the League believes that Idaho should maintain a balanced, equitable tax structure using a variety of sources which is adequate to provide for citizens needs. (Full text is attached­Attachment #2)
PRO:	Jim Baugh, Comprehensive Adversity Disabilities, testified in support of HB 379 stated there has been a seven and one-half cut in home care programs. It is not an exaggeration to say that removing 3,000 people from life-sustaining services would result in some deaths.
PRO:	Mary Knodell, Church Women United, appeared before the Committee in support of HB 379 saying this six and one-half sales tax is a good interim solution and agrees with the sunset.
PRO:	Ray Stark, Boise Metro Chamber of Commerce, testified that the Chamber supports, at a minimum, higher education funding of $213.6 million the original appropriation for the current fiscal year for next year's budget. The Chamber supports maintaining economic development tools to benefit the economy, including the sales tax production exemption and the investment tax credit. The Chamber supports minimum revenue increases for fiscal year 2003. State budget recommendations are attached. (Attachment #3)
PRO:	Marty Peterson, University of Idaho President's Office, testified that colleges have cut expenses during this recession period. They agree with the Governor's deliberations and approach to preserve the higher education system and goals.
PRO:	Patricia Scott appeared before the Committee in support of HB 379 stating she has a child with disabilities. Medicaid allows her child to stay at home and without waivers would be forced to live in an institution. Thirty percent of the budget was cut last fall. Revenue is needed to allow vulnerable children to receive services not to cut services.
PRO:	Marilyn Sword, Executive Director of the Developmental Disability Council, appeared before the Committee in support of HB 379 stated medicaid has been a target of discussion about growth and cut to the bone.
PRO:	Roger Sherman, United Vision for Idaho, testified in support of HB 379 stating that in surveys conducted at a fair booth people support education funding. The people said education has been cut enough and support raising the sales tax.
PRO:	Sue Stadler appeared before the Committee in support of HB 379 with reservations. She said revenues are needed for education but the sales tax should not be raised to 6.5%. Exemptions need to be looked into.
PRO:	Katherine Hansen, Director of Community Partnership, testified in support of HB 379 said there have been several cuts in services to balance the budget. Impact of these cuts have been significant and cannot be cut anymore.
PRO:	Kelly Buckland, State Independent Living Council, appeared before the Committee in support of HB 379 stated one of the issues is to make it possible for the disabled to live at home. Cuts have taken place and revenues need to be raised for these programs.
CON:	Denise Brennan, Idaho Automobile Dealers Association, testified in opposition to HB 379 saying the increased sales tax will add one or two extra payments on cars. However they will live with whatever the Committee decides.
	Randy Nelson, Associated Taxpayers of Idaho, provided a hand-out depicting "State Tax Rate and Burden Comparisons." He also provided a state revenue/budget forecast chart that included the HB 379 governor's recommendation and other scenarios carried out to FY2008. (Attachment # 4) Mr. Nelson said he used combinations of 5.2% to 6.9% average annual budget/revenue growth beyond FY 2004 after explaining that for the fourteen years prior to FY 2002 the average annual budget/revenue growth was 8.2% to 8.3%. He pointed out that the ending balance for most of the scenarios remained positive going out to FY 2008, but if the ending balance got built into future budgets it would become negative. To prevent budgets from exceeding long-term revenue growth and to monitor economic impacts, Mr. Nelson recommended that any sales tax increase be revisited annually rather than having a three-year sunset.
PRO:	Jean Boyles appeared before the Committee in support of HB 379 with exception to certain economic groups.
PRO:	Deanna Smith testified in support of HB 379 saying she did not generally support tax increases but the state is at a point that it cannot cut services any further.
CON:	Pete Skamser, National Federation of Independent Business, appeared before the Committee in opposition to HB 379 saying his membership voted against raising taxes to balance budgets.
PRO:	Nancy Merrill, Mayor of Eagle, testified that she had served on Governor Kempthorne's Blue Ribbon task force and the sales tax may be better than other revenue increasing options.
PRO:	Alex Feldman, University Professor at Boise State University, appeared before the Committee in support of HB 379. He said higher education has tried many ways to do more with less revenue to provide programs.
PRO:	Steve Rodoletz, Idaho Benefits Planning Assistance Out Reach, testified in support of HB 379 said federal grants need Idaho matching funds for new programs for the disabled.
PRO:	Bobby Ball testified in support of HB 379 said health insurance does not cover personal care and without help she would not be able to get out of bed. Cutting medicaid she would have to stay in bed.
CON:	Dr. Greg Nelson, Idaho Farm Bureau Federation, provided the members with a copy of a letter from Frank Priestley, President of the Farm Bureau Federation. (Attachment # 5). Dr. Nelson said they do not support an increase of sales tax of one and one-half cents. The Idaho Farm Bureau policy #70 states: "We oppose balancing budget shortfall by any tax increase." Dr. Nelson said school budgets should be cut before taxes are increased on farmers.
PRO:	Katherine Gray appeared before the Committee in support of HB 379 said she had a disabling mental illness for ten years. Without help from the state programs she would not have gotten better. She stated that she was attending Boise State University and is able to hold a job.
MOTION:	Representative Smith moved to send HB 379 to general orders with Committee amendment to change the sales tax from six and one-half cents to five and one-half cents.
	Mr. Whitlock concluded his testimony by saying he appreciated both sides of this issue. There is a serious problem and this is not a perfect tax. Sales tax provides an easier way to provide services and maintain integrity.
PRO	Janet Orndorf, Trustee, Idaho School Board Association, appeared before the Committee in support of HB 379 stated to cut education would do more long term damage to the economy.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Roberts to Hold HB 379.
AMENDED SUBSTITUTE MOTION:	An amended substitute motion was made by Representative Kellogg to send HB 379 to the floor with a do pass recommendation.
ROLL CALL VOTE:	Voting Aye -Representatives Kellogg, Ridinger, Ringo, Martinez, Henbest, Cuddy. Voting Nay - Representatives Crow, Raybould, Barrett, Moyle, Field, Schaefer, Smith, Collins, Roberts, Wood, Denney, McKague, McGeachin. Amended substitute motion failed, 6-13-0.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Raybould, Barrett, Moyle, Field, Schaefer, Collins, Roberts, Wood, Denney, McKague, McGeachin. Substitute motion to HOLD HB 379 passed, 12-7-0.
ADJOURN:	Chairman Crow announced that the Committee was past due on the floor and would hear HB 378 on Monday. She adjourned the meeting at 11:15 a.m.

DATE:	March 24, 2003
TIME:	9:00 a.m.
PLACE:	Gold Room
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, (Henbest) Bray, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Brian Whitlock, Office of the Governor; Amber Halverson, Cab Inc. Enterprises; Paul Noorda, President of Tem State Distributors; John Wager, Idaho Candy Company; Bill Roden, Williamson Tobacco Company; Janet Orndorff, Idaho School Board Association; Phil Homer, Idaho Association of School Administrators; Randy Nelson, Associated Taxpayers of Idaho; Charley Jones, Stinker Stations; Skip Smyser, Phillip Morris; Cory Jackson, Capitol Distributors
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Kellogg moved to accept the minutes of the meeting held on March 20, 2003 as written. Motion carried on a voice vote.
HB 378:	Chairman Crow announced the first item on the agenda was HB 378 and recognized Mr. Whitlock to present the bill. Brian Whitlock, Office of the Governor, said he appreciated the opportunity to address the second element of the Governor's revenue package. As a number of states look at revenue options to help with their fiscal crisis, the cigarette tax is one to which many states have turned. HB 378 represents a 34 cent per pack increase in the cigarette tax here in Idaho which is a viable option to help balance the budget. The proposed increase in the cigarette tax differs from the sales tax proposal in one important aspect: we are suggesting this be a permanent increase. It increases the tax on cigarettes from its current rate of $.28 per pack to $.62 per pack. At the time the Governor was considering this increase the national average was $.62. Since then many states have increased their cigarette tax, including our neighboring states of Washington, Oregon, Utah and Wyoming. Just for your information an updated listing of cigarette taxes from the State Tax Commission shows that Washington's current rate is 1.52.5 cents per pack, Oregon is 1.28 cents, Utah is now at 69.5 cents and Wyoming is 60 cents. Again, under this proposal Idaho would be at 62 cents. In fairness he would also point out Montana is still at 18 cents a pack and Nevada is at 35 cents a pack. It has been almost nine years since Idaho adjusted its rate. The last time we increased the tax on cigarettes was in July of 1994. HB 378 calls for an implementation date of June 1 of this year in order to ensure that a full twelve month fiscal impact of $28.7 million for FY 2004 is achieved. The distribution of revenues to the Public School Income Fund, Permanent Building Fund, Cancer Control Fund, Central Tumor Registry Fund and the Juvenile Probation Fund are retained and thus share in the increased revenue. The projection of $28.7 million in revenues has taken into account the "elasticity" or effects a higher cost will have on decisions to purchase cigarettes. This proposal is as straightforward and effective as we can possibly make it and at 34 cents is probably the most conservative increase in the cigarette tax that this committee will hear this session.
CON:	Amber Halverson, Cab Inc. Enterprises, appeared before the Committee in opposition to HB 378 stated she is a small family business owner. The state will not benefit by raising the cigarette tax but will lose money to other states. She distributed a packet containing information on the Cab Inc. tobacco sales from January 1999 through December 2002. (Attachment #1) The State of Washington increased their cigarette tax to $6.00 per carton in January, 2002. There is concern that a tax increase would force people to go to Indian Reservations to purchase cigarettes. Recently internet sales advertised by "Google" for cheap cigarettes result in more loss of cigarette sales. (Copy of Google" #2 attachment.) There is no age requirement and teenagers can go on line and purchase cigarettes. There is also a problem of increasing in the Master Settlement Agreement of $2.72 per carton. Cross-border sales create interstate smuggling. (Copy of reports from the Tax Foundation #3 attachment.) Cab Inc. showed a 20% increase in the year of 2002 with no change in their operations. Cross-border and internet sales will make a difference in Idaho sales if the cigarette tax is raised.
CON:	Paul Noorda, President of Gem State Distributors, an Idaho Corporation located in Pocatello. We are one of Idaho's licensed wholesale distributors and tax collectors. He briefly touched on the following three points. First is the issue of fairness to a minority group of Idaho citizens. Second is the issue of fairness to Idaho's retail community. Third is the reduction of compensation to Idaho wholesalers who affix the tax stamps. On the first point is of fairness to a minority group of Idaho citizens who choose to use a legal product and who already contribute over $62.7 million dollars to state and federal coffers. In 2002 Idaho smokers comprise only 19.6% of the adult population in the state and already pay more than their fair share only because they choose to buy a legal product. Here is what Idaho smokers paid in FY 2002: State and Federal Excise Tax $23,410,260 State Sales Tax 13,377,291 Tobacco Settlement Payments 25,965,969 Total dollars FY 2002 $62,753,520 HB 378 asks this minority, 19.5% of Idaho citizens, to belly up and pay an additional $28.7 million dollars; now this becomes a real issue of fairness. The second point of fairness to Idaho's retail community. This point of fairness most certainly broadens the retail price disparity between taxed and untaxed retail outlets. HB 378 also creates a new financial burden on Idaho retailers by increasing their cost of goods by ten to fifteen percent. That may not sound as bad as it is, but here are some quick calculations he came up with yesterday. Average store carton inventory 1,000ctns HB 378 proposed increase per ctn. x$3.40 Additional capital requirements $3,400.00 This example is very conservative. Keep in mind that most stores carry 2 to 3 times that amount of inventory and tobacco outlet stores can easily reach 10 times that amount. One of my very good accounts that have five stores told me that he estimated that HB 378 would require him to have an additional capital requirement of $22,250 just to maintain existing inventories. The point is the reduction of compensation to the Idaho Wholesaler who affixes the tax stamp to packages of cigarettes. When the author of HB 378 came up with this idea he or she sure did not ask the wholesalers of Idaho for any input, so today he would like to offer you his input. He could only share an example of what it costs our company to affix Idaho Tax Stamps to each package of cigarettes shipping from our warehouse. He was sure all his fellow wholesale distributors can give you similar examples of cost. He was only sharing costs of labor, equipment and accounts receivable financing for simplicity. He gave an example of man hours used to affix stamps costing $5,540.00. Total cost per carton was $0.31. One last quick point. Rising prices due to unfair excise tax increases force smokers to find alternative methods of purchasing cigarettes and tobacco such as through the Internet. This results in greater evasion of state excise taxes and lessens control of underage access. Studies also show when a state raises its excise tax their cigarette smoker's travel to nearby states with lower excise taxes. They also find brands that are not approved by the attorney general's authorized list of non-participating manufacturers. They can also seek out an approved NPM brand and our state loses Master Settlement Agreement monies.
CON:	John W. Wagers, Idaho Candy Company, appeared before the Committee in opposition to HB 378 saying that this is a regressive tax. Idaho smokers comprise about 20% of the population. It is easy to pass a tax onto the minority. He reiterated Mr. Noorda's testimony on the cost for wholesaler to affix the stamps on cigarettes.
CON:	Bill Roden, representing Williamson Tobacco Company, testified in opposition to HB 378. He provided the members with fiscal information relating to the history of cigarette taxation for the last ten years, together with a fiscal analysis of HB 378. The primary purpose of the information is to show you the following important information. Because of increased taxes in bordering states, Idaho's cigarette tax collections for FY 21003 and FY 2004, as projected by the Division of Financial Management, are projected to rise dramatically due to cross-border cigarette sales. These increases follow a decline in sales for the past nearly six years. These projected increases are due to substantial tax increases in Washington, Oregon and Utah. History shows that a major cigarette tax increase in Idaho will result in a substantial loss in sales in the short and long term and will not provide stability in the cigarette tax revenue. Reliance on product taxes does not provide necessary predictability upon which to base long-term budget decisions. HB 378 will cause a substantial loss of package sales of cigarettes and will erode support now being given through the cigarette tax for substance abuse programs of five cents in our public schools and five cents for county juvenile probation services. Because of time constraints placed on this hearing, he would be pleased to answer questions concerning the printed information following his prepared remarks. (Attachment # ) In considering HB 378 it is important to also consider some of the policy issues which apply to the broader issue of taxes popularly known as "sin" or "product" taxes. Items which many of our citizens do not use or which many of our citizens do not want to publicly defend. When government, either state or federal, is torn with the demands between budget reduction or the need to maintain a certain level of governmental programs, it is easy to demonize consumers concerning products which a majority of the public does not use or the use of which a non-vocal minority of the public is not willing to openly defend. The consumer's use of products which some regard as "sinful" or harmful to the public health justifies in some minds a tax which will help to reform the users' indulgent or harmful behavior. For others if there is a pressing need for additional revenues a tax on products that the majority either does not use, or which some can afford to use, regardless of the tax burden. Product taxes may be justifiedp on the seldom expressed basis that it will avoid an increased tax burden on either income, property or sales taxes that will affect the majority of the public. The major dilemma with "product" or "sin" taxes is three-fold: First, is the provision of social benefits depend on revenue from the "product" tax. Some level of consumption of the product must be maintained. This creates a bipolar political and economic mindset and weakens the benevolent justification for the tax. In the cigarette and tobacco tax arena this is clearly a problem for the funds receiving major support from this source. Second, if the "product" or "sin" tax is intended to raise revenue the concept runs counter to the established principles of "fair taxation." Fairness in taxation is usually understood to involve non-discriminatory treatment of persons in similar situations, horizontal equity, and differentiation in the burdens imposed on persons varying abilities to pay, vertical equity. An example of horizontal equity is the taxation of all persons with equal net taxable income being taxed at the same rate. In property taxation, the homeowner's exemption would be another example. An example of vertical equity would be our tax structure that exempts persons below certain subsistence income levels from the impact of income taxation. "Product" or "sin" taxes, however, work to impose the greatest economic burden on the poorest members of society or to compel them to desist from use of the product. Economically sufficient members of our society can escape the compulsion to desist from use of the demonized product for a fee, ie., the tax. Third, "product" or "sin" taxes are politically discriminatory since they constitute a "tax shift" enabling the majority to shift a substantial portion of the burden of providing benefits for the public sector onto a select minority. It is no secret that political support for an excise tax rises as the percent of the population consuming the product falls. Cigarette taxes are the best example of this truism because the majority does not consume the product at all or consumes such a small share that the aggregate tax price is small in relation to the majority. Reluctance to increase a broad based excise tax, such as the sales tax, demonstrates the reverse of this statement, ie., political support for an excise tax falls as the percent of the population affected rises. The term, "tax exploitation," aptly describes this discriminatory justification for a selective excise tax on a minority of the citizens. In conclusion, HB 378 will have unintended consequences on existing funds and as a solution to the state's budget problems it is speculative as to providing a stable future revenue on which to build a fiscally sound budget base. More importantly, selective excise taxes, both existing and future and on whatever products, are politically schizophrenic, unfair and discriminatory in their application. He urged the Committee not to compound the existing inequities through the approval of HB 378 or any of its progeny.
PRO:	Janet Orndorff, Idaho School Board Association, appeared before the Committee in support of HB 378 saying without revenue increases there will be un-precedented cut in school programs. It will affect kids in various ways and cuts in programs will hurt children at risk. By slashing education through K12 to balance the state budget will do long term harm. Idaho must continue to provide quality education.
PRO:	Phil Homer, Idaho Association of School Administrators, reiterated his testimony made on March 21, 2003. He stated his membership recognizes that revenue enhancements are going to be necessary to ensure that all state agency services are, at a minimum, maintained at the current level of operation. The measure before you today is an important step in providing that assurance.
CON:	Randy Nelson, Associated Taxpayers of Idaho, testified that the cigarette tax, like the income tax, can be pretty volatile but as HB 378 proposes he thought that any new revenue from this source should go to the general fund for appropriation rather than being directly earmarked to specific programs. The economy is weak and uncertain. If Idaho state government needs more revenue it is fairer and simpler to adjust the rate on a broader based tax like the sales tax. He understood why higher cigarette taxes might be attractive. Other states have tapped this source and like Idaho many are also receiving millions from the tobacco settlement agreement. That from a sound, long-term tax policy perspective, Idaho should be careful about relying heavily on excise taxes. He said he left a tax rate comparison "handout" with you at your hearing last Friday morning. The information included cigarette tax rates. He said he hoped they find that helpful. (The tax rate comparison is attachment #4 in the March 21, 2003 minutes.)
CON:	Charley Jones, Stinker Stations, appeared before the Committee in opposition to HB 378 stated he opposed this "sin" tax. Tax on the minority to increase the revenue source makes the cigarette smoker pay a disproportionate share. He said do not depend on this "sin" tax measure to stop smokers behavior. There should be a broader base tax to get everyone.
CON:	Skip Smyser, representing Phillip Morris, testified in opposition to HB 378 stating revenues should be raised in an equitable manner. Increasing the excise tax on cigarettes would require additional enforcement and Idaho is not ready to do this. There will be illegal transactions and organized crime is already moving into this country.
CON:	Cory Jackson, Capitol Distributors, appeared before the Committee stating a price increase for smokers will cause them to down grade to cheaper products. The revenue increase is less than what has been projected in elasticity. This increase will make it easy to buy from the Indian reservations. It will also make business expenses for wholesalers to go higher because the more expensive the cigarettes there will be more stolen.
	Mr. Whitlock wrapped up saying he appreciated the previous testimony presenting good arguments. There has been a lot of thought given to close the gap of the deficit and this bill is one element proposed by the Governor.
MOTION:	Representative Denney moved to hold HB 378 time certain March 26, 2003.
SUBSTITUTE MOTION:	Representative Barrett moved to Hold HB 378. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Kellogg, Barrett, Ridinger, Schaefer, Roberts, Wood, McKague, Cuddy. Voting Nay - Representatives Raybould, Moyle, Field, Smith, Collins, Denney, McGeachin, Ringo, Martinez, Bray. Substitute motion to Hold HB 378 failed, 9-10-0 Motion to Hold HB 378 time certain to March 26, 2003 passed on a voice vote. Representatives Crow, Kellogg, Barrett, Cuddy requested to be recorded as voting No.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:30 a.m.

DATE:	March 25, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, (Henbest) Bray, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Wood
GUESTS:	Dan John, Idaho State Tax Commission; Senator Davis
	Chairman Crow called the meeting to order at 10:00 a.m. and requested a silent roll call. She announced that the first item on the agenda was RS 13231C1 and asked Representative Denney to explain the proposed legislation.
RS 13231C1:	Representative Denney said this is one out of two recommendations made by the School Facilities Task Force. This legislation establishes a safe school facilities levy. It sets up criteria under which the levy may be imposed and allows for judicial confirmation when the safety levy fails. School districts identify safety issues after they have spent all monies available.
MOTION:	Representative Raybould moved to introduce RS 13231C1. Motion passed on a voice vote. Representative Barrett requested to be recorded as voting no.
RS 13219:	Chairman Crow announced the next item on the agenda was RS 13219 and recognized Mr. John to explain the proposed legislation. Dan John, Idaho State Tax Commission, said that this is the annual bill to update references to the Internal Revenue Code (IRC). It conforms the Idaho income tax to changes made to the IRC after January 1, 2002, including the federal "Job Creation and Worker Assistance Act of 2002." However, no Idaho deduction will be allowed relating to: 1. The special allowance for 30% first year "bonus depreciation" permitted by subsection (k) of section 168 of the IRC would not be deductible in computing Idaho taxable income. For computing Idaho taxable income, the adjusted basis of depreciable property and capital gains or losses will be modified to reflect the disallowance of the federal bonus depreciation. 2. Expenses of elementary and secondary teachers for purchases of classroom supplies otherwise allowable under the IRC would not be deductible.
MOTION:	Representative Cuddy moved to introduce RS 13219. Motion carried on a voice vote. Representatives Ridinger, Ringo and Martinez requested to be recorded as voting no.
SJM 102:	Chairman Crow announced the next item on the agenda was SJM 102 and she said the Committee would go at ease until the sponsor of the bill was available
MOTION:	Representative Moyle moved to send SJM 102 to the floor with a do pass recommendation.
	Senator Davis asserted that the purpose of this memorial would be to encourage Congress to immediately and permanently repeal the death tax. This is a memorial to congress and the mere passage creates no fiscal impact to the State of Idaho. In the event that Congress does repeal the death tax and should not de-couple, the fiscal impact would be projected at $4.5.
	After a brief question and answer period. A motion was made to send SJM 102 to the floor with a do pass recommendation. Motion carried on a voice vote. Representatives Ringo and Martinez requested to be recorded as voting no. Representative Denney will sponsor the bill on the floor.
SJM 103:	Senator Davis explained that the alternative minimum tax for individuals and corporations is an evil tax. When a taxpayer reaches a certain level of income they have to pay the minimum tax and are unable to take the same deduction allowed to other taxpayers. The purpose of this Joint Memorial is to encourage the Congress of the United States to abolish the alternative minimum tax for individuals and corporations.
MOTION:	Representative Moyle moved to send SJM 103 to the floor with a do pass recommendation. Motion carried on a voice vote. Representatives Ringo, Martinez and Bray requested to be recorded as voting no.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 9:28 a.m.

DATE:	March 26, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Speaker Newcomb; Senator Stennett
	Chairman crow called the meeting to order and requested a silent roll call. She recognized Speaker Newcomb to address the Committee.
	Speaker Newcomb said he would like to explain the meeting held yesterday. The meeting was with some of the majority members of the Revenue and Taxation Committee to discuss procedural motions that may be made when a bill to raise revenues is made in committee, one of which is to come to the floor without recommendation. He also discussed what obligations the members have when supporting that legislation. During this meeting he gave an historical perspective of what has occurred in the past. He said that all members of this Committee know that it is up to them to make decisions on all revenue measures. The constitution charges the House to originate all revenue measures. It was his view that the germane committee on revenues and taxation should originate the bills, not the Ways and Means Committee. Mr. Speaker said that in the meeting held yesterday there was no subject matters discussed, it was strictly procedural matters. He apologized to the press and others who were offended.
HB 378:	Chairman Crow announced the next item on the agenda was HB 378:
MOTION:	Representative Denney moved to put HB 378 in the tobacco subcommittee. Motion passed on a voice vote. Representative Kellogg requested to be recorded as voting no.
RS 13171:	Chairman Crow announced the next it on the agenda was RS 13171 and asked Senator Stennett to explain the proposed legislation. Senator Stennett said this proposal has been before the Committee earlier and was returned to make changes to address problems voiced by committee members. He distributed copies of letters from the State Tax Commission, Idaho Cattle Association, Ken Haught, Picabo Livestock Co. and a petition from farmers in Blaine County. (Attachment #1) The purpose of this proposed legislation is to provide each homesite on an otherwise recognized farm or ranch under 63-602EE, Idaho Code to be considered agricultural property and provides that the assessed market value for qualifying home sites which exceeds $30,000 shall be exempt from property taxation. The farm or ranch must exceed 100 contiguous acres, the applicant must file for a homeowners exemption and the applicant must file documentation from a certified public accountant with the county assessor that certifies the filing of a schedule under the IRS code. If the property can be split off under separate survey it will not qualify for the exemption. It would be revenue neutral to counties and other taxing districts. However, it would be a tax shift if the county currently is assessing home sites for more than $30,000. The qualifications are drawn tightly to protect viable agriculture, open space and wildlife habitat which have public benefits.
MOTION:	Representative Cuddy moved to introduce RS 13171.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Moyle to return RS 13171 to sponsor. There was a lengthy discussion about the good merits of the bill and how it could penalize farms close to expanding urban areas. Chairman Crow suggested that Senator Stennett work out the problems with those Committee members who voiced their concerns. The Substitute motion to return RS 13171 to sponsor passed on a voice vote.
	Chairman Crow said the JFAC has the budgets set at seven and one-half percent reduction. The Revenue and Taxation Committee has our work cut out for us to raise revenue up to the $120 million range. There will then be a committee bill created in a package or one bill form.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:45 a.m.

DATE:	March 27, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Moyle Denney, Brail
GUESTS:	Commissioner Dewey Hammond, Chairman of the State Tax Commission
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Ringo moved to accept the minutes of the meeting held on March 21, 2003. Motion carried on a voice vote. Representative Martinez moved to accept the minutes of the meeting held on March 24, 2003 as written. Motion carried on a voice vote.
	Chairman Crow explained that Representative Ringo, co-sponsor of HB 99, had requested that the bill be held. The Chairman announced that if there was no objection HB 99 would be held in Committee. There were no objections.
	The Chairman introduced Commissioner Dewey Hammond to demonstrate the computer program which was developed by Commissioner Hammond and Dan John, Idaho State Tax Commission. He provided the members with a copy of instructions on how to retrieve revenue data for various taxes and possible adjustments to selected product tax rates. (Attachment # 1)
ADJOURN:	There being no further business to come before the committee, Chairman Crow adjourned the meeting at 10:35 a.m.

DATE:	March 31, 2003
TIME:	9:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Wood moved to accept the minutes of the meeting held on March 25, 2003 as written. Motion carried on a voice vote. Representative Kellogg moved to accept the minutes of the meetings held on March 26 and 27, 2003 as written. Motion carried on a voice vote. Chairman Crow advised the Committee members that there are a number of issues and ways to work a bill or bills. It will be a Committee action, not personal bills. The objective is to raise approximately $120 million. She said the Committee would discuss the various options and ideas.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:28 a.m.

DATE:	March 31, 2003
TIME:	8:15 a.m.
PLACE:	Room 412
MEMBERS:	Chairman Cuddy, Representatives Ridinger, Barrett, Roberts and Denney
ABSENT/ EXCUSED:	None
GUESTS:	Karleane Allen, IWMA; John Wagers, Idaho Candy; Bill Roden, attorney/Brown & Willamson; Charley Jones, Stinker Stations; Russell Westerberg, Lobbyist/S.T.C.; Ron Williams, American Heart Assoc.; Skip Smyser, Lobbyist/Philip Morris
BILL #: H73	Rep. Ring, presented H73. This legislation is to increase taxes on cigarettes and increase the appropriation to the public schools for substance abuse programs by amending section 62-2506 of the Idaho Code, and increase taxes on other tobacco products by amending section 63-2552 of the Idaho Code. This bill would increase the cost of a pack of cigarettes to $1.20. Fifteen cents of the tax collected per pack would be an appropriation to the public school income fund to be utilized to facilitate and provide substance abuse programs in the public school system. Five cents of the tax collected per pack shall be subject to appropriation to the department of juvenile corrections for distribution to the counties to be utilized for county juvenile probation services. Rep. Ring gave other data on a handout which is attached.
CON:	Karleane Allen, stated that as a licensed Idaho Tobacco Wholesaler they collect the fifth largest amount of revenue through tobacco excise tax and remit these funds to the state of Idaho. She showed a video of employees affixing Idaho's tax stamp to each package of cigarettes to show the committee how time consuming and expensive this is. The remainder of her testimony is attached.
PRO:	Ron Williams, stated that the average pack of cigarettes in Idaho cost $3.33 per pack. Smoking caused medical costs per pack in Idaho is $6.03 per pack. The current Idaho cigarette tax of 28 cents per pack raises approximately $28 million in state revenues. Medicaid costs in Idaho for smoking related illness are approximately $65 million per year. More data is attached.
CON:	Bill Roden, suggested that with a raise in taxes to this level would cause bootlegging and smuggling. He also stated that this bill would not put money in the general fund, but it would go to health problems and that it is dictating what social behavior will be. Mr. Roden passed out a fact sheet on "Idaho Cigarette Tax Facts" which is attached.
CON:	Charley Jones, stated that this bill is not sound tax or public policy. Mr. Jones' testimony is attached.
MOTION:	Rep. Barrett made a motion to recommend to the full committee that H73 be held in committee. Motion approved unanimously.
ADJOURN:	The meeting was adjourned at 9 a.m.

DATE:	April 1, 2003
TIME:	9:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Representative Jones; Dan John, Idaho State Tax Commission
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Martinez moved to accept the minutes of the meeting held on March 31, 2003 as written. Motion passed on a voice vote.
RS 13249:	Chairman Crow announced the first item on the agenda was RS 13249 and asked Representative Jones to explain the proposed legislation. Representative Jones testified that this proposed legislation creates a tax credit for growers of turf grass in Kootenai and Benewah counties who will stop burning their grass stubble. The credit would be $100.00 per acre not burned for up to ten years depending on the year the grower chooses to enter the program The grower must have burned his fields for the previous three years to be eligible. If the grower is unable to use part or all of the credit they may carry it forward or sell it to someone else who could use it. This credit is created in order to encourage growers to find alternatives to field burning or alternative crops to produce.
MOTION:	Representative Kellogg moved to introduce RS 13249.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Roberts to return RS 13249 to sponsor. A roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Raybould, Barrett, Moyle, Field, Schaefer, Smith, Collins, Roberts, Wood, Denney, McKague, McGeachin. Voting Nay - Representatives Kellogg, Ridinger, Ringo, Martinez, Henbest, Cuddy. Motion to return RS 13249 to sponsor passed, 13-6-0.
HB 389:	Chairman Crow announced the next item on the agenda was HB 389 and recognized Representative Denney to present the bill. Representative Denney stated this bill is one of four recommendations from the School Task Force. This legislation establishes a safe school facilities levy. It sets up criteria under which the levy may be imposed and allows for judicial confirmation when the safety levy fails. He explained the process schools who have identifiable safety issues must use. This bill is important because the problem has not been solved to address fail safe method for schools with immanent safety problems.
MOTION:	Representative Kellogg moved to send HB 389 to the floor with a do pass recommendation. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Kellogg, Ridinger, Moyle, Smith, Denney, Ringo, Martinez. Voting Nay - Representatives Raybould, Barrett, Field, Schaefer, Collins, Roberts, Wood, McKague, McGeachin, Henbest, Cuddy. Motion failed, 8-11-0.
HB 390:	Chairman Crow announced the next item on the agenda was HB 390 and recognized Mr. John to present the bill. Dan John, Idaho State Tax Commission, testified that this is the annual conformance bill to update references to the Internal Revenue Code (IRC). It conforms the Idaho income tax to changes made to the ITC after January 1, 2002, including the federal "Job Creation and Worker Assistance Act 2002." The conformance with IRC carves out the "bonus depreciation" and special education deduction.
MOTION:	Representative Kellogg moved to send HB 390 to the floor with a do pass recommendation. Motion carried on a voice vote. Representatives Ridinger, Ringo and Martinez requested to be recorded as voting NO. Representative Moyle will sponsor the bill on the floor.
SUBCOMMITTEE REPORT:	Representative Cuddy, Chairman, reported that his subcommittee has heard testimony on HB 73, HB 362 and HB 378 and makes the following recommendations: HB 73, Relating to increased tax on Cigarettes and tobacco products, to be held by the full Committee HB 362 Relating to cigarette tax surcharge used for suicide prevention, be held at the request of the sponsor. HB 378 Increased cigarette tax ­ Governor's proposal -be held by the full Committee
UNANIMOUS CONSENT:	Unanimous consent was granted to accept the Cuddy Subcommittee report to HOLD HB 73, HB 362 and HB 378.
	There was a short discussion relating to the budget shortfall.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 9:45 a.m.

DATE:	April 1, 2003
TIME:	8:15 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Charles Cuddy; Representatives Denney, Roberts, Ridinger and Barrett
ABSENT/ EXCUSED:	Representative Denney
GUESTS:	Brian Whitlock, Governor's Office; John Wagers, Idaho Candy Co.; Representative Henbest; Russell Westerberg
HB 362:	Chairman Cuddy recognized Representative Henbest to testify. Representative Henbest said this bill deals with an appropriation of a portion of the tax levied on tobacco for one year to develop a state suicide prevention plan. Representative Henbest asked that HB 362 be held in Committee. Chairman Cuddy said if there was no objection, the subcommittee would recommend to the full committee that HB 362 be held at the request of the sponsor. There being no objection, that recommendation will be made.
HB 378:	Brian Whitlock with the Office of the Governor was recognized. Mr. Whitlock said this legislation increases the cigarette tax rate from $0.28 per cigarette package of twenty cigarettes to $0.62 per pack, effective June 1, 2003. The bill makes adjustments to the distribution formula to cause all additional net revenue generated by this increase to go to the General Fund, while holding all other recipients of cigarette tax distributions harmless. It also reduces the compensation for affixing stamps from 5% to 2.4%. This would increase the General Fund revenue by $28.7 million beginning in FY 2004. This tax increase would actually be below the national average.
CON:	John Wagers with the Idaho Candy Company was recognized. Mr. Wagers said Idaho Candy Company has been in business since 1901. Mr. Wagers said HB 378 is a flawed bill. It is not consistent with good business practices and it is not reasonable. Wholesalers need to be taken care of and this legislation does not do that. His business would be penalized for affixing stamps to packages of cigarettes. The bill is not equitable. It would cause a loss of sales in northern Idaho. These stamps provide no benefit to those who stamp the cigarettes. A better bill needs to be drafted.
CON:	Chairman Cuddy recognized Russell Westerberg, representing the Smokeless Tobacco Council. Mr. Westerberg gave the committee a handout providing information on "Other Tobacco Products" (OTP) (Attachment). Mr. Westerberg said the OTP tax has been automatically increasing each year. There has been a 45% increase in OTP tax revenue since 1994. The person who will bear the cost of this tax increase will be the average middle aged underground miner, mill worker, truck driver and farm hand, who will pay the tax from their average annual income of less than $30,000. Consider the fairness issue. OTP product taxes have been rising steadily as the price of the product is increased by the manufacturer. Taxes on other "sin" products like cigarettes, beer and wine have not been increased for several years.
MOTION:	Representative Barrett moved to recommend to the full Committee that HB 378 be held in Committee. In support of the motion, Representative Barrett said this bill is deja vu to the ninth degree. Business is the workhorse of the economy. When you hurt business, you hurt the economy. Everybody needs to pull their share of the load. Motion carried.
ADJOURN:	There being no further business to come before the committee, the meeting was adjourned at 8:45 a.m.

DATE:	April 2, 2003
TIME:	9:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
	Senator Compton; Speaker Newcomb
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Kellogg moved to accept the minutes of the meeting held on April 1, 2003 as written. Motion carried on a voice vote.
SUBCOMMITTEE REPORT:	Representative Kellogg reported that the Kellogg Revenue and Taxation Subcommittee met on March 25, 2003 and heard testimony for HB 380. It was recommended by the subcommittee to return HB 380 to the full committee with the recommendation that it be held. The subcommittee also recommended that HJR 002 be returned to the full committee with the recommendation that it be held.
UNANIMOUS CONSENT:	Unanimous consent was requested to accept the Kellogg Subcommittee report to HOLD HB 280 and HJR002. Consent was granted.
RS 13259:	Chairman Crow announced the first item on the agenda was RS 13259 and recognized Senator Compton to explain the proposed legislation. Senator Compton asked for the Committee's approval to let the people elect to put in an economic plan with the tool contained in this proposed legislation. The purpose of this proposed legislation is to expand the opportunity of creating port districts to areas that are not adjacent to continuous waterways and to allow for the creation of port districts in county and regional situations. Senator Compton said if the ten percent of electors approve a port district it would include the whole county not just part of the county. He said this proposed legislation is a positive tool to allow counties to support their economic plan.
MOTION:	Representative Raybould moved to introduce RS 13259. Motion passed on a voice vote.
UNANIMOUS CONSENT:	Chairman Crow stated that SB 1090aa was started unconstitutionally in the Senate and was replaced by RS 13259. Unanimous consent was requested to HOLD SB 1090aa, consent was granted.
	Chairman Crow said the Speaker had been asked to draft revenue bills to raise revenues to fund approximately $150 million budget shortfall. The bills will be Committee bills and referred to the full house without recommendation. Committee bills sent to the floor without recommendation do not bind Committee members to a floor vote.
RS13261:	Chairman Crow announced the next item on the agenda was RS 13261. The purpose of this legislation is to require individuals, who by federal law pay income tax quarterly, to make their state income tax payment quarterly.
MOTION:	Representative Field moved to introduce RS 13261 with the recommendation that it be placed on second reading without recommendation.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to return RS 13261 to sponsor. Roll call vote was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Barrett, Ridinger, Smith, Wood, Ringo, Martinez, Henbest, Cuddy. Voting Nay - Representatives Crow, Kellogg, Raybould, Moyle, Field, Schaefer, Collins, Roberts, Denney, McKague, McGeachin. Motion failed, 8-11-0
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Kellogg, Field, Schaefer, Collins, Roberts, Denney, McKague, McGeachin. Voting Nay - Representatives Barrett, Ridinger, Moyle, Smith, Wood, Ringo, Martinez, Henbest, Cuddy. Motion to introduce RS 13261 with recommendation that it be placed on second reading without recommendation passed, 10-9-0. Representative McGeachin will sponsor the bill on the floor.
RS 13262:	Chairman Crow announced the next item on the agenda was RS 13262 and recognized Speaker Bruce Newcomb to explain the bill. Speaker Newcomb testified that this proposed legislation is one of the components to balance the budget which is required by law. This proposal increases the sales tax from 5% to 5.5% for the period May 1, 2003 through June 30, 2004. This proposal is sufficient to balance the FY2003 budget.
MOTION:	Representative Smith moved to introduce RS 13262 with the recommendation that it be placed on second reading without recommendation. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Kellogg, Ridinger, Smith, Ringo, Martinez, Henbest, Cuddy. Voting Nay - Representatives Crow, Raybould, Barrett, Moyle, Field, Schaefer, Collins, Roberts, Wood, Denney, McKague, McGeachin. Motion failed, 7-12-0.
RS 13263:	The Chairman announced the next item on the agenda was RS 13263 and asked Mr. Speaker to continue. The purpose of this proposed legislation is to increase the tax on cigarettes to five cents per cigarette and one dollar per package of twenty cigarettes. This proposal would also increase the tax on tobacco products to sixty percent of the wholesale sales price. Speaker Newcomb said this proposal is expected to generate $53,500,000.
MOTION:	Representative McGeachin moved to return RS 13263 to sponsor.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Field to introduce RS 13263 with the recommendation that it be placed on second reading without recommendation.
AMENDED SUBSTITUTE MOTION:	An amended substitute motion was made by Representative Cuddy to introduce RS 13263. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Raybould, Wood, McKague, Ringo, Martinez, Henbest, Cuddy. Voting Nay - Representatives Crow, Kellogg, Barrett, Ridinger, Moyle, Field, Schaefer, Smith, Collins, Roberts, Denney, McGeachin. Amended substitute to introduce RS 13263 motion failed, 7-12-0.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Raybould, Moyle, Field, Smith, Collins, Denney, McKague, Ringo, Martinez, Henbest. Voting Nay - Representatives Kellogg, Barrett, Ridinger, Schaefer, Roberts, Wood, McGeachin, Cuddy. Substitute Motion to introduce RS 13263 that it be placed on second reading without recommendation passed, 11-8-0. Representative Field will sponsor the bill on the floor.
RS 13264:	Chairman Crow announced the next item on the agenda was RS 13264 and asked Speaker Newcomb to continue. Speaker Newcomb stated that this proposed legislation is different than RS 13262. This proposal increases the sales tax from 5% to 5.5% for the period July 1,2003 through June 30, 2004.
MOTION:	Representative Smith moved to introduce RS13264 with the recommendation that it be placed on second reading without recommendation.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to return RS 13264 to sponsor. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Barrett, Schaefer, Roberts, Wood, McGeachin. Voting Nay - Representatives Kellogg, Raybould, Ridinger, Moyle, Field, Denney, McKague, Ringo, Martinez, Henbest, Cuddy. Substitute motion to return to sponsor failed, 6-13-0. Original motion to introduce RS 13264 with the recommendation that it be placed on second reading without recommendation passed on a voice vote. Representatives Barrett, Wood and McGeachin requested to be recorded no. Representative Smith will sponsor the bill on the floor.
RS 13271:	Chairman Crow announced that the next item on the agenda was RS 13265 but has been replaced by RS 13271. She recognized Speaker Newcomb and asked him to continue. Speaker Newcomb stated that testimony on beer and wine tax has not had a hearing. He pointed out that beer tax had not been raised since 1961 and wine since 1971.
MOTION:	Representative Wood moved to introduce RS 13271. Motion carried on a voice vote. Representatives Barrett, McKague and McGeachin requested to be recorded as voting no.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:05 a.m.

DATE:	April 3, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Senator Goedde; Representative Shepherd
	Chairman Crow called the meeting to order and requested a silent roll call. She announced the first item on the agenda was RS 13257 and asked Senator Goedde to explain the proposed legislation.
RS 13257:	Senator Goedde stated that what is before you today is based on the bill passed in 1995 and HB 192 which you agreed to hear earlier in this session. This proposal changes from past legislation to be open to all counties, maximum tax reduced to one-half percent, one-half of the proceeds can be used only for retirement of debt for detention facilities. The other one-half percent to be used as property tax reduction. The measure sunsets in 2009. Kootenai County is relying on a statute passed by this body and in good faith proposed to their voters a local option sales tax to fund expansion of the jail. The jail was built and funded at a cost of $1.4 million per year until 2009. Following the Supreme Court decision the property taxpayers will need to come up with the additional revenue to fund the debt load as well as some $3.4 million per year in property tax reduction, somewhere between 18% and 22% increase. This proposed legislation authorizes counties to adopt local option sales taxes and to implement and collect such tax. It is possible that other counties could take advantage of this legislation. To use this local option tax the measure must be approved by 60% of the voters and would need enough cash flow to pay off the measure prior to 2009.
MOTION:	Representative Raybould moved to introduce RS 13257.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to return to sponsor. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Barrett, Wood, McKague, McGeachin. Voting Nay - Representatives Crow, Kellogg, Raybould, Ridinger, Moyle, Field, Schaefer, Smith, Collins, Roberts, Denney, Ringo, Martinez, Henbest, Cuddy. Motion failed, 4-15-0
	Original motion to introduce RS 13257passed on a voice vote.
RS 13236:	Chairman Crow announced the next item on the agenda was RS 13236 and asked Representative Shepherd to explain the proposed legislation. Representative Shepherd stated that this proposed legislation was originally drafted early in the session but it had problems. After checking with the Attorney Generals office, the Tax Commission and the Idaho Association of Counties, it was determined it had been addressed in the wrong Idaho code. With a great deal of help from these same entities a new RS was drafted that is constitutional. It is now in the correct code and addresses the needs of what the problem is for Shoshone County. Representative Shepherd gave a brief history of the East Shoshone Hospital District which has declared bankruptcy. This district is still intact and is repaying 100% of old debt with bonds and has a levy to repay the bonds. It is expected that the district will stay intact until the bonds are paid. However this may take as long as 20 years. The concern is that if for some reason before the bond debt is satisfied the district would dissolve, the county would become liable for any remaining debt and that debt would fall within the 3% cap and come under the county levy thereby placing more financial pressure on the struggling county budget. Current law would then leave the county with the hospital debt, the hospital levy would cease and the county would have no ability to levy to pay that debt. This proposed legislation would create additional requirements in the process of dissolving a hospital district. District residents should be responsible for the eventual payment of any district debts. Residents of the entire county should not be responsible for a district in which they do not reside. The county commissioners must be able to levy for the hospital district until all debt is paid.
MOTION:	Representative Cuddy moved to introduce RS 13236. Motion passed unanimously.
RS 13275:	Chairman Crow announced the next item on the agenda was RS 13275 and asked Representative Field to explain the proposed legislation. Representative Field stated that the purpose of this legislation is to impose an excise tax on bottled soft drinks, syrups and dry mix and provide for affixing of tax stamps or crowns. The revenue will be one cent for twelve fluid ounces, one dollar per gallon of soft drink syrup and one cent each ounce by weight of dry mixture for making soft drinks.
MOTION:	Representative Kellogg moved to introduce RS 13275.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to return RS 13275 to sponsor. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Barrett, Moyle, Field, Collins, Roberts, Wood, McKague, McGeachin. Voting Nay - Kellogg, Raybould, Ridinger, Schaefer, Smith, Denney, Ringo, Martinez, Henbest, Cuddy. Motion to return to sponsor failed, 9-10-0.
	Original motion to introduce RS 13275 passed. Representatives Barrett, Moyle, McKague, McGeachin requested to be recorded as voting no.
RS 13263C2:	Chairman Crow announced that RS 13263 which passed yesterday had a drafting error and the Committee would now hear from Representative Denney to explain the purpose of this change. Representative Denney explained that RS 13263 was not intended to include tobacco products. RS 13263C2 takes out tobacco products and changes the reimbursement for affixing the stamps on cigarettes. The purpose of this proposed legislation is to increase the tax on cigarettes to five cents per cigarette and one dollar per package of twenty cigarettes. Representative Denney asked for unanimous consent to change RS 13263. There was an objection and unanimous consent was denied.
MOTION:	Representative Denney moved to introduce RS 13263C2 with the recommendation that it be placed on second reading without recommendation. Roll call was called for.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Raybould, Moyle, Field, Collins, Denney, McKague, Ringo, Martinez, Henbest. Voting Nay - Representatives Kellogg, Barrett, Ridinger, Schaefer, Smith, Roberts, Wood, McGeachin, Cuddy. Motion to introduce RS 13263C2 with the recommendation that it be placed on second reading without recommendation passed, 10-0-0. Representative Field will sponsor the bill on the floor.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:35 a.m.

DATE:	April 4, 2003
TIME:	8:35 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Speaker Bruce Newcomb; Ron Bitner, Idaho Grape Growers, Idaho Beer & Wine Distributors Association; Pete Skamser, National Federation of Independent Business; Ken McClure, Anheuser Busch Companies, Inc.; Bob Corbell, Idaho Wine Commission; Randy Nelson, Associated Taxpayers of Idaho; Skip Smyser, Miller Brewing Company; Mike Fitzgerald, Table Rock Café; Charlie Jones, Stinker Stations, Scott Defulhorst, Snake River Winery; Chuck Devlin, Ste. Chapell Winery; Brad Pintler, Skyline Vineyards and Sawtooth Winery
	Chairman Crow called the meeting to order and requested a silent roll call. She announced the first item on the agenda was HB 402 and asked Speaker Newcomb to present the bill.
HB 402:	The purpose of this legislation is to increase the tax on beer from $4.65 per barrel to $7.44 per barrel and to increase the excise tax on wine from $.45 per gallon to $.75 per gallon. The revenues generated by such increases will be distributed to the General Fund. Speaker Newcomb stated that it had been called to his attention that vineyard owners have concerns with this bill. He said that if the bill goes out of this Committee that it be referred to General Orders with Committee amendments without recommendation.
	Ron Bitner, Idaho Grape Growers, appeared before the Committee and advised the Committee that Idaho has eighteen wineries producing world class wines. Idaho does not have the same support as Washington and Oregon. Idaho wineries need support to market Idaho wine.
	Bill Roden stated he was representing the Idaho Beer & Wine Distributors Association. He sympathized with comments made by members of this committee concerning the difficult and uncomfortable position you are in. The clients he represented recognize that none of you want to raise taxes in these difficult times. To paraphrase a comment by Will Rogers, "when the state has money, government cuts taxes. When the state is broke, government raises taxes". Rogers may have been being facetious but he added "that's statesmanship of the highest order." The times are difficult and you have painful decisions to be made. Mr. Roden passed out a brochure containing data relating to Idaho beer and wine distributors and the important economic contributions that the beer and wine industry makes to the economy of the state. (Attachment #1) They provide jobs, make major capital investments in the state resulting in enhancements to the property tax base and pay substantial taxes to the state and federal coffers. He passed out a two-page paper showing the effect of HB 402 on the taxpayer. (Attachment #2) The wholesaler actually pays the tax to the Idaho Tax Commission but in the final analysis the wholesaler is the tax collector and it is the consumer that pays the tax through increased prices for the products if you decide to selectively tax. For those of you who refer to the taxes in HB 402 as "sin" taxes, he reminded the Committee that the state has even been selective in picking the "sins" to be taxed. Only "sins" resulting from private business operations are taxed under laws now being considered by this Legislature. Private alcohol beverage taxes will increase under HB 402. Yet, there is no tax on the state sales of distilled spirits, profit, yes, but no tax. The wholesalers and their employees also share their profits with the state in the form of income, sales and property taxes. The state retail operations do not charge a sales tax on the shelf price of products at the state liquor store, as the state imposes on products being taxed under HB 402. Mr. Roden conveyed that it has been said that, "The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing." HB 402 and other unfair selective tax bills that you have had before you are excellent examples of attempting to avoid the hissing goose. Selective excise tax bills impose taxes on products that many of our citizens either do not use or which many of our citizens are reluctant to publicly defend. Selective excise taxes are a good example of robbing Peter to pay Paul. Many believe that as George Bernard Shaw said, "A government which robs Peter to pay Paul can always count on Paul's support." Mr. Roden said that he was not sure it was a true statement for the reason that the public recognizes that the tax on beer or wine or cigarettes or soda pop, today may tomorrow mirror federal selective taxes or, worse, and follow the federal example of imposing selective taxes on pistols, ammunition, bows and arrows or fishing equipment. There is nothing fair about selective taxes. Governments should not have gone down this road in the past. Selective excise taxes are and always have been bad tax policy. It probably is too late to turn back but someday it should be considered. A state that relies on selective excise taxes rather than broad based taxes may well be digging the hole deeper. But there is no question that you don't make a "bad tax" better by increasing the tax. The term "tax exploitation" applies as it describes this discriminatory justification for a selective excise tax on a minority of the citizens. Lyndon Johnson jokingly said: "in 1790 the nation which had fought a revolution against taxation without representation discovered that some of its citizens weren't much happier about taxation with representation." This is actually a true statement and particularly applicable to the ability of those in power to selectively impose a tax burden on the minority or even the silent majority. To repeat, a bad tax policy is not made better by increasing the tax. Increases in such taxes merely compound the existing inequities and should not be approved. Mr. Roden concluded his remarks saying if HB 402 is to proceed, careful attention needs to be paid to the effect of the tax rates on the industry, particularly with reference to Idaho's wine industry. In addition, if HB 402 is to proceed they respectfully request that the amendment to treat all beer equally be recommended for adoption by this committee. It would be a small but important move to remove an existing discriminatory treatment under current law. (Amendment attachment #3)
	Pete Skamser, National Federation of Independent Business, appeared before the Committee in opposition to HB 402 saying 87% of his membership voted for no increased taxes.
	Ken McClure stated he was representing Anheuser Busch Companies, Inc.. He said this bill is regressive with the combination of sales tax and excise tax. If the body increases sales tax it will compound the regressivity. Adding an additional excise tax is more regressive. The tax structure is not out of kilter and doesn't appear to have enough revenue to balance the budget.
	Bob Corbell, Executive Director, Idaho Wine Commission, testified that the State of Washington has an eighty seven cent excise tax and uses state employees. They have a $600,000 general fund appropriation for advertising and promotion. Reducing the small percentage to the wine commission would decrease promotion and advertising of Idaho's wine and alcohol treatment account. Idaho's small wine producers would have to adjust their price on premium wine and would be in competition with other states where wine producers are being subsidized by government. Wineries in Idaho will lose the shift in market creating another problem for them. This bill could affect a lot of jobs.
	Randy Nelson, Associated Taxpayers of Idaho, provided the members with a report on "State Tax Rate and Burden Comparisons." (Attachment #4) Mr. Nelson stated that the tax rate chart #1, which you have seen before, includes beer and wine tax rates. It specifically identifies rates for other western states. The flip side of this chart includes the state and local sales tax rates which also apply to beer and wine sales. The beer and wine tax, although a small share of the general fund revenues, can also be fairly volatile like the cigarette tax and even the income tax. He did not think that any new revenue from these sources should go to the General Fund as HB 402 proposes. However if Idaho state government needs more revenue it would be simpler and more reliable to adjust the rate on a broader based tax rather than targeting large rate increases on a mix of product taxes. Mr. Nelson concluded his remarks saying from a long-term tax policy perspective, Idaho should be careful about depending too heavily on product taxes.
	Skip Smyser, Miller Brewing Company, passed out copies of two letters from distributors. The attached are letters form Gate City Intermountain and Bear River Sales Company in opposition to HB 402. (Attachments # 5 and #6) Mr. Smyser stated that Idaho has a three legged stool tax structure and this bill will make a fourth stool which is unreliable. The State Treasurer is concerned about Idaho's credit rating relying on an unstable tax base.
	Mike Fitzgerald stated he owned the Table Rock Café and was appearing before the Committee in opposition to HB 402. He briefed the Committee members on the negative effect this bill would have on micro beer. When prices go up consumers buy cheaper beer and wine. Now is not the time to take money from small business.
	Charlie Jones stated that he was the President of the Stinker Stations and was appearing in opposition to HB 402. Excise tax on targeted products will affect business and jobs will be destroyed. A broad based tax such as sales tax would do less harm. He said that he reduces expenses when income is down.
	Scott Defulhorst, Snake River Winery, appeared before the Committee in opposition to HB 402 saying the wine business is currently at a critical juncture. The fledgling wine business needs help and increasing the excise tax would be devastating not only for small wineries but larger ones as well. This bill affects not just the growers and distillers but industry in the entire state.
	Chuck Devlin, Ste. Chapell Winery, appeared before the Committee in opposition. He said he was afraid that if his parent company were to perceive that the business climate here in Idaho is unstable or perhaps hostile to wine production and wine sales, they will probably take that capital and invest it elsewhere. The political climate in Oregon, Washington and California is extremely favorable to the wine industry. State general funds are allocated in both Oregon and Washington to promote the grape and wine industry. He concluded his remarks urging the Committee to send the message that Idaho is a good place for them to invest their money and reject this alarming increase.
	Brad Pintler representing Skyline Vineyards and Sawtooth Winery appeared before the Committee in opposition to HB 402 reiterating previous testimony on Idaho's fledgling wine industry. He stated that the increased excise tax would put the wine industry in a non competitive and unprofitable position.
MOTION:	Representative Barrett moved to HOLD HB 402.
SUBSTITUTE MOTION;	A substitute motion was made by Representative Henbest to send HB 402 to General Orders with Committee Amendments attached without recommendation.
AMENDED SUBSTITUTE MOTION:	An amended substitute motion was made by Representative Smith to send HB 402 to the floor without recommendation. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representative Smith. Voting Nay - Representatives Crow, Kellogg, Raybould, Barrett, Ridinger, Moyle, Field, Schaefer, Collins, Roberts, Wood, Denney, McKague, McGeachin, Ringo, Martinez, Henbest, Cuddy. Motion to sent HB 402 to the floor without recommendation failed, 1-18-0.
ROLL CALL VOTE:	Voting Aye - Representatives Moyle, Denney, Ringo, Martinez, Henbest. Voting Nay - Representatives Crow, Kellogg, Raybould, Barrett, Ridinger, Field, Schaefer, Smith, Collins, Roberts, Wood, McKague, McGeachin, Cuddy. Motion to send HB 402 to General Orders failed, 5-14-0.
	Original motion to HOLD HB 402 passed on a voice vote.
HB 405:	Chairman Crow announced the next item on the agenda was HB 405 and asked Representative Field to present the bill. Representative Field said this bill imposing an excise tax on soft drinks was an attempt to level the playing field with the wine and beer tax.
UNANIMOUS CONSENT:	Representative Field asked for unanimous consent to hold HB 405. Consent was granted.
	Representative Barrett asked for point of order to lodge a complaint against the Revenue and Taxation Committee as the contact on the Statement of Purpose. The House Rules book says that the Statement of Purpose must have "a person" named as contact. A Committee is not a person, not even in the collective sense.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 9:55 a.m.

DATE:	April 8, 2003
TIME:	9:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT:	None
GUESTS:	Senator Compton; Representative Bedke, Charlie Clark, Union Pacific Railroad; Steve Ahrens, Idaho Association of Commerce & Industry; George Millward, United Transportation Union, Senator Goedde, Ben Wolfinger, Deputy Sheriff of Kootenai County; Randy Nelson, Associated Taxpayers of Idaho; Russ Westerberg, Hagadone Corporation; Rocky Watson, Kootenai County Sheriff; Jane Gorsuch, Intermountain Forest Association
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to accept the minutes of the meeting held on April 2, 2003 as written.
UNANIMOUS CONSENT:	Chairman Crow informed the members that Representative Shepherd requested HB 407 relating to dissolution of hospital districts be held in Committee. She asked for unanimous consent to Hold HB 407. Consent was granted.
HB 401:	Chairman Crow announced the first item on the agenda was HB 401 and recognized Senator Compton to present the bill. Senator Compton passed out copies of letters from the Post Falls Chamber of Commerce, the Association of Idaho Cities, the Idaho Association of Counties (neutral), Jobs Plus and the City of Post Falls in support of HB 401. Senator Compton said this is an important bill to be used as an economic tool. The states of Washington and Montana have land-based ports and have been very successful. This legislation is the catalyst for economic development to provide infrastructure for a land-based port. It takes fifty percent of the voters to form a district and this legislation takes two-thirds to pass a bond. The purpose of this legislation is to expand the opportunity of creating port districts to areas that are not adjacent to contiguous waterways and to allow for the creation of port districts in county and regional situations. This legislation provides for great opportunity for counties to have this economic tool with long lasting positive impact.
	Representative Bedke testified that there are a number of organizations and people developing economic plans to germinate in counties. This bill will provide the tax structure to allow for infrastructure to attract business. The Port of Lewiston and the Moses Lake Port districts have been very successful in attracting business. Representative Bedke stated that no one likes Ad Valorem taxes. This legislation allows counties to have the opportunity to enter into a taxing district to help with economic development. Voters pass school bonds with a two-thirds vote which is the consensus of the community and the building of schools is widely accepted. This bill is the same with a two-thirds vote of the people to obligate themselves to allow counties to enter into a port district to compete for business.
	Charlie Clark, Union Pacific Railroad, appeared before the Committee in support of HB 401 saying he has had ten years experience with Montana and Washington Port districts. These districts have utilized the Union Pacific in distributing commodities in the area. Bringing a port district into Pocatello where there are two interstate highways and Union Pacific would be an opportunity for economic development.
CON:	Steve Ahrens, Idaho Association of Commerce & Industry, testified in opposition to HB 401 saying with Idaho's economy mired in a recession, with the state searching desperately for current revenue and for ways to create new revenue, it is entirely appropriate that this committee and this Legislature have spent a great deal of time this session considering a variety of proposals that promise to create economic development. However, we should not forego the exercise of some careful inspection, even of proposals that promise this much sought-after "economic development." Such a proposal is HB 401. The bill is quite straightforward. It is basically an "election bill." It describes in excruciating detail how citizens can go about creating a so-called "port district." It does not, however, spend much time telling you what kind of a creature a port district is, what its powers are, how it operates or the impact it will have on local taxpayers. You may want to look on Page 5, at the bottom, Title 70-2220 "Application of Port District provisions." You have to go and check the chapters listed here to find out all about what a Port District really is. If you do go to read those chapters, you will find that in creating a Port District, you are creating a whole new level of government at the local level. Among other things a Port District has: The power of eminent domain, the right of condemnation; The power to levy and collect assessments on property; The power to acquire or dispose of property; The power to make grants or take out loans; The power to issue general obligation and/or revenue bonds; The power to accept federal aid; The power to levy property taxes up to one-tenth of one percent of the market value for assessment purposes on all taxable property in the port district. Mr. Ahrens said that HB 401 and debate over the bill has nothing to do with the Lewiston Port District or "whether the Lewiston Port has been successful " or "whether the Lewiston Port has contributed to economic development." The Lewiston Port has been a great asset to the local and Idaho economy. HB 401 is simply about the question of whether it is a good idea to transfer the "port concept" to creation of a whole new governmental entity, a land-based entity, in any county and to authorize that new government to levy yet one more tax on local property taxpayers. Mr Ahrens concluded his remarks saying Idaho statistically has had low property taxes although many property taxpayers don't' feel that to be true when they pay their property taxes. In the last few years, property taxes have once again begun to rise around the state. We must watch carefully to see that property tax rates do no get out of hand and one way to do that is to look very carefully at creation of additional levels of government with property taxing authority. He opposed the creation of additional taxing districts.
	George Millward, United Transportation Union, appeared before the Committee in support of HB 401 stated he represented 930 members of which most worked in Pocatello. He said this legislation will bring in more tools for counties to use to bring in investment by the creation of a port district.
	Senator Compton wrapped up the testimony saying this legislation allows communities to put on the ballot an economic tool for development.
MOTION:	Representative Martinez moved to send HB 401 to the floor with a do pass recommendation.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to hold HB 401. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Crow, Barrett, Moyle, Field, Schaefer, Collins, Roberts, Wood, Denney, McKague, McGeachin. Voting Nay - Kellogg, Raybould, Ridinger, Smith, Ringo, Martinez, Henbest, Cuddy. Motion to hold HB 401 passed, 11­8-0.
HB 406:	Chairman Crow announced the next item on the agenda was HB 406 and recognized Senator Goedde to present the bill. Senator Goedde stated that this legislation is to reinstate a local option tax passed previously by the Legislature. Kootenai County approved an ordinance for local option sales tax to fund the expansion of their jail. This was challenged by the Supreme court while the jail was being built. This legislation authorizes counties to adopt local option sales taxes and to implement and collect such tax. Not less than fifty percent of the revenue generated would be applied to reduce existing property taxes and the balance to pay off the debt load of $1.4 million a year until 2009. Senator Goedde provided a copy of a proposed amendment to change the voter approval to sixty- six and two thirds.
	Ben Wolfinger, Deputy Sheriff of Kootenai County, testified in favor of HB 406 said that in 1996 a levy was imposed to fund major infrastructure spread among visitors for a much needed jail facility. One-half of the revenue decreased property taxes. The Coeur d' Alene Area Chamber of Commerce supports the bill. See attached letter. (Attachment #1) The legislature gave the people of Kootenai a tool to build a jail and the Supreme Court took it away.
	Randy Nelson, Associated Taxpayers of Idaho, passed out a report depicting State Sales and Use Tax identified by county from the State Tax Commission. The .5% sales tax generates $6,383,425 and is close to what has been collected.
	Russ Westerberg, Hagadone Corporation, appeared before the Committee in support of HB 406. He stated that the Hagadone Corporation is the largest property owner and collector of sales tax in the county and they are in total support of the local option tax.
	Rocky Watson, Kootenai County Sheriff, testified in support of HB 406. He said in 1999 there were no available rooms in the jail facilities and prisoners were transported to Montana. The local option sales tax was fifty percent for the jail expansion and fifty percent for property tax relief. In 2001 the Supreme Court took away this option and this bill will give back to the county revenues to finish paying for the jail expansion.
	Jane Gorsuch, Intermountain Forest Association, testified in favor of HB 406 saying her membership urges full support.
	Senator Goedde wrapped up the testimony stating that as soon as the bond is paid off the tax gets shut off.
MOTION:	Representative Ridinger moved to send HB 406 to general orders with Committee amendments attached.
SUBSTITUTE MOTION :	Representative Barrett moved to Hold HB 406. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Crow, Barrett, Moyle, Field, Schaefer, Wood, McKague, McGeachin. Voting Nay - Representatives Kellogg, Raybould, Ridinger, Smith, Collins, Roberts, Denney, Ringo, Martinez, Henbest, Cuddy. Motion to hold HB 406 failed, 8-11-0 Motion to send HB 406 to general orders with committee amend-ments attached passed on a voice vote. Representatives Crow, Barrett, Wood, McKague, McGeachin requested to be recorded as voting no. Representatives Ridinger and Kellogg will co-sponsor the bill on the floor.
ADJOURN:	Chairman Crow stated that the Committee members were past due on the floor and would continue the agenda tomorrow. She adjourned the meeting at 10:03 a.m.

DATE:	April 9, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	None
GUESTS:	Mike Gilmore, Deputy Attorney General; Representative Doug Jones
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Kellogg moved to accept the minutes of the meetings held on April 3, 2003 and April 4, 2003 as written. Motion carried on a voice vote.
HB 403:	Chairman Crow announced the first item on the agenda was HB 403 and recognized Representative Denney to present the bill. Representative Denney testified that the purpose of this legislation is to break the current law suit into segments to be heard in their own district. The State has been in litigation for twelve years over the universal problem of safe school facilities. This legislation establishes a safe school facilities levy. It sets up criteria under which the levy may be imposed and allows for judicial confirmation when the safety levy fails. This legislation also brings all pending lawsuits under the constitutional based Education Claims Act. Representative Denney proposed the bill be amended to delete "or safe school levy" to ""school facility levy."
	Mike Gilmore, Deputy Attorney General, briefed the Committee members on the history of ISEEO and related lawsuits. (Attachment # 1) There are seven school districts that which have continued to put on evidence that have not proposed plant facilities levies or bonds since the interest subsidy program began. It is time to bring them under the procedures of the Constitutional Based Education Claims Act, Idaho Code 6-2201 et seq., and make them defendants in a suit brought by the State in their own counties to encourage these districts to devote their available resources to abate any unsafe or unhealthy conditions.
MOTION:	Representative Wood moved to send HB 403 to general orders with Committee amendments attached.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Ringo to hold HB 403. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Ridinger, Ringo, Martinez, Henbest, Cuddy. Voting No - Representatives Crow, Kellogg, Raybould, Barrett, Moyle, Field, Schaefer, Smith, Collins, Roberts, Wood, Denney, McKague, McGeachin. Motion to Hold HB 403 failed, 5-14-0
	Original motion to send HB 403 to general orders with committee amendments attached passed on a voice vote.
RS 13283:	Chairman Crow announced the next item on the agenda was RS 13283 and asked Representative Doug Jones to explain the proposed legislation. Representative Jones stated that this legislation would require a ten percent per year reduction in the number of acres of grass stubble burned in Kootenai and Benewah counties for four years resulting in a forty percent reduction by the year 2006. Growers who voluntarily sign up acres not to be burned would receive a $100.00 per acre tax credit for ten years until the number of acres required to meet the ten percent reduction level has been reached voluntarily. Additional acres would be required to not be burned without receiving the tax credit.
MOTION:	Representative Field moved to introduce RS 13283. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Crow, Kellogg, Raybould, Ridinger, Moyle, Field, Schaefer, Denney, Ringo, Cuddy. Voting Nay - Representatives Barrett, Smith, Collins, Roberts, Wood, McKague, McGeachin, Martinez, Henbest. Motion to introduce RS 13283 passed, 10-9-0.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 11:00 a.m.

DATE:	April 15, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Schaefer and Cuddy
GUESTS:	Representative Ellsworth, Ted Spangler, Idaho State Tax Commission
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Martinez moved to accept the minutes of the meetings held on April 8, 2003 and April 9, 2003 as written. Motion carried on a voice vote.
RS 13270C1:	Chairman Crow announced the first item on the agenda was RS 13270C1 and asked Representative Ellsworth to explain the proposed legislation. Representative Ellsworth stated that this proposed bill intends to improve compliance with existing laws relating to taxation of cigarettes and to age restrictions on sale of cigarettes. The proposal imposes a use tax on individuals who purchase or possess unstamped contraband cigarettes. The tax equals the amount of the required tax stamp. The penalty for possession of contraband cigarettes is changed from a misdemeanor to a civil penalty of $20 per unstamped pack of cigarettes to a maximum of $2,500. This RS prohibits shipment of cigarettes to consumers by a cigarette seller or common or contract carrier. It requires containers of cigarettes to be externally marked as cigarettes. The intent is number one, to make tax avoidance more difficult and number two, facilitate age verification of retail purchasers. Representative Ellsworth yielded to Mr. Spangler to explain the details of the proposed bill.
	Ted Spangler, Idaho State Tax Commission, conveyed that this proposal makes the sale of cigarettes in compliance with the law and gives the State Tax Commission a tool to enforce the law. It is not an overall dragnet for revenue leaking out but when the Tax Commission finds a situation the use tax can be collected. Section 3 provides for a civil penalty of twenty dollars per package of unstamped cigarettes or two thousand five hundred dollars. The intent of this proposed legislation is to limit retail sales of cigarettes face to face. This is no cure all to enforce the sale of unstamped cigarettes but it will help to deter persons in possession of large volumes of unstamped cigarettes.
MOTION:	Representative Raybould moved to introduce RS 13270C1. Motion passed on a voice vote. Representatives Kellogg, Barrett, McKague and McGeachin requested to be recorded as voting no.
	Chairman Crow submitted that the following bills have been in Committee for some time and action was needed on the following bills: HB 82-- Relating to income tax credits, land management which was brought back from the floor for additional information. Sponsored by the Department of Agriculture. HB 126­Relating to schools, support, sales tax moneys. Motion to hold subject to the call of the Chair if money was needed. Sponsored by Representative Clark.
	HB 191 ­ Relating to Sales tax, repeals special exemption on tangible and personal property sold on Indian reservations. Sponsored by Senator Bunderson. HB 408 ­ Relating to income tax credit. No field burning. Sponsored by Representative Jones who requested that it be held in Committee.
MOTION:	Representative Barrett moved to HOLD HB 82, HB 126, HB 191 and HB 408. Motion carried on a voice vote. Representative Smith requested to be recorded as voting no on holding HB 191.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:20 a.m.

DATE:	April 17, 2003
TIME:	9:30 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Frost, Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Schaefer and McGeachin
GUESTS:	Representative Ellsworth; Bill Roden; Ted Spangler, Idaho State Tax Commission
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Kellogg moved to accept the minutes of the meeting held on April 15, 2003 as written. Motion carried on a voice vote.
RS 13297:	Chairman Crow announced the first item on the agenda was RS 13297 and asked Representative Field to explain the proposed legislation. Representative Field said the purpose of the proposed legislation is to require that sales tax on retail sales of liquor by the state liquor dispensary shall be collected on the retail shelf price after all surcharges and mark-up by the dispensary and to direct the sales tax collected be placed in the general account. This proposal does not affect the distribution formula for the liquor account as provided in section 23-404, Idaho Code. Representative Field said that Mr. Roden had assisted her in drafting this RS to generate money to the general fund and yielded to Mr. Roden to explain the proposal further.
	Bill Roden stated that the state liquor dispensary does not distribute sales tax on sales to the general fund. It is included in the surcharge and distributed by a formula to various funds. This proposal places the 5% sales tax on the shelf price and is distributed directly to the general fund.
MOTION:	Representative Moyle moved to introduce RS 13297. Motion carried on a voice vote. Representatives Kellogg and Barrett requested to be recorded as voting no.
HB 421:	Chairman Crow announced the next item on the agenda was HB 421 and recognized Representative Ellsworth to present the bill. Representative Ellsworth testified that this bill intends to improve compliance with existing laws relating to the taxation of cigarettes and to age restrictions on sale of cigarette.
	Ted Spangler stated that this bill imposes a use tax on individuals who purchase or possess unstamped contraband cigarettes. It provides for a penalty for possession of contraband cigarettes is changed from a misdemeanor to a civil penalty of the greater of $20.00 per unstamped pack of cigarettes or $2,500.00. The bill prohibits shipment of cigarettes to consumers by a cigarette seller or common or contract carrier. It requires containers of cigarettes to be externally marked as cigarettes. The intent is to limit retail sales of cigarettes to face-to-face transactions in order to make tax avoidance more difficult and facilitate age verification of retail purchases. Mr. Spangler said it had been brought to his attention that the Statement of Purpose is misstated and should be reprinted.
	Bill Roden stated he was not representing his clients but wanted to make some comments relating to HB 421. In Section 3 it provides increased civil penalties for possession of unstamped cigarette packages or cigarette packages upon which the use tax imposed by section 2 has not been paid. The penalty together with interest is the greater of $20 per pack of cigarettes or $1,200. This language of the bill permits an interpretation that the penalty is $2,500 per pack because $2,500 is greater than $20. That would be $25,000 for each carton, ten time $2,500 per pack per carton, over the first carton. This penalty would certainly make it worth while as a deterrent but it would add on a lot of law enforcement officers. Mr. Roden voiced concern with the language in section 3 which covers military personnel purchasing at military facilities as well as tourists. If they had two cartons of cigarettes in their possession the possessor may be liable for a civil penalty of $25,000, plus interest plus confiscation of the carton of cigarettes. That is an unconscionable penalty for one who innocently possesses unstamped cigarettes. If it is the intent of the sponsor for a purchaser of cigarettes at a military PX not be subject to the penalty he suggested that the language on page 2, line 20 be changed from "or" to "and."
MOTION:	Representative Wood moved to send HB 421 to general orders amending page 2, line 20 to delete "or" and add "and" with a corrected Statement of Purpose. Motion carried on a voice vote. Representatives Kellogg, Barrett and McKague requested to be recorded as voting no.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 9:50 a.m.

DATE:	April 21, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, (Ringo) Cooke
ABSENT/ EXCUSED:	Representative Schaefer
GUESTS:	Dan John, Idaho State Tax Commission
	Chairman Crow called the meeting to order and requested a silent roll call. She stated that questions had been raised concerning HB 406aa after this Committee sent it to General Orders for amendment and the bill was returned from the floor for further discussion.
HB406aa:	Chairman Crow announced the first item on the agenda was HB 406aa. This legislation authorizes counties to adopt local option sales taxes and how to implement and collect such tax. The bill requires that the measure be put to the voters and obtain a minimum of sixty-six and two-thirds percent approval. The bill sets a period of time to ten years or less, set forth a rate of taxation and that rate shall not exceed one-half of one percent. Not less than fifty percent of the revenue generated would be applied to reduce existing property taxes and the balance of such revenues to provide needed services which otherwise be paid for by county general fund revenues. Chairman Crow questioned conflict in the bill on page 2, line 3 which states "for the purpose of the tax which shall be debt retirement for expansion of detention facilities" and lines 42 and 43 "revenue of the county available for any lawful purpose approved by county voters." She also said Section 4 "void and of no force and effect on and after December 31, 2009 and on page 2, line 2 limits the term to ten years. Representative Barrett said this bill opens up the option for a tax increase for a local option tax. Representative Kellogg disagreed that this is an additional tax rather it is a replacement tax. In response to the question of conflict on lines 3 and 42-43, Dan John, Idaho State Tax Commission, the two sections conflict. The section dealing with jails is specific and the other section is a general section. Specific control over general provisions. Representative Ridinger pointed out the bill is for fifty percent for property tax relief and fifty percent for debt reduction of the jail Representative Henbest asked Mr. John if the expiration date of 2009, the period of the debt, differ from the Act. Mr. John responded saying no the county sales tax goes away at 2009. Representative Kellogg said the approval of the tax takes sixty-six and two-thirds approval to pay for infrastructure. Representative Ridinger stated that this bill is narrowly drafted to allow a local option tax which has worked well for Kootenai County to build a jail and is supported by local business. Federal and state codes require people to go to jail and local governments have to provide a jail. This bill is a genuine property tax relief for something that property tax would have to pay for and requires sixty-six and two-thirds voter approval.
MOTION:	Representative Ridinger moved to send HB 406aa to the floor with a do pass recommendation. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Kellogg, Ridinger, Smith, Denney, Cooke (Ringo) Martinez, Henbest, Cuddy. Voting Nay - Representative Crow, Barrett, Raybould, Moyle, Field, Collins, Roberts, Wood, McKague, McGeachin. Motion failed, 8-10-1.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:24 a.m.

DATE:	April 22, 2003
TIME:	10:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, (Ringo) Cooke
ABSENT/ EXCUSED:	None
GUESTS:	Bill Roden
	Chairman Crow called the meeting to order at 10:08 and requested a silent roll call. Representative Cuddy moved to approve the minutes of the meeting held on April 17, 2003 as written.
HB 423:	Chairman Crow announced the first item on the agenda was HB 423 and recognized Representative Field to present the bill. Representative Field testified that this legislation requires that sales tax on retail sales of liquor by the state liquor dispensary shall be collected on the retail shelf price. She stated it was not her intention to hurt anyone with introducing this bill but it was the intention to find money for the general fund. The charges built into the price of liquor has been changed seven times. This bill is similar to the surcharge to fund the family and drug courts that has passed both houses. She yielded to Mr. Roden to explain the bill.
	Bill Roden stated he was not representing any of his clients. He provided the members with a hand-out depicting the retail price components, the Liquor Dispensary income statement, statement of changes in fund equity and historical data on the liquor surcharge. (Attachment # 1) Mr. Roden explained that the purpose of this legislation is for the Liquor Dispensary to collect sales tax on the shelf price this will treat them the same as all other retailers in Idaho. The liquor dispensary has never used the fifteen percent surcharge provided for in statute. As shown on the chart provided by the Idaho State Liquor Dispensary on a retail price of $10.95 there is a charge of .52 cents for sales tax, $2.16 for federal alcohol tax, $4.72 markup and handling and $3.55 product cost. This bill also puts sales tax on non-alcohol items sold in the liquor dispensary. Liquor by the drink charges five percent sales tax and licensees get a five percent discount. The liquor dispensary can apply the taxes on the product and go forth to make as much money as they can. The last page of the hand-out reflects the liquor surcharge distribution of fixed amounts to the Alcohol Treatment Fund, Community College Fund, Cooperative Welfare Fund , Public School Fund. The balance goes to cities and counties and retained funds for current obligations. The second page of the hand-out reflects the income statement with $22,300,831.5973 in net income for FY 2002 and $21,865,754.08 for FY 2001. Page 3 reflects the changes in the fund equity. After the distributions the fund equity at the end of the FY 2002 was $9,963,491.06 and FY 2001 was $9,203,093.70. The total income increased by 6.8% from FY 2001. There has been steady growth in terms of sales. Per capita sales essentially stayed the same. Mr. Roden said this is a policy issue to treat the liquor dispensary the same as all other retail stores.
	Maggie Mahoney, Idaho Association of Counties, appeared before the Committee in opposition to HB 423. She testified that counties strongly oppose losing $3.7 million in revenue. Counties take the end of what is left over after fixed distributions are made with natural growth. One-half of the liquor distribution goes to fund Junior College tuition which does not cover the cost. The only way to make up any shortfall will have to be made up for by property taxes.
MOTION:	After a lengthy discussion, Representative McGeachin moved to HOLD HB 423.
	Representative Moyle voiced concern that no one was here from the liquor dispensary to explain the approximately $10 million fund balance. Chairman Crow thanked Representative Field and Mr. Roden for bringing this issue forward.
	Motion to HOLD HB 423 passed on a voice vote.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:53 a.m.

DATE:	April 23, 2003
TIME:	8:30 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, (Ringo) Cooke
ABSENT:	None
GUESTS:	Senator Goedde
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Field moved to accept the minutes of the meetings held on April 21, 2003 and April 22, 2003 as written. Motion passed on a voice vote.
RS 13305C1:	Chairman Crow announced that the first item on the agenda was RS 13305C1 and recognized Representative Ridinger to explain the proposed legislation. Representative Ridinger yielded to Senator Goedde. Senator Goedde said this is the fourth time this local option sales tax has been before the Committee. This RS addresses the concerns expressed by Committee members in the meeting held on April 21, 2003. There are changes on page 2, lines 43 and 44 removing "any lawful purpose" to "expansion of detention facilities". This language clears up any misinterpretation of the use of this local option sales tax. Language was changed on lines 48, 49 and 50 to clarify the debt retirement.
MOTION:	Representative Ridinger moved to introduce RS13305C1 and recommend that it be placed directly on second reading without recommendation.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to return RS 13305C1 to sponsor. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Raybould, Barrett, Moyle, Field, Schaefer, Collins, Roberts, Wood, McKague, McGeachin, Crow. Voting Nay - Representatives Kellogg, Ridinger, Smith, Denney, (Ringo) Cooke, Martinez, Henbest, Cuddy. Motion to return RS 13305C1 to sponsor passed, 11-8-0.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 8:40 a.m.

DATE:	April 24, 2003
TIME:	9:00 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representatives Kellogg and Smith Representative Schaefer and Collins
GUESTS:
	Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to accept the minutes of the meeting held on April 23, 2003 as written. Motion passed on a voice vote. Chairman Crow thanked the Committee and Secretaries for their diligent work. She informed the Committee to be on standby.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 9:01 a.m.

DATE:	April 25, 2003
TIME:	11:16 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Toryansky (Field(18)), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Martinez, Ringo
ABSENT/ EXCUSED:	Representative Smith Representative Collins
GUESTS:	Representative Bolz
	Chairman Crow called the meeting to order and requested a silent roll call. She recognized Representative Bolz to explain the proposed legislation.
RS 13320:	Representative Bolz testified that the purpose of this RS was to exempt the additional one cent sales tax on contracts entered into agreement prior to May 1, 2003. Since the sales tax of 5% was in effect when contracts were agreed upon and signed to build at that price it is a matter of fairness. Representative Bolz said that on lines 26 through line 37 explains procedures of applying to the state tax commission for the one cent refund.
MOTION:	Representative Raybould moved to send RS 13320 directly to second reading with a do pass recommendation. Motion passed unanimously. Representative Bolz will sponsor the bill on the floor.
ADJOURN:	There being no further business to come before the Committee Chairman Crow adjourned the meeting subject to call of the Chair, at 11:25 a.m.

DATE:	April 28, 2003
TIME:	11:30 a.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Echohawk (Martinez), Ringo
ABSENT/ EXCUSED:	None
	Chairman Crow called the meeting to order at 12:10 p.m. and requested a silent roll call. Representative Raybould moved to accept the minutes of the meetings held on April 23, 2003 and April 24, 2003 as written. Motion carried on a voice vote. Chairman Crow said the testimony had previously been heard on all three RS's on the agenda. The House did not concur with Senate amendments on HB 317 and HB 294.
RS13322:	Chairman Crow announced the first item on the agenda was RS13322 and recognized Representative Denney to present the RS. Representative Denney explained that this legislation replaces HB 135 requiring cigarette revenue stamps affixed to each pack of cigarettes sold to non-Indians on Indian reservations. The language has been modified to clarify where cigarettes are sold and where not sold. It also clarifies definitions to conform with Internal Revenue currently in United States Code. This language has been changed per letter from the Attorney General's Office. (Attachment #1)
MOTION:	Representative Field moved to introduce RS13322.
SUBSTITUTE MOTION:	A substitute motion was made by Representative Barrett to return RS13322 to sponsor. Roll call was requested.
ROLL CALL VOTE:	Voting Aye - Representatives Kellogg, Raybould, Barrett, Ridinger, Schaefer, Collins, McKague, Ringo, Eckohawk (Martinez), Henbest. Voting Nay - Representatives Crow, Moyle, Field, Smith, Roberts, Wood, Denney, McGeachin, Cuddy. Motion to return RS 13322 to sponsor passed. 10-9-0.
RS13321:	Chairman Crow announced the next item on the agenda was RS13321 and asked Representative Moyle to present the RS. Representative Moyle stated that this RS replaces HB 317 which the Senate amended to add other taxes and the House did not concur with the amendments. This is a leadership bill which allows taxpayers who make new personal property investments in Idaho the opportunity to forego the income tax investment tax credit by electing an exemption from personal property tax on the property for a period of two years.
MOTION:	Representative Wood moved to introduce RS13321 and recommend that it be placed on second reading with a do pass recommendation. Representatives Ridinger and Ringo requested to be recorded as voting No. Motion passed on a voice vote. Representative Moyle will sponsor the bill on the floor.
RS13324:	Chairman Crow announced the next item on the agenda was RS13324 and recognized Representative Cuddy to explain the proposed legislation. Representative Cuddy stated that this is a replacement of HB 264 which the Senate amended with other tax measures and the House did not concur with the amendments. This legislation is to further clarify the definition of occupancy of a house after construction.
MOTION:	Representative Ridinger moved to introduce RS13324 and recommend that it be place on second reading with a do pass recommendation. Motion carried unanimously. Representative Cuddy will sponsor the bill on the floor.
ADJOURN:	There being no further business to come before the Committee, Chairman Crow adjourned the meeting subject to the call of the Chair at 12:35 p.m..

DATE:	April 28, 2003
TIME:	4:00 p.m.
PLACE:	Room 404
MEMBERS:	Chairman Crow, Vice Chairman Kellogg, Representatives Barrett, Ridinger, Moyle, Field(18), Schaefer, Smith(24), Collins, Raybould, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Henbest, Echohawk (Martinez), Ringo
ABSENT/ EXCUSED:	None
	Chairman Crow called the meeting to order at 4:00 p.m. and requested a silent roll call. She recognized Representative Denney to explain the proposed legislation.
RS13331:	Representative Denney said this proposed legislation replaces RS13322 requiring that a cigarette tax stamp be affixed on each package of cigarettes sold on Indian reservations. RS13322 was returned to sponsor by actions taken in the noon meeting. Representative Denney said this proposal changes the implementation date to July 1, 2004. This will allow the Tribes a year to talk about economic issues with representatives of the State of Idaho and negotiate an equitable agreement.
MOTION:	Representative Henbest moved to return RS13331 to sponsor.
SUBSTITUTE MOTION:	After a brief discussion a substitute motion was made by Representative Field to introduce RS13331 and recommend that it be placed on second reading without recommendation. Roll call was requested.
ROLL CALL:	Voting Aye - Representatives Raybould, Moyle, Field, Smith, Collins, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Crow. Voting Nay - Representatives Kellogg, Barrett, Ridinger, Ringo, Echohawk (Martinez), Henbest. Motion passed to introduce RS13331 and recommend that it be placed on second reading without recommendation, 13-6-0.
ADJOURN:	There being no further business to come before the Committee, Chairman crow adjourned the meeting subject to call of the Chair at 4:20 p.m.