House Revenue & Taxation Committee

 

2004 Minutes

 

January 19, 2004
January 20, 2004
January 21, 2004
January 21, 2004 - Subcommittee
January 22, 2004
January 22, 2004 - Subcommittee
January 26, 2004
January 26, 2004 - Subcommittee
January 27, 2004
January 28, 2004
January 29, 2004

February 2, 2004
February 3, 2004
February 4, 2004
February 5, 2004
February 9, 2004
February 10, 2004
February 11, 2004
February 12, 2004
February 17, 2004
February 18, 2004
February 19, 2004
February 20, 2004
February 23, 2004
February 24, 2004
February 25, 2004
February 26, 2004

March 1, 2004
March 3, 2004
March 5, 2004
March 8, 2004
March 9, 2004
March 15, 2004
March 17, 2004 - Subcommittee
March 19, 2004

DATE: January 19, 2004
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 Ridinger
GUESTS: Ted Spangler and Dan John, Idaho State Tax Commission
Chairman Crow called the meeting to order at 10:00 a.m. and requested a silent roll call. She assigned the following subcommittees:

#1 Representative Kellogg, Chairman; Members - Representatives Field, Smith, Wood, Ringo, McGeachin, Henbest

#2 Representative Cuddy, Chairman; members - Representatives Barrett, Ridinger, Roberts and Denney

#3 Representative Raybould, Chairman; members - Representatives Moyle, Schaefer, Collins, McKague, Martinez

The Chairman assigned the Tax Commission Rules to the Kellogg subcommittee. She requested that Representative Raybould assist in the meetings. She advised all the members they were welcome to attend the meetings but those not on the subcommittee would vote only when the rules were before the full committee.

RS13450: Chairman Crow announced that the first item on the agenda was RS13450 and asked Mr. Spangler to explain the proposed legislation. Ted Spangler, Idaho State Tax Commission, stated that this proposal makes technical amendments and updates to the property tax statutes as follows:

Section 1. Repeals section 63-602DD, Idaho Code, relating to a deferral of property taxes from 1997 to 1999 for qualified non-profit hospitals and medical centers. The section is no longer operative.

Section 2 and 3. Provisions relating to exempting manufactured homes used under a dealer's plate, or as a sheep or cow camp, are moved from section 63-303, Idaho Code, ( relating to assessments) to a new section 63-602DD, Idaho Code.

Section 4 amends section 63-602K, Idaho Code, to require the State Tax Commission to promulgate rules specifying procedures by which the Commission establishes and publishes average crop prices, capitalization and discount rates. These amounts are used to determine the exemption of the speculative portion of the value of agricultural land.

MOTION: It was moved by Representative Cuddy to introduce RS13450. Motion passed unanimously.
RS13472C1: The Chairman announced that the next item on the agenda was RS13472C1 and recognized Mr. John. Dan John, Idaho State Tax Commission, explained that this RS makes several needed updates and technical changes to the Idaho Income Tax Act.

Section 1 clarifies the limitation on the exclusion for certain dividends payable to a mutual insurance stock holding company or intermediate holding company. The exclusion is not available if the prior years insurance premium taxes were less than the amount of income tax the subsidiary would have paid. The amendment clarifies that the amount of income tax is determined after allowance for credits.

Section 2 corrects a cross-reference to the Internal Revenue Code.

Section 3 reflects changes to the federal Social Security Act increasing the full retirement age and adds a definition of "disabled."

Section 4 clarifies that the deduction for certain expenses for household and dependent care services must be paid by the individual maintaining the household, thus conforming to the Internal Revenue Code.

Section 5 corrects a cross-reference.

Section 6 requires that the Lottery Commission withhold Idaho income tax on prizes in excess of the maximum current tax rate (currently 7.8%) rather than at 8.2%.

MOTION: It was moved by Representative Moyle to introduce RS13472C1. Motion passed unanimously.
RS13503: Chairman Crow announced the next item on the agenda was RS13503. She asked Mr. John to continue. Dan John explained that this proposed legislation makes needed updated and technical correction to various statutes applicable to taxes administered by the State Tax Commission.

Section 1 permits taxpayers to use private delivery services approved by the Internal Revenue Service to accomplish timely filing of tax returns and other tax related documents with the State Tax Commission.

Section 2 changes from October to September the month of the applicable federal rate used to index the interest rate on taxes and refunds. This change allows the Tax Commission to spread interest rates and print in a timely manner.

Section 3 requires that an action to foreclose a tax lien must be brought in the county in which the property is located rather than where the lien is filed. All liens are now filed with the Secretary of State. It also clarified the limitation of time for bringing such an action.

Sections 4, 5 and 6 delete obsolete references to "constables" and updates references to "deputies" of the State Tax Commission.

MOTION: It was moved by Representative Moyle to introduce RS13503. Motion passed unanimously.
RS13514: The Chairman announced the next item on the agenda was RS13514 and asked Mr. Spangler to present the RS. Mr. Spangler stated that this proposal makes updates and corrections to Idaho's adoption of the Uniform Unclaimed Property Act.

Section 1 resolves a conflict between sections 14-517 (2) and 14-502 (e) which covers reporting of the full name and last known address of an insured, annuitant or the beneficiary entitled to unclaimed funds under any life or endowment insurance policy or annuity contract. The "$50 or more" in 14-517 is conformed to the "more than $50" in section 14-502. Section 2 also clarifies that the filing date for the report of unclaimed property is November 1, not "before November 1."

Section 2 clarifies the ten-year time after which property escheats to the State of Idaho. It conforms the ten-year escheat date of section14-518 - "10 years after published" - to that of 14-523 (4) = "10 years after received."

Section 3 requires the state tax commission to record the name and last known address of the person entitled to the property within sixty days of transferring excess funds from the unclaimed property account.

Section 4 strikes a reference to "tax due" and substitutes a reference to amounts due under the Unclaimed Property Act.

MOTION: Representative Field moved to introduce RS13514. Motion passed unanimously.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:37 a.m.




DATE: January 20, 2004
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: Susan Renfro, Board of Tax Appeals; John Mackey, United Heritage
MINUTES Chairman Crow called the meeting to order at 10:30 a.m. and requested a silent roll call. She asked the members to read the minutes of the meeting held yesterday. Representative Cuddy moved to accept the minutes of the meeting held on January 19, 2004 as written.
RS13451: The Chairman announced the first item on the agenda was RS13451 and recognized Ms. Renfro to explain the proposed legislation. Susan Renfro, State Board of Tax Appeals, said the petition for judicial review references conformity to Idaho rules of civil procedure, including rule 84 (e). The rules of civil procedure were amended in 2001 to include several sections applicable to appeals of decision of the Board of Tax Appeals to the district court. It is more efficient and less confusing to the parties seeking judicial review to follow the rules of the court rather than the Board of Tax Appeals statute in conjunction with the court rules.

There is another change on page 1, line 36 of the RS correcting an error in HB 302 which passed in 2003.

MOTION: Representative McGeachin moved to introduce RS13451. Motion passed on a voice vote.
RS13541: Chairman Crow announced that the first item on the agenda was RS13451 and asked Ms Renfro to explain the RS. Susan Renfro, Board of Tax Appeals, said Section 63-3632, I. C. originally described the time for appeal from the State Tax Commission decision to the Board of Appeals or district court, along with a reference to interest on the deficiency. The section was amended in 1993 rescinding the filing time and addressing only interest on deficiencies. Idaho Code 63-3049 now defines the time frame for appeal from deficiency determinations.

Idaho Code 633-3632 no longer refers to appeal time frames, but only interest on deficiencies and has not since 1993. This section is no longer applicable to appeals to or from the Board of Tax Appeals.

In response to Committee members questions whether this change would be beneficial to appellants, Ms. Renfro related an instance where an appellant was denied a hearing because of the fourteen day allowance and asked for reconsideration which was granted. This change clarifies the procedure step by step.

MOTION: It was moved by Representative Raybould to introduce RS13541. Motion carried on a voice vote.
RS13574: Chairman Crow announced the next item on the agenda was RS13574 and asked Mr. Mackey to address the proposed legislation. John Mackey spoke in behalf of the United Heritage stating that there are two Guaranty Associations in Idaho which were created by legislative action. This bill would allow Property & Casualty and Workers Compensation insurance companies to deduct assessments paid to their Guaranty Association from premium taxes paid to the State. This would be in the same manner and extent as the Life and Health insurance companies are currently permitted to do with respect to assessments paid to their Guaranty Association.

The fiscal impact of this bill will vary depending on future insurance company insolvencies and assessments. Since 1980 there have been fourteen years with no assessments and ten years with assessments. The total net assessment for the twenty-four year period was $14,887,933. This represents an average of $629,339 per year. Loss to the general fund for FY 2005 is not anticipated.

MOTION: Representative Barrett moved to introduce RS13574. Motion carried on a voice vote.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:50 a.m.




DATE: January 21, 2004
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 Kellogg, Barrett, McGeachin, Ringo

Representative Field

GUESTS: Robert Aldridge, Taxation, Probate and Trust Section of the Idaho State Bar
MINUTES: Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to approve the minutes of the meeting held on January 20, 2004 as written. Motion passed on a voice vote.
RS13575: The Chairman announced the first item on the agenda was RS13575 and asked Mr. Aldridge to present the proposal. Robert Aldridge, stated that he was representing the Taxation, Probate and Trust Section of the Idaho State Bar. He asserted that massive revisions in the circuit breaker and "50-50" homeowner tax reduction provisions of the Idaho Code were made in 2001. This bill is furtherance of those prior revisions by making further changes to carry out the best administration and purpose of the prior changes. He said that he had worked with the Tax Commission and the Assessors Association to work out essential internal technical problems. The changes are:

(1) In 63-702, Definitions, parts 4 and 7, and other sections in the bill, reference to grantor trusts is eliminated, since that status is no longer required to receive the benefits of the property tax reductions.

(2) In 63-701, part 4, the definition of income in relation to dual principal residence applications is clarified.

(3) In 63-701, procedure for filing claims, the application procedure is simplified, especially as to the affidavit in support of the application, by limiting the information to only information actually needed. The difference between and affidavit for trust ownership and an affidavit for entity ownership is also clarified. The use of the word "grantor" is changed to "claimant" since, as noted above, grantor status is no longer relevant. Section d is redundant and is eliminated.





(4) In 63-707, procedure after claim approval, part 1(c) is amended to properly state what the assessor shall include on the property tax reduction roll. Part 4 of 63-707 and part 1 of 63-709, reimbursement by State Tax Commission, are contracted and amended to eliminate dual reference to the same determination and to provide a single date, the third Monday in November, for the provision of such data and payment by the State Tax Commission to the county. This makes the layout of the two sections more logical and compact and eliminates the conflict in dates in the two sections.

(5) In 63-602G, property exempt from taxation - residential improvements, lengthy affidavit procedures are eliminated, since the same informational requirements are already set forth in section 63-703 (4) and a cross-reference to that section is substituted. This also eliminates differences and conflicts in the two code sections as to what information and supporting documents were required to be submitted.

Since making the change in the midst of a tax year would be difficult, the bill also declares an effective date of January 1, 2004.

All of the language of the bill has been submitted to the state-wide organization of the Assessors, including to their legislative committee and to the Sate Tax Commission and has been reviewed by them and approved by them.

This bill will have no fiscal impact. The bill will greatly clarify and simplify the administration of the property tax reduction procedures of the State of Idaho which may lead to administrative savings.

In response to a question whether these changes were approved by the Tax Commission, Mr. Aldridge responded saying that the Tax Commission had contacted him for his assistance.

MOTION: It was moved by Representative Roberts to recommend that RS13575 be introduced. Motion carried on a voice vote.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:35 a.m.




DATE: January 21, 2004
TIME: 9 a.m.
PLACE: Room 404
MEMBERS: Chairman Kellogg, Representatives Field, Smith, Wood, Ringo, McGeachin, Henbest
ABSENT/

EXCUSED:

None
GUESTS: Janice Boyd, James Husted, Alan Dornfest, State Tax Commission
Chairman Kellogg called the meeting to order at 9 a.m. and requested the secretary to take a silent roll. The Chairman recognized Janice Boyd, State Tax Commission Specialist to present Idaho Income Tax Administrative rules Docket No. 35-0101-0301 as follows:

Rule No. 45 - Non Resident - Rule 045 is being amended to add information regarding the federal limitation on the states against taxing the compensation earned by water carrier employees that are covered by Title 46, Section 11108, United States Code. Previously, federal law restricted only the withholding on these employees' wages, not the taxation of their income.

MOTION: Representative Field moved to accept the proposed rule amendments to Docket No 35-0101-0301 - Idaho Income Tax Administrative Rule No. 45 and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Rule No. 75 - Tax on Individuals, Estates, and Trusts. The amendment adds tables for the income tax brackets and rates by year including the amounts for taxable year 2003. Information is being added to conform to 2003 legislation that amended Section 63-3024, Idaho Code, in H.B. 79. The legislation provides that the income tax due on income from an electing small business trust's stock in a S corporation will be taxed at the maximum individual rate, rather than at the graduated individual rates.
MOTION: Representative Smith moved to accept the proposed rule amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rule No. 75 and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Rule Nos. 76 and 77 - Tax on Individuals, Estates, and Trusts - Taxable Years Beginning in 1987 Through 1999 and Beginning in 2000. Rules 76 and 77 are being repealed since the information was moved and put in tables in Rule 75.
MOTION: Representative Smith moved to accept the proposed rule amendments to Docket No 35-0101-0301 - Idaho Income Tax Administrative Rule Nos. 76, 77 and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Rule 78 - Tax on Trusts - Electing Small Business Trusts - Rule 78 is being amended to delete the income tax rate and bracket information for taxable years beginning in 2001, which is being moved into Rule 75. Information is being added to conform to 2003 legislation that amended Section 63-3024, Idaho Code, in H.B. 79. Subsection 01 is being amended to provide guidance on how to compute the Idaho income tax for an electing small business trust. Subsection 02 provides information on the tax rate to be applied to the income. The title of the rule is being changed to more accurately reflect the information in the rule. These rule changes are consistent with H.B. 79, which provides that the income tax on income from an electing small business trust's stock in an S corporation will be computed according to the special rules provided in Internal Revenue Code Section 641 at the maximum individual tax rate.
MOTION:

Representative Henbest moved to accept the proposed rule amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rule No. 78 and present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Rule No. 79 - Tax on Individuals, Estates, and Trusts - Taxable Years Beginning in 2002. Rule 79 is being repealed since the information was moved and put in tables in Rule 75.
MOTION: Representative Ringo moved to accept the proposed rule amendments to Docket No 35-0101-301 - Idaho Income Tax Administrative Rule No. 79 and to present the rule change to the full committee for approval. Motion passed on a voice vote.
Rule No. 105 - Adjustments to Taxable Income - Additions Required of All Taxpayers - Rule 105 is being amended to conform to 2003 legislation that added new Section 63­30220, Idaho Code, in H.B. 390. Subsection 06 is being added to required an addition to taxable income if the taxpayer claimed the special first-year depreciation allowance for federal income tax purposes and the Idaho depreciation allowed is less than the amount claimed fdor federal. This rule change is consistent with H.B. 390, which requires Idaho depreciation to be computed without the federal bonus depreciation.
MOTION: Representative McGeachin moved to accept the proposed rule amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rule No. 105 and to present the rule change to the full committee for approval. Motion passed on a voice vote. Representative Henbest asked to be recorded as voting no.
Rule No. 108 - Adjustments to Taxable Income - Additions Required only of Individuals - Rule 108 is being amended to conform to 2003 legislation that modified Section 63­3022(o), Idaho Code, in H.B. 69, and that added new Section 63-30220, Idaho Code, in H.B. 390 Subsection 03 is being amended to reduce the addition to taxable income for non qualified withdrawals from and Idaho college savings program for the amount included in the account owner's gross income. Subsection 04 is being added to require an addition to taxable income of individuals if the taxpayer claimed out-of-pocket classroom expenses as an above-the-line deduction for federal income tax purposes.
MOTION: Representative McGeachin moved to accept the proposed rule amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rule No. 108 and to present the rule change to the full committee for approval. Motion passed on a voice vote. Representatives Henbest and Ringo asked to be recorded as voting no.

Rule No. 120 - Adjustments to Taxable Income - Subtractions Available to All Taxpayers - Rule 120 is being amended to conform to 2003 legislation that added new Section 63-30220, Idaho Code, in H.B. 390. Subsection 06 is being added to require a subtraction to taxable income if the taxpayer claimed the special first-year depreciation allowance for federal income tax purposes and the Idaho depreciation allowed is more than the amount claimed for federal. Subsection 06 also requires a subtraction if property was sold or exchanged and the taxpayer claimed the special first-year depreciation allowance on the property for federal income tax purposes. Examples are being added. These rule changes are consistent with H.B. 390, which requires Idaho depreciation, adjusted basis, and capital gains and losses of depreciable property to be computed without the federal bonus depreciation.

MOTION: Representative Field moved to accept the proposed rule amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rule No. 120 and to present the rule change to the full committee for approval. Motion passed on a voice vote. Representative Henbest asked to be recorded as voting no.
Rule No. 193 Health Insurancae Costs and Long-Term Care Insurance - amends Income Tax Rule 193 so that it also applies to the deduction for long-term care insurance. Modify the examples by putting the information in tables.
MOTION: Representative Wood moved to accept the proposed rule amendments to Docket No. 35-0101-301 - Idaho Income Tax Administrative Rule No. 193 and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Rule No. 253 - Nonresident and Part Year Resident Individuals - Additions Required in Computing Idaho Adjusted Income - Rule 253 is being amended to conform to 2003 legislation that modified Section 63-3022(o), Idaho Code, in H.B. 69, and that added new Section 63-30220, Idaho Code, in H.B. 390
MOTION: Representative Wood moved to accept the proposed amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rule No. 253 and to present the rule to the full committee for approval. Motion passed unanimously on a voice vote.
Rule No. 254 - Nonresident and Part-Year Resident Individuals-Subtractions Allowed in Computing Idaho Adjust Income - Rule 254 is being amended to conform to 2003 legislation that added new Section 63-30220, Idaho Code, in H.B. 390.
MOTION: Representative Smith moved to accept the proposed amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rule No. 254 and to present the rule to the full committee for approval. Motion passed unanimously on a voice vote.
Rule Nos. 740 and 741 - Natural Resource Conservation Credit - In General - Rule is being repealed since the statute authorizing the credit contained a sunset date of January 1, 2003, and there were no carryover provisions. Rule 741 is being repealed since the statute authorizing the credit contained a sunset date of January 1, 2003, and there were no carryover provisions.
MOTION: Representative Field moved to accept the proposed amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rules Nos. 740 and 741 and to present the rules to the full committee for approval. Motion passed unanimously on a voice vote.
Rule No. 746 - Credit for Qualifying new Employees - Calculations Used to Determine the Credit and Credit Carryover. Rule 108 is being amended to conform to 2003 legislation that modified Sections 63-3029E and 63-3029F, Idaho Code, in H.B. 79.
MOTION: Representative Henbest moved to accept the proposed amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rule No. 746 and to present the rule to the full committee for approval. Motion passed unanimously on a voice vote.
Rule No. 790 - Transfer of Credit - Rule 790 is being amended to conform to 2003 legislation that amended Sections 63-3029I and 63-3029J, Idaho Code, in H.B. 225.
MOTION: Representative Ringo moved to accept the proposed amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rule No. 790 and to present the rule to the full committee for approval. Motion passed unanimously on a voice vote.
Rule No. 791 - Transfer of Credit - Notification of Intended Transfer - Rule 791 is being amended to conform to 2003 legislation that amended Sections 63-3029I and 63-3029J, Idaho Code, in H.B. 225.
MOTION:

Representative Ringo moved to accept the proposed amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rule 791 and to present the rule to the full committee for approval. Motion passed unanimously on a voice vote.

Rule No. 793 - Transfer of Credit - Rule 793 is being amended to conform to 2003 legislation that amended Sections 63-3029I and 63-3029J, Idaho Code, in H.B. 225.
MOTION: Representative Ringo moved to accept the proposed amendments to Docket No. 35-0101-0301 - Idaho Income Tax Administrative Rule 793 and to present the rule to the full committee for approval. Motion passed unanimously on a voice vote.
Rule 799 - Priority Order of Credits - Rule 799 is being amended to remove the natural resource conservation credit from the list of non refundable credits since the statute authorizing the credit contained a sunset date of January 1, 2003, and there were no carryover provisions.
MOTION: Representative Henbest moved to accept the proposed amendment to Docket No. 35-0101-0301 - Idaho Income Tax Administrative rule 799 and to present the rule to the full committee for approval. Motion passed unanimously on a voice vote.
Ms. Boyd proceeded with Docket N0. 35­0101-0302- Idaho Income Tax Administrative Rule 719- Idaho Investment Tax Credit - Property Tax Exemption in Lieu of - explaining income tax rule 719: HB 453 passed by the 2003 Legislature, amended Section 63-3029B, Idaho Code, to allow a property tax exemption on personal property in lieu of claiming the investment tax credit on qualified investment. A new Income Tax Rule is being promulgated to address the calculation of negative Idaho taxable income in the second preceding taxable year and the use property limitation.
MOTION: Representative Wood moved to accept the proposed amendment to Docket No. 35-0101-0302 - Idaho Income Tax Administrative Rule 719-HB453. and present the rule to the full committee for approval. Motion passed on a voice vote. Representative Ringo requested to be recorded as voting no.
Docket 35-0101-0303 - Idaho Income Tax Administrative rule

Rule No. 872 - Report and Paying State Income Tax Withholding - Rule 872 is being amended to add a paragraph to address split-monthly filers for income tax withholding. It includes a table to identify the monthly and annual threshold amounts for meeting the requirement to remit income taxes withheld on a split-month basis. .

MOTION: Representative McGeachin moved to accept the proposed amendment for Docket 35-0101-0303, rules 872 and to present the rules to the full committee for approval. Motion passed unanimously on a voice vote.
Docket No. 35-0201-0301 - Idaho Tax Commission Administration and Enforcement Rules Rule No. 310 - Interest Rates - Rule 310 is being amended to add the interest rate for calendar year 2004, which is 6%. The calculation of the rate is set by statute as 2% plus the annual midterm applicable federal rate that applies on October 15 of the immediately preceding calendar year rounded to the nearest whole number. (2% + 3.65% = 5.65% rounded to 6%) The format of Rule 310 is also being changed to put the interest rates and applicable Revenue Rulings where the federal rates can be found in a table.
MOTION: Representative Smith moved to accept the proposed amendment for Docket No. 35-0201-0301 - Rule No. 310 and to present the rules to the full committee for approval. Motion passed unanimously on a voice vote.
Docket No 35-0201-0301 - Rule No. 400 - Penalties - General Rules - Rule 400 is being amended to add two new subsections (02 and 03) to clarify the calculation of "tax due" when computing the extension of time criteria and when computing the penalties for failure to file, failure to pay, delinquent filing, and extension of time. The title area is also being amended to add Section 63-3033, Idaho Code, as a code reference.
MOTION: Representative McGeachin moved to accept the proposed amendment for Docket No. 35-0201-0301 - Rule No. 400 and to present the rules to the full committee for approval. Motion passed unanimously on a voice vote.
Docket No. 35-0201-0301 - Rule No. 704 - Disclosure of Information - Government. - Rule 704 is being amended to conform to 2003 legislation that modified Section 63-3029B, Idaho Code, in H.B. 453.
MOTION: Representative Wood moved to accept the proposed amendment for Docket No. 35-0201-0301 - Rule No. 704 and to present the rules to the full committee for approval. Motion passed unanimously on a voice vote.
Docket No. 35-0201-0302 - Rule 450 - Property Tax Exemption Penalty - Rule 450 is being promulgated to conform to 2003 legislation that modified Section 63-3029B, Idaho Code, in H.B. 453.
MOTION: Representative Smith moved to accept the proposed amendment for Docket No. 35-0201-0302 Rule 450 and to present the rules to the full committee for approval. Motion passed unanimously on a voice vote.
ADJOURN: Chairman Kellogg announced continuation of the Agenda will be held at 9.a.m., room 404, Thursday, January 22, 2004. Meeting was adjourned at 9:45 a.m.





DATE: January 22, 2004
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 Schaefer and Cuddy
GUESTS: Brian Whitlock, Office of the Governor, Dan John, State Tax Commission
MINUTES: Chairman Crow called the meeting to order at 10:30 a.m. and requested a silent roll call. She announced the first item on the agenda was RS13583 and asked Mr. Whitlock to present the RS.
RS13583: Brian Whitlock, Office of the Governor, said that this proposed legislation deals with two income tax credits. These are the income tax credit for qualified research and development expense and the credit for qualified broadband equipment. Both credits are currently scheduled to sunset on December 31, 2005.

Mr. Whitlock reviewed the history relating to these tax credits stating that when they were granted the Governor recommended a three year trial basis. The legislature extended the time to five years. There have been real benefits to the State as a result of these credits. With enactment of this bill both tax credit provisions will become permanent.

There will be no fiscal impact to the General Fund in Fiscal Year 2005. The combined fiscal impact for taxable years beginning on and after January 1, 2006 could be $2.25 million if utilized.

MOTION: Representative Kellogg moved to recommend that RS13583 be introduced. Motion carried on a voice vote.
RS13596: Chairman Crow announced the next item on the agenda was RS13596 and recognized Mr. John. Dan John, State Tax Commission, stated that this bill changes the time when Idaho employers must file income tax withholding returns from quarterly to annually. The requirement to remit to the State Tax Commission the amount of Idaho income tax withheld from employees' earnings each month, or each quarter in the case of smaller businesses, will remain unchanged.





There will be a cost savings to taxpayers by reduced reporting requirements and to the State Tax Commission in processing requirements.

MOTION: It was moved by Representative Moyle to recommend that RS13596 be introduced. Motion carried on a voice vote.
RS13576: Chairman Crow announced the next item on the agenda was RS13576 and recognized Mr. John. Dan John, State Tax Commission, said this RS simply makes clear where the money comes from to reimburse local governments for the agricultural equipment exemption.

Each fiscal year the state distributes to counties, cities, school districts and other local taxing districts an amount of state funds intended to replace revenues lost when agricultural equipment was exempted from property tax in 2001. Under current law these funds are paid from the state refund account which is used to pay income tax refunds. This overstates refunds paid each year and depletes the refund account. This bill will change the distribution to provide that it be paid from revenue received from the Sales Tax Act.

Local governments will receive the same amount of state General Fund revenue.

There was a question relating to the value of agricultural equipment going up or down, Mr. John responded saying reimbursement cost for the agricultural exemption is a fixed amount of $13.4 million per year.

MOTION: Representative Roberts moved to recommend that RS13576 be introduced with a corrected Statement of Purpose to include the fixed amount of $13.4 million per year for the exemption. Motion carried on a voice vote
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:50 a.m.




DATE: January 22, 2004
TIME: 9 a.m.
PLACE: Room 404
MEMBERS: Chairman Kellogg, Representatives, Field(18), Smith(24), Wood, McGeachin, Henbest, Ringo
ABSENT/

EXCUSED:

None
GUESTS: James Husted
Chairman Kellogg called the meeting to order at 9 a.m. and requested the secretary to take a silent roll.

The Chairman recognized James Husted, State Tax Commissions Specialist to present the rule changes. Mr Husted explained the proposed amendments as follows: (See attached - complete document of Idaho Income Tax Administrative Rules).

Idaho Tax Commission Administrative and Enforcement Rules Docket 35-0102-0303 Fee Rule No. 109 - Amusement Devices. .

Section 63-3623B(c), Idaho Code states: Upon payment of the permit fees, the state tax commission shall issue the permit(s) to the owner or lessee or person having the right to impose a charge for use of the amusement device. Such permit fee may be increased in a proportionate amount by the commission if the state sales tax rate increases.

With the enactment of H.B. 400 in 2003, the legislature increased the sales tax rate from 5% to 6%. The Tax Commission is therefore proposing to increase the amusement device permit fee by a proportionate amount, as permitted by statute. The rule promulgated by the Commission accomplishes this by adding a formula to calculate the permit fee. The formula multiplies the current tax rate by $700. Thus, at the current rate the permit fee would be 6% of $700 or $42.

When the sales tax rate returns to 5% the permit fee will therefore automatically return to $35 by applying this formula.

MOTION: Representative McGeachin moved to accept the proposed rule amendments to Docket 35-0102-0303 Fee Rule 109 - Idaho Tax Administrative Enforcement Rules - Amusement Devices and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket No. 35-0102-0301- Idaho Sales and Use Tax Administrative Rule 68 - Collection of Tax. The amended rule adds a new bracket schedule for collecting tax on fractions of a dollar for the 6% sales tax rate. Section 63-3619, Idaho Code, requires the Tax Commission to provide this schedule. All the amendments to this rule were made because of the sales tax rate increase that became effective with the enactment of H.B. 400 in 2003.
MOTION: Representative Wood moved to accept the proposed rule amendments to Docket 35-0102-0301 - Idaho Sales and Use Tax Administrative Rule 68 - Collection of Tax and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket 35-0102-0302 - Idaho Sales and Use Tax Administrative Rule No. 41 - Food, Meals and Drinks. All the amendments of rules included on this docket were prompted by the sales tax rate increase that became effective with the enactment of H.B. 400 in 2003. Other non substantive changes were made for grammatical or stylistic purposes or to delete obsolete language.
MOTION: Representative Field moved to accept the proposed rule amendments to Docket 35-0102-0302 - Idaho Sales and Use Tax Administrative Rule No. 41 - Food, Meals and Drinks, and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket 35-0102-0304 - Idaho Sales and Use Tax Administrative Rules No. 39 - Sale and Purchase of Bullion, Coins, or Other Currency - With the enactment of H.B. 415 in 2003, the legislature created an exemption for sales of silver medallions by the Office of the Idaho State Treasurer and its appointees. Rule 039 had to be amended to make it comport with the statute.
MOTION: Representative Wood moved to accept the proposed rule amendments to Docket 35-0102-0304 - Idaho Sales and Use Tax Administrative Rule No. 39 and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket 35-0102-0304 - Idaho Sales and Use Tax Administrative Rule No. 31 - Radio and Telecommunications equipment and Land Mobile Radio Service of Systems. In 1996 the legislature enacted an amendment for wireless telecommunications equipment given away as an inducement to commence or continue a contract for telecommunications services. As a result no tax is ever imposed on cellular telephones that are given away as an inducement to purchase cellular telephone service. The statute does not define "telecommunications services." The Tax Commission is proposing a definition similar to the statutory definition adopted by the Public Utilities Act in Section 61-121(2), Idaho Code.
MOTION: Representative Henbest moved to accept the proposed rule amendments to Docket 35-0102-0304 - Idaho Sales and Use Tax Administrative Rule No. 31. and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
MOTION: Docket 35­0102-0304 - Rule No. 37 - Aircraft and Flying Services - Section 63-3522GG, Idaho Code, Provides an exemption for sales of aircraft sold to nonresidents for use outside of Idaho. The Tax Commission is proposing to change the definition of a "nonresident business" to clarify that a business that is formed under the laws of Idaho or that has significant contacts or operations in Idaho is not a nonresident.

Representative McGeachin moved to accept the proposed rule amendments to Docket 35-0102-0304 - Idaho Sales and Use Tax Administrative Rule No. 37 - and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.

Docket 35-0102-0304 - Idaho Sales and Use Tax Administrative Rule No. 39b - Sale and Purchase of Bullion, Coins, or Other Currency - With the enactment of H.B. 415 in 2003 the legislature created an exemption fo sales of silver medallions by the Office of the Idaho State Treasurer and its appointees. Rule 39 had to be amended to make it comport with the statute.
MOTION: Representative Wood moved to accept the proposed rule amendments to Docket 35-0102-0304 - Rule No. 39b - Idaho Sales and Use Tax Administrative Rule No. 039b and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket 35-0102-0304 - Idaho Sales and Use Tax Administrative Rule No. 43 - Sales price or Purchase Price Defined. Section 63-3613, Idaho Code defines the sales price subject to sales tax as the total amount paid for tangible personal property "including services agreed to be rendered as part of the sale." The proposed amendment to Rule 43 is intended to clarify which charges are included in the sales price subject to tax when separately stated. Such services include: amounts charged to bring an article into its finished condition, charges for customizing or modifying goods, charges based on the amount or frequency of a purchase, commissions, and mandatory charges.
MOTION: Representative Field moved to accept the proposed rule amendment to Docket 35-0102-0304 - Idaho Sales and Use Tax Administrative Rule No. 43 and to present the rule change to the full committee fdor approval. Motion passed unanimously on a voice vote.
Docket No. 35-0102-0304 - Idaho Sales and Use Tax Administrative Rule No. 58 - Sales Through Vending Machines - The formula for calculating taxable sales through vending machines in Rule 68 is being amended to conform to industry practice. Also, the rule is being amended to clarify that the sales tax is included in the sales price on vending machine sales of goods for more than one dollar.
MOTION: Representative Ringo moved to accept the proposed rule amendments to Docket No. 35-0102-0304 - Idaho Sales and Use Tax Administrative Rule No. 58- Sales Through Vending Machines and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket No. 35-0102-0304 - Idaho Sales and Use Tax Administrative Rule No. 105 - Time and Imposition of Tax, Returns, Payments and Partial Payments. Subsection 105.08 is being deleted because the order of payment conflicts with the Tax Commission's Administration and Enforcement Rule 140. Because the sales tax rules incorporate the Administration and Enforcement rules by reference this subsection is unnecessary.
MOTION: Representative Field moved to accept the proposed Idaho Sales and Use Tax Administrative Docket No. 35-0102-0304 - Rule No. 105 - Time and Imposition of Tax, Returns, Payments and Partial Payments and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket No. 35-0102-0304 Idaho Sales and Use Tax Administrative Rule No. 107 - Vehicles and Vessels - The definition of "ATV" in Section 63-3622JR, Idaho Code, was changed with the enactment of H.B. 204 in 2003. Rule 107 is being amended to make the rule comport with the statute. Also, one example was changed to reflect the rate change.
MOTION: Representative Ringo moved to accept the proposed amendment to Docket No. 35-0102-0304 Idaho Sales and Use Tax Administrative Rule No. 107 - Vehicles and Vessels - and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket No. 35-0102-0304 Idaho Sales and Use Tax Administrative Rule No. 112 - Direct Pay Authority - The expiration period for direct pay authorizations is being changed from two years to five years. Authorization holders were required to notify vendors that the authorization had been renewed. Requiring such notification every two years was burdensome both for the taxpayers and the Tax Commission.
MOTION: Representative McGeachin moved to accept the proposed amendments Docket No. 35-0102-0304 - Idaho Sales and Use Tax Administrative Rule No. 112 - Direct Pay Authority - and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
MOTION: Docket No. 35-0110-0301- Idaho Cigarette and Tobacco Products Tax Administrative Rule No. 017 - Security for Tax Required. Section 63-2510A, Idaho Code, provides a minimum bonding requirement for cigarette distributors but no maximum. Cigarette Tax Rule 017 (IDAPA) 35.O1.10.017 provides for a $200,000 maximum bond. With the enactment of H.B. 264 the cigarette tax rate was increased from $.29 per pack to $.57 per pack. In light of this increase, the Tax Commission is proposing that the maximum bond amount be deleted from the rule.

Representative Field moved to accept the proposed rule amendments to Docket No. 35-0110-0301 - Idaho Cigarette and Tobacco Products Tax Administrative Rule 017 - Security for Tax Required and to present the changed rule to the full committee for approval. Motion passed unanimously with a voice vote

Docket No. 35-0111-0301 - Idaho Unclaimed Property Tax Administrative Rule No. 15 - Report of Abandoned Property - The proposed amendments to Rule 015 are not substantive. Subsection 015.02 would be amended to read "fifty dollars ($50) or less" from "less than fifty dollars ($50)." Subsection 015.03 would be amended to read "more than fifty dollars ($50)" rather than "fifty dollars ($50) or more." This brings the rule into conformity with Sections 14-501 and 14-520, Idaho Code.
MOTION: Representative Smith moved to accept the proposed rule amendments to Docket No. 35-0111-0301 - Unclaimed Property Tax Administrative Rule No. 15 - Report of Abandoned Property and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Chairman Kellogg announced continuation of the Subcommittee Agenda at 9.a.m. Room 404 on Monday, January 26, 2004. Meeting was adjourned at 9:45 a.m.





DATE: January 26, 2004
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 Ridinger
GUESTS: Senator Burtenshaw; Representative Stevenson
Chairman Crow convened the meeting at 10:30 a.m. and requested a silent roll call. Representative Wood moved to accept the minutes of the meeting held on January 22, 2004 as written. Motion carried on a voice vote. Representative Raybould moved to accept the minutes of the meeting held on January 21, 2004 as written. Motion carried on a voice vote.
RS13629C1: Chairman Crow announced the first item on the agenda was RS13629Cl and asked Senator Burtenshaw to present the proposed legislation. Senator Burtenshaw reviewed a problem regarding farmers leasing land to outfitters and guides causing them to lose their agricultural exemption. He explained that this legislation clarifies the taxation of agricultural property when that land is leased for grazing of livestock. The new language defines a bona fide lessee as a for-profit business that grazes livestock that will be sold or used in their business. Changes include a written lease agreement to be provided to the county assessor.

Additional language puts into statute that any sale or lease of hunting or fishing rights on the property does not change the tax status of the land if it meets the definitions of 63-604, "land actively devoted to agriculture."

MOTION: It was moved by Representative Moyle to recommend that RS13629C1 be introduced. Motion carried on a voice vote.
RS13772: The Chairman announced the next item on the agenda was RS13772 and recognized Representative Stevenson. Representative Stevenson explained that this proposed legislation is the result of discussions in meetings with utilities companies and the Association of Idaho Cities. The Association of Idaho Cities and the Idaho Association of Counties support this legislation. The interim committee on energy had reviewed this legislation and also support this proposal.





The purpose of this legislation is to provide an incentive to locate thermal power plants owned by electric utilities close to electric load. It also gives an incentive to cities to permit a power plant to locate within or near a city by providing that the property taxes from such a plant are "apportioned based on the physical location of the plant."

Currently utility owned generating assets are centrally assessed and the property values are then apportioned throughout the utility service area based on the situs of the utility's transmission wire miles.

The proposed legislation will change the apportionment or allocation of property taxes from an electric generating plant as among a multitude of taxing districts. This would result in a generalized net effect of taxing districts with nexus to the plant receiving more property tax revenues. Taxing districts without plant nexus but with utility transmission nexus would receive less.

MOTION: Representative Cuddy moved to recommend that RS13772 be introduced. Motion carried on a voice vote.
RS13523: Chairman Crow announced the next item on the agenda was RS13523 and asked Representative Henbest to present the RS for Representative Langhorst, the sponsor of the proposed legislation. Representative Henbest stated that this bill is the consequence of HB 400 and the trailer HB 452 allowing a waiver of the one cent sales tax increase on contracts made prior to the date of the sales tax increase. The Tax Commission has interpreted that the waiver applies only to real estate transactions. She said it was her understanding that the legislation applied to all contracts prior to the sales tax increase. The actual amount allowed in 2003 was $200,000 and the estimated fiscal impact for HB 452 was $6 million.

This proposed legislation clarifies the definition of those transactions which qualify for an exemption from last year's one cent sales tax increase.

Representative Cuddy said this affects public works and highway contracts right in the middle of a project.

MOTION: It was moved by Representative Moyle to recommend that RS13523 be introduced. Motion carried on a voice vote.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:48 a.m.




DATE: January 26, 2004
TIME: 9 a.m.
PLACE: Room 404
MEMBERS: Chairman Kellogg, Representatives, Field(18), Smith(24), Wood, McGeachin, Henbest, Ringo
ABSENT/

EXCUSED:

Representative Wood
GUESTS: Alan Dornfest, State Tax Commission, Ada County Assessor Robert McQuade and Canyon County Assessor, Gene Kuehn.
Chairman Kellogg called the subcommittee to order at 9 a.m. and requested the secretary to take a silent roll. The Chairman recognized Alan Dornfest, State Tax Commission Specialist to present Idaho Property Tax Administrative Rules.
Mr. Dornfest introduced Ada County Assessor Robert McQuade and Canyon County Assessor Gene Kuehn.

Docket No. 35-0103-0301 - Rule No. 313 - Assessment of Transient Personal Property - Rule 313 is being amended to clarify the statutory references for different types of transient personal property (by definition, construction, logging, and mining equipment that is moved between counties during the year). When such property is "in transit" it is not subject to property tax, based on the provisions of Section 63-313(4), Idaho Code. Transient personal property that has been sold is not subject to additional property tax, provided the full year's tax was paid, based on Section 63-313(4), Idaho Code. An existing cross-reference to Section 63-602U, Idaho Code, is being deleted as confusing.

MOTION: Representative Ringo moved to accept the proposed rule amendment to Rule No. 313 - Assessment of Transient Personal Property and present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket 35-0103-0301 - Rule No. 316 - Compliance of continuing valuation program - The rule is being amended to comport with the changes provided in H.B. 142. This new law changes the annual appraisal cycle, permitting a smaller proportional share of all parcels to be appraised during the first year of each five-year appraisal cycle, and establishing the minimum cumulative percentage of parcels that must be appraised each year of the cycle.
MOTION: Representative Smith moved to accept the proposed rule amendment

to Rule 316 - Compliance of Continuing Valuation Program and to present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.

Docket 35-0103-0301 - Rule No. 509 - Identification of Urban Renewal Increment and Partial Exemption Values on County and School District Abstracts of Value. This rule is being amended to provide for inclusion of the value of the new exemption pursuant to H.B. 453 on each county and school district abstract. Beginning in 2004, the abstracts prepared and submitted by each county to the State Tax Commission must show the value of property granted the exemption, as established in Section 63-3029B, Idaho Code, in lieu of the investment tax credit.
MOTION: Representative Field moved to accept the proposed rule amendments to Rule No. 509 and present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket 35-0103-0301 - Rule 609 - Property Exempt From Taxation - Residential Improvements - The rule is being amended to eliminate language that now is redundant of statute and to correct an inconsistency with statutory amendments relating to beneficiaries of trusts. The changes resulted from H.B. 150 in 2001. The statute now includes the allowance for an eligible owner to be a grantor who "...created a revocable or irrevocable trust and was named as a beneficiary of that trust..." This language is being deleted from the rule. In addition, a cross-referenced statute (*63-701(7)) specifies that, in cases where ownership is vested in the trust, beneficiaries with rights of occupancy are still eligible. This conflicted with other language in the rule that is being deleted.
MOTION: Representative McGeachin moved to accept the proposed rule amendment to Rule 609 - Property Exempt From Taxation - Residential Improvements and present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket 35-0103-0301 - Rule 802 - Budget Certification Relating to New Construction and Annexation - This rule is being amended to provide for distribution of annexation and new construction roll values to taxing districts and to eliminate an unnecessary requirement for counties to internally certify corrected new construction roll values and to report such corrected values to the tax commission. Previously, there was no requirement for these values to be sent to the taxing districts that rely on them. Also, the certification and reporting requirements are not consistent with those found in other, similar statutes and rules. With the passage of H.B. 75 in 2003, there is no longer a requirement for preliminary new construction roll values to be submitted to the state tax commission in June. The elimination of this requirement and the statutory provision for these values to be submitted to the state tax commission by the fourth Monday in July reduces the likelihood of corrections. When corrections are needed, they can be addressed according to general procedures in use throughout the property tax budget review process.
MOTION: Representative Henbest moved to accept the proposed rule amendment to Rule No. 802 - and present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket 35-0103-0302 - Rule 803 - Budget Certification - Dollar Certification Form (L-2 Form). This rule is being amended to clarify terms related to the budget and levy certification and approval process. "Property tax funded budget" is defined to mean the approved portion of any taxing district's budget subject to the limitations of Section 63-802, Idaho Code. Information to be attached to the L-2 budget certification form is specified. This includes a copy of the L-2 worksheet, the petition of formation for a newly formed recreation or auditorium district showing levy restrictions, notice of election results for newly elected budget or levy related issues, the voter approved fund tracker form, utility company agreements with fire districts, and, in cases of city/library district consolidation, city certifications of property tax funds dedicated by the city to library services. Pursuant to H.B. 140, clarification is also provided for computing the 3% cap as provided pursuant to Section 63-802, Idaho Code, for cities and library districts subject to consolidation. Adjustments (up and down) are to be made to the library district and city property tax budgets for only the year immediately preceding the year of the first levy for the consolidated district.
MOTION: Representative Smith moved to accept Rule 803 - Budget Certification - Dollar Certification Form (L-2 Form) and present the rule change to the full committee for approval. Motion passed unanimously on a voice vote.
Docket 35-0103-0303 - Rule 988 - Election of Qualified Property for Exemption - This rule establishes administrative procedures to assist taxpayers and assessors in the implementation of the two-year property tax exemption in lieu of the investment tax credit for qualified investments for taxpayers with losses for Idaho income tax purposes. The rule provides requirements for taxpayers claiming the exemption to file a special election form along with personal property declarations or, in the case of operating property, operator's statements. The rule provides special procedures for county assessors to report exempt value and property that may be subject to recapture penalties. The amendments add a provision for the taxpayer claiming the property tax exemption to designate certain related information as confidential and exempt from public disclosure.

In response to questions relating to confidentiality Robert McQuade, Ada County Assessor, stated the legal staff had checked out violations that had occurred, therefore this rule was developed:

Paragraph 15 - Public Records and Exemption Of Certain QIE Information From Disclosure. Public records are presumed to be open to the public. Records containing certain information pertaining to private businesses (such as trade secrets and other proprietary information) may be exempt from public disclosure (See Section 9-340D, Idaho Code) and may be protected from disclosure by the Idaho Trade Secrets Act, Chapter 8 Title 48, Idaho Code, and other laws. A taxpayer who submits information to the State Tax Commission or to a county assessor or board of equalization in accordance with this rule may designate all or part of the information as confidential. The designation must be made in writing and clearly identify the particular information deemed confidential. In addition, the front page of the submission must prominently state that the document contains information as designated as confidential. The State Tax Commission, the county assessor and board of equalization shall treat the designated information as confidential, exempt from disclosure under Section 9-34D, Idaho Code and as subject to the Idaho Trade Secrets Act (See Chapter 8 Title 48, IdahoCode). Nothing in this paragraph limits exchanges of information between or among the State Tax Commission and county officials otherwise authorized by law.

MOTION: Representative Smith moved to accept Rule 988 - Election of Qualified Property for Exemption - excluding paragraph 15 - Public Records and Exemption of Certain QIE Information From Disclosure and present the rule change to the full committee for approval.
SUBSTITUTE MOTION: A substitute motion was made by Representative Field to accept the Rule 988 - Election of Qualified Property for Exemption and present the rule change to the full committee for approval. Roll call was requested.
ROLL CALL: Voting Aye. Representatives Kellogg and Field.

Voting Nay. Representatives Smith, McGeachin, Henbest and Ringo.

Substitute Motion failed - 2-4-1

MOTION: Original motion to exclude paragraph 15 from Rule 988. Roll Call was requested.
ROLL CALL: Voting Nay Representatives Kellogg and Field.

Voting Aye Representatives Smith, McGeachin, Henbest and Ringo Original Motion passed. 4-2-1

ADJOURN: There being no further business to come before the Committee, Chairman Kellogg adjourned the meeting.




DATE: January 27, 2004
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 Raybould and Schaefer
GUEST: David Lehman, Office of the Governor
MINUTES: Chairman Crow called the meeting to order at 10:30 a.m. and requested a silent roll call. Representative Henbest moved to accept the minutes of the meeting held on January 26, 2004 as written.
RS13733: The Chairman announced the only item on the agenda was RS13733 and asked Mr. Lehman to present the proposal. David Lehman, the Governor's Labor, Health and Human Resources Service Advisor, spoke on behalf of exempting long term care insurance premiums to one-hundred percent.

Mr. Lehman stated that in 2001 the legislature allowed fifty percent of long term care insurance premiums to be exempted as a tax incentive. This legislation further enhances the incentive by increasing the deduction for the full amount of the premiums.

The reason for this incentive is to encourage people to purchase long term care insurance and not rely on medicaid. Private long term care insurance is accepted by all care centers to provide the right care and the right setting. This incentive will be a long term benefit for individuals and the state.

MOTION: Representative Roberts moved to recommend that RS13733 be introduced. Motion carried on a voice vote.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:34 a.m.




DATE: January 28, 2004
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 Field and Schaefer
GUESTS: None
MINUTES: 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 January 27,2004 as written. Motion carried on a voice vote.
RS13754: Chairman Crow announced the only item on the agenda was RS13754 and advised the members that a Constitutional amendment will require a two-thirds vote when the bill is returned to the Committee for a hearing. The RS requires only a simple majority. She recognized Representative Roberts to present the RS. Representative Roberts stated that this resolution proposes to amend the Idaho Constitution to provide that on and after January 1, 2005 any action taken by the legislature that would increase the rate of the state sales and use tax, the state individual income tax or the state corporate or franchise tax shall be approved by two-thirds of the entire membership of the House of Representatives, two-thirds of the of the entire membership of the Senate and signed by the governor.

If this legislation receives the needed two-thirds approval in both the House of Representatives and the Senate it will then be placed on the November 2004 ballot to be ratified by the voters of the State of Idaho.

The fiscal impact from this legislation will be realized by the taxpayers of the State of Idaho. This proposal is designed to control the growth of government.

Representative Roberts informed the members that there are thirteen states that have constitutional amendments in place requiring more than a simple majority.

MOTION: After a brief discussion Representative Moyle moved to recommend that RS13754 be introduced. Roll call was requested.
ROLL CALL VOTE: Voting Aye - Representatives Raybould, Barrett, Moyle, Smith, Collins, Roberts, Wood, Denney, McKague, McGeachin, Cuddy, Crow.

Voting Nay - Representatives Kellogg, Ridinger, Ringo, Martinez, Henbest. Motion passed. 12-5-2

ADJOURN: There Being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:40 a.m.




DATE: January 29, 2004
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 Ridinger, Schaefer
GUESTS: Jason Kreizenbeck and Tom Laws, Micron Technology, Inc.; Steve Ahrens, Idaho Association of Commerce and Industry
MINUTES: Chairman Crow called the meeting to order at 10:00 a.m. and requested a silent roll call. Representative Ringo moved to accept the minutes of the meeting held on January 28, 2004 as written. Motion passed on a voice vote. The Chairman said when she announced yesterday that it would take a two-thirds vote of the committee to introduce a constitutional amendment. This was the instruction from the Chief Clerk and House parliamentarian. There is research being done on this subject and when the decision is made we will abide. She then asked Representative Kellogg to present the report of the subcommittee recommendations of the State Tax Commission Rules.
SUBCOMMITTEE REPORT: Representative Kellogg, Chairman of the Kellogg Subcommittee, said the subcommittee had reviewed the entire set of 2004 prepared by the Idaho State Tax Commission and recommends the approval of all the administrative rules and the fee rule with one exception. Docket No. 35-0103-0303, Rule 988-paragraph 15. Election of Qualified Property for Exemption, Idaho Code - 63-302, 63-313, 63-404 and 63-32098B.
Chairman Crow stated that the Committee would vote on each Docket Number. She announced the first rules were Income Tax Administrative Rules in Docket No. 35-0101-0301.
MOTION: It was moved by Representative Kellogg to adopt all the pending rules in Docket No. 35-0101-0301. Motion passed on a voice vote.
Chairman Crow announced the next rules were in Docket No. 35­0101-0302.
MOTION: Representative Kellogg moved to adopt all the pending rules in Docket 35-0101-0302. Motion carried on a voice vote.

The Chairman announced the next rules were in Docket No. 35-0101-0303, Income Tax Administrative Rules.
MOTION: Representative Kellogg moved to adopt all the pending rules in Docket No. 35-0101-0303. Motion passed on a voice vote
Chairman Crow announced the next rules were in Docket No. 35-0102-0301, Idaho Sales and Use Tax Administrative Rules.
MOTION: It was moved by Representative Kellogg to adopt all the pending rules in Docket No. 35-0102-0301. Motion passed on a voice vote.
The Chairman announced the next rules were in Docket No. 35-0102-0302, Idaho Sales and Us Tax Administrative Rules.
MOTION: Representative Kellogg moved to adopt all in pending rules in Docket No. 35-0102-0302. Motion passed on a voice vote.
Chairman Crow announced the next rules were in Docket No. 35-0102-0304, Idaho Sales and Use Tax Administrative Rules.
MOTION: It was moved by Representative Kellogg to adopt the pending rules in Docket No. 35-0102-0304. Motion passed on a voice vote.
The Chairman announced the next rules were in Docket No. 35-0103-0301, Property Tax Administrative Rules.
MOTION: Representative Kellogg moved to adopt the pending rules in Docket No. 35-0103-0301. Motion carried on a voice vote.
Chairman Crow announced the next rules were in Docket No. No. 35-0103-0302, Property Tax Administrative Rules
MOTION: Representative Kellogg moved to adopt the pending rules in Docket No. 35-0103-0302. Motion passed on a voice vote.
Chairman Crow announced the next rules were in Docket No. 35-0103-0303 which was recommended by the Kellogg Subcommittee to be approved with the exception of Rule 988.15, Election of Qualified Property For Exemption.
MOTION: Representative Raybould moved to adopt all of the pending rules in Docket 35-0103-0303.
SUBSTITUTE MOTION: Representative Smith moved to adopt all the pending rules in Docket No. 35-0103-0303 with the exception of Rule 988, Election of Qualified Property For Exemption.

Subsection 15, "Public Records and Exemption of Certain QIE Information From Disclosure, Public records are presumed to be open to the public, Records containing certain information pertaining to private businesses (such as trade secrets and other proprietary information) may be exempt from public disclosure (See Section 9-340D, Idaho Code) and may be protected from disclosure by the Idaho Trade Secrets Act, Chapter & Title 48, Idaho Code, and other laws. A taxpayer who submits information to the State Tax Commission or to a county assessor or board of equalization in accordance with this rule may designate all or part of the information as confidential. The designation must be made in writing and clearly identify the particular information deemed confidential. In addition, the front page of the submission must prominently state that the document contains information designated as confidential. The State Tax Commission, the county assessor and board of equalization shall treat the designated information as confidential, exempt from disclosure under Section 9-340D, Idaho Code and as subject to the Idaho Trade Secrets Act (see Chapter 8 Title 48, Idaho Code). Nothing in this paragraph limits exchanges of information between or among the State Tax Commission and county officials otherwise authorized by law.

Representative Smith explained his substitute motion saying this rule sets forth standards for information exempt from exposure. The majority of the subcommittee viewed this as setting tax policy. This rule goes beyond the rule making process, beyond public policy and goes beyond the statute.

Rule 15 confidentiality is deemed to be a "Trade Secret" by the taxpayer and the assessor. There is no information for people to protest. This rule goes beyond the statute and if there is a need for confidentiality there needs to be as statute to take advantage of the tax credit.

PRO: Chairman Crow recognized Mr. Kreizenbeck. Jason Kreizenbeck stated he was appearing before the Committee on behalf of Micron Technology, Inc. in support of Rule 988.15. He said it is important to be consistent with the State protecting confidentiality of taxpayers.
PRO: The Chairman recognized Mr. Ahrens. Steve Ahrens, Idaho Association of Commerce and Industry, spoke in support of Rule 988.15 saying that it is generally not unusual to use the Idaho Trade Secrets Act. The Idaho Trade Secrets Act is used in the bid process, Health & Welfare, Environmental Quality, etc. Information being presented to the Tax Commission is protected by Rule 988.15 from competitors to have access to confidential information.
In response to a question, Tom Laws, Micron Technology, Inc., representing Tax Division of Micron, stated that if this rule was not in place they would have to evaluate their information on confidential equipment . The possibility of losing confidentiality would overshadow any tax credit that might be available.
After several members expressed their opinions on the issue of confidentiality in Rule 988.15, roll call was requested.
SUBSTITUTE MOTION: Voting Aye: Representatives Smith, Ringo, Martinez, Henbest

Voting Nay: Representatives Kellogg, Raybould, Barrett, Moyle, Field, Collins, Roberts, Wood, Denney, McKague, McGeachin, Crow.

Motion failed, 4-12-3

Original motion to adopt all of the pending rules in Docket 35-0103-0303 passed on a voice vote.
Chairman Crow announced the next rules were in Docket No. 35-0110-0301, Idaho Cigarette and Tobacco Products Tax Administrative Rules.
MOTION: Representative Kellogg moved to adopt the pending rules in Docket No. 35-0110-0301. Motion passed on a voice vote.
The Chairman announced the next rules were in Docket No. 35-0111-0301, Idaho Unclaimed Property Tax Administrative Rules.
MOTION: Representative Kellogg moved to adopt the pending rules in Docket 35-0111-0301. Motion passed on a voice vote.
Chairman Crow announced the next rules were in Docket No. 35-0201-0301, Tax Commission Administration and Enforcement Rules.
MOTION: It was moved by Representative Kellogg to adopt the pending rules in Docket No. 35-0201-0301. Motion passed on a voice vote.
The Chairman announced the next rules were in Docket No. 35-0201-0302, Tax Commission Administration and Enforcement Rules.
MOTION: Representative Kellogg moved to adopt the pending rules in Docket No. 35-0201-0302. Passed on a voice vote.
Chairman Crow announced the last rule on the agenda was a pending fee rule in Docket No. 35-0102-0303, Idaho Sales and Use Tax Administrative Rule
MOTION: It was moved by Representative Kellogg to adopt the pending fee rule in Docket No. 35-0102-0303. Motion passed on a voice vote.
ADJOURN: Having completed the adoption of the Idaho State Tax Commission Rules, Chairman Crow adjourned the meeting at 10:40 a.m.




DATE: February 2, 2004
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: Ken Kraft, Blind Services Foundation, Inc., Representative Eberle
Chairman Crow called the meeting to order at 10:30 a.m. and requested a silent roll call.
RS13786: She announced the first item on the agenda was RS13786 and asked Mr. Kraft to explain the proposed legislation. Ken Kraft, Blind Services Foundation, Inc. stated that the foundation is a valid Idaho non-profit corporation. The purpose of this bill is to allow tax exempt purchases of low vision equipment to be given to residents of the blind and visually impaired community. The goal of the Foundation is to provide services for blind persons in obtaining equipment that they are unable to fund any other way. This legislation would give the Blind Services Foundation the same exemption that is extended to a number of other groups covered in the Idaho Code.
MOTION: Representative Wood moved to recommend that RS13786 be introduced. Motion passed on a voice vote.
RS13653: The Chairman announced the next item on the agenda was RS13653 and recognized Representative Eberle to submit the proposed legislation. Representative Eberle stated that the purpose of this legislation is to repeal Chapter 13, title 7, Idaho Code. This bill removes the authority of a single judge to impose a tax levy.

In response relating to repealing Chapter 13, title 7, Idaho Code, Representative Eberle said it does repeal judicial confirmations. It also repeals the power of the judicial to impose a tax. That power should be by the vote of the people if they want to be taxed.

MOTION: It was moved by Representative Wood to recommend that RS13653 be introduced.
SUBSTITUTE MOTION: A substitute motion was made by Representative Ridinger to return RS13653 to sponsor. Roll call vote was requested.
ROLL CALL VOTE: Voting Aye on the substitute motion: Representatives Kellogg, Raybould, Ridinger, Moyle, Field, Smith, Roberts, Denney, McGeachin, Martinez, Henbest, Crow.

Voting Nay: Representatives Barrett, Collins, McKague, Ringo, Cuddy. Substitute motion to return to sponsor passed, 12-6-1.

RS13652: Chairman Crow announced the next item on the agenda was RS13652 and asked Representative Eberle to explain the RS. Representative Eberle stated the purpose of this legislation is to amend Section 63-1015 which requires that proceeds from a tax foreclosure sale in excess of the actual tax and costs of collection be returned to the property owner.
MOTION: Representative Kellogg moved to return RS13652 to sponsor.
SUBSTITUTE MOTION: After a short discussion relating to other costs incurred other than tax liens, Representative Barrett made a substitute motion to recommend that RS13652 be introduced. Motion carried on a voice vote.
RS13606C1: Chairman Crow announced the next item on the agenda was RS13606C1 and asked Representative Roberts to explain the proposed legislation. Representative Roberts stated last year this committee and the House passed HB236 and the Senate Local Government and Taxation Committee made some amendments. The bill died on the Senate floor near the end of the session. This RS incorporates the Senate amendments which brings the definition in line with the original sponsor intention.

The purpose of this bill is to partially exempt parcels of land in a rural homesite development plat. This bill 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 requirement for total land area defined in Section 63-0604 (a) and the amendment to 63-604 providing exceptions for implementation of this act. It also defines terms used in the act.

MOTION: Representative McGeachin moved to recommend that RS13606C1 be introduced. Motion passed on a voice vote.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:59 a.m.




DATE: February 3, 2004
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 Debbie Field
GUESTS: Ted Spangler and Dan John, Idaho State Tax Commission

Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to accept the minutes of the meetings held on January 29, 2004 and February 2, 2004 as written.

HB 477: Chairman Crow announced the first item on the agenda was HB477 and recognized Mr. Spangler to present the bill. Ted Spangler, State Tax Commission, stated that this bill makes fairly minor technical amendments and updates to the property tax statutes. In Section 1, starting on line 16, repeals section 63-602D, Idaho Code, relating to a deferral of property taxes from 1997 to 1999 for qualified non-profit hospital and medical centers. The section is no longer operative.

In section 2 and 3 language is moved from section 63-303, Idaho Code, relating to assessments, to a new section 63-602DD, Idaho Code, relating to exemptions. The provisions relate to exempting manufactured homes used as dealers plate or as a sheep and cow camp.

Section 4 amends section 63-602K, Idaho Code, to require the State Tax Commission to promulgate rules specifying procedures by which the Commission establishes and publishes average crop prices, capitalization and discount rates. These amounts are used to determine the exemption of the speculative portion of the value of agricultural land.

MOTION: Representative Wood moved to send HB 477 to the floor with a do pass recommendation. Motion passed unanimously on a voice vote. Representative Wood was assigned as the floor sponsor.
HB 478: Chairman Crow announced the next item on the agenda was HB 478 and recognized Mr. John to present the legislation. Dan John, State Tax Commission, stated that this bill is a clean-up bill in various income tax statutes.
Changes in section 1 permits taxpayers to use private delivery services approved by the Internal Revenue Service to accomplish timely filing of tax returns and other tax related documents with the State Tax Commission.

Section 2 changes from October to September the month of the applicable federal rate used to index the interest rate on taxes and refunds.

Section 3 requires that an action to foreclose a tax lien must be brought in the county which the property is located rather than where the lien is filed and clarifies the limitation of time for bringing such an action.

Section 4, 5 and 6 deletes reference to 'constables" which is antiquated language. There is only one "constable" in the State who is in Bellevue which is a charter city. It also updates references to "deputies" of the State Tax Commission to 'agent of the state tax commission."

MOTION: It was moved by Representative Ridinger to send HB 478 to the floor with a do pass recommendation. Motion passed unanimously by a voice vote. Representative Smith was assigned to sponsor the bill on the floor.
HB 479: Chairman Crow announced the next item on the agenda was HB 479 and asked Mr. Spangler to present the bill. Ted Spangler outlined updates and corrections to Idahos adoption of the Uniform Unclaimed Property Act.

Section 1 resolves a conflict between sections 14-717 (2) and 14-502 (e) about reporting of the full name and last known address of an insured, annuitant or the beneficiary entitled to unclaimed funds under any life or endowment insurance policy or annuity contract. The "$50 or more" in 14-517 is conformed to the "more then $50" in section 14-502. Section 1 also clarifies that the filing date for the report of unclaimed property is November I, not "before November I."

Section 3 requires the State Tax Commission to record the name and last known address of the person entitled to the property within sixty days of transferring excess funds from the unclaimed property account.

Section 4 strikes a reference to "tax due" and substitutes a reference to amounts due under the Unclaimed Property Act.

MOTION: Representative Ringo moved to send HB 479 to the floor with a do pass recommendation. Motion passed unanimously on a voice vote. Representative Collins was assigned as floor sponsor.
HB 481: Chairman Crow announced the next item on the agenda was HB 481 and recognized Mr. John to address the bill. Dan John, State Tax Commission, said this bill makes minor updates and technical changes to the Idaho Income Tax Act.
Section 1 clarifies the limitation on the exclusion for certain dividends payable to a mutual insurance stock holding company or intermediate holding company. This amendment clarifies that the amount of income tax is determined after allowance for credits.

Section 2 corrects a cross-reference of college tuition to the Internal Revenue Code.

Section 3 , page 7, line 3 reflects changes "man" to "person" making it gender neutral. Starting on line 3 adds "full retirement" from "age sixty-five years" to reflect changes to the federal Social Security Act increasing the full retirement age. Line 45 adds a definition of "disabled."

Section 4 clarifies that the deduction for certain expenses for household and dependent care services must be paid by the individual maintaining the household thus conforming to the Internal Revenue Code.

Section 5 corrects a cross reference from "J" to "j".

Section 6 requires that the Lottery Commission withhold Idaho income tax on prizes in excess of the maximum current income tax rate of 7.8% rather than at 8.2%.

MOTION: Representative Cuddy moved to send HB 481 to the floor with a do pass recommendation. Motion unanimously passed on a voice vote.

Representative Barrett was assigned to sponsor the bill on the floor.

ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:55 a.m.




DATE: February 4, 2004
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 Wood
GUESTS: Senator Goedde; Representative Eskridge; Paul Anderson; Avista Utilities; Ken Harward, Association of Idaho Cities; Ron Williams, Idaho Consumer Avista Utilities; Dan John, Idaho State

Tax Commission; Neil Colwell, Avista; Leon Duce, Association of Idaho Cities

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 February 5, 2004 as written. Motion passed on a voice vote.
RS13570: Chairman Crow announced the first item on the agenda was RS13570 and asked Senator Goedde to explain the proposed legislation. Senator Goedde said a couple of years ago the legislature put in rehab facilities to be exempted from income tax. The purpose of this legislation is to add Children's Village to this list. The Children's Village serves children through eighteen years of age and offers a number of services in addition to providing temporary housing.
MOTION: Representative Kellogg moved to recommend that RS13570 be introduced. Motion passed unanimously on a voice vote.
HB 542: Chairman Crow announced the next item on the agenda was HB 542 and recognized Representative Eskridge to present the bill. Representative Eskridge stated that this legislation is not a property tax bill. This bill is the product of the energy interim committee.

"The purpose of this legislation is to provide an incentive to locate thermal power plants owned by electric utilities close to electric load." Representative Eskridge said that in today's atmosphere there is a need for thermal power as we have reached capacity of water use for power. Citizens of communities accept the burden of waste water and other nuisances created by the operation of the plant. In current law the cities bear the brunt of the impact and very little revenue from property taxes.



This bill changes the apportionment of property taxes on thermal power plant facilities located within five miles outside city borders to be apportioned to that taxing district.

Representative Eskridge stated that this is not a property tax bill, it is a power plant siting bill. This bill enhances the benefit of location of a power plant to cities by allowing the property taxes to remain at the local level.

Paul Anderson, Avista Utilities, spoke in behalf of HB 542. He briefed the committee members on experience the owners of a utility plant had with the city of Rathdrum. He testified that with central assessment the City of Rathdrum would receive little tax distribution from the plant located within the city. He said the company wanted to locate the plant close to a load center and needed city services. The company entered into an agreement with the city for twenty years. If the plant is centrally assessed the plant owners would be paying taxes distributed to other locations. He reiterated Representative Eskridge's comments that residents of a city where a power plant is located endures noise, use of lots of water and other disturbances and the city should receive the property tax revenues.
Ken Harward, Association of Idaho Cities, testified in support of HB 542 saying this bill is a change in energy policy by addressing power plant sites. This bill does not change the Tax Commission's assessment of central property on hydro power or the distribution of property taxes.
Ron Williams representing the Idaho Consumer-Owned Utilities Association, testified in support of HB542. There was a discussion relating to whether this bill would cause a tax shift.
Neil Colwell, Avista Corporation, testified in favor of HB 542 stating that AVISTA supports the legislation. He pointed out that independent power producers of electricity are treated differently than utilities for tax purposes. This legislation would cause all producers to be treated equally. The distribution of tax revenues would go to taxing jurisdiction in which a new power plant would be located.
In response to queries posed to prior testifier, Dan John, State Tax Commission, said power plant construction value went back to the City of Rathdrum and local jurisdictions. Personal property is not in the statutes.
Leon Duce, Association of Idaho Cities, responded to an inquiry relating to the five mile limitation, stating every impact area may be different, there is no general standard of impact.
Chairman Crow recognized Representative Eskridge to make his closing remarks. He stated we do have to equate the impact with benefits on local siting. This bill only makes it possible for the city to receive the benefit of revenue because of the impact.
MOTION: Representative Cuddy moved to send HB 542 to the floor with a do pass recommendation. Motion carried on a voice vote. Representative Eskridge will sponsor the bill on the floor.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 11:02 a.m.
DATE: February 5, 2004
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 Denny and Henbest
GUESTS: Susan Renfro, State Tax Appeals Board; John Mackay, United Heritage Financial Group; Woody Richards, Idaho Guaranty Association
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 RS13913 and said the sponsor requested that it be held until Monday.
HB 505: Chairman Crow announced the next item on the agenda was HB 505 and recognized Ms. Renfro to present the bill. Susan Renfro, State Board of Tax Appeals, testified that Section 63-3632 originally described the time for appeal from a State Tax Commission decision to the Board of Tax Appeals or district court along with a reference to interest on the deficiency. The section was amended in 1993 rescinding the filing time and addressing only interest on deficiencies.

Section 63-3632 no longer refers to appeal time frames, only interest on deficiencies and has not since 1993. This section is no longer applicable to appeals to or from the Board of Tax Appeals.

MOTION: Representative Wood moved to send HB 505 to the floor with a do pass recommendation. Motion unanimously passed on a voice vote. Representative McKague was assigned as floor sponsor.
HB 506: Chairman Crow announced the next item on the agenda was HB 506 and recognized Ms. Renfro. Susan Renfro, State Board of Appeals, testified that this bill deals with two amendments . The petition for judicial review references conformity to Idaho rules of civil procedure including rule 84 (e). The rules of civil procedure were amended in 2001 to include several sections applicable to appeals of decision of the Board of Tax Appeals to the district court. It is more efficient and less confusing to parties seeking judicial review to follow the rules of the court rather than the Board of Tax Appeals statute in conjunction with the court rules.

The second change is to correct an error in HB 302 passed in 2003. On line 36 of the bill it deletes the word "party" and inserts the word "burden."

MOTION: Representative Raybould moved to send HB 506 to the floor with a do pass recommendation. Motion pass unanimously on a voice vote. Representative Schaefer was assigned to be the floor sponsor.
HB 512: Chairman Crow announced the next item on the agenda was HB 512 and recognized Mr. Mackay to present the bill. John Mackay, United Heritage Financial Group, testified that this bill when enacted would allow property casualty and workers compensation insurance companies to deduct assessment paid to their Guaranty Association in the same manner and the same extent as the life and health insurance companies are permitted.

By way of review Mr. Mackay reminded the committee that there are two Guaranty Associations in the state. One covers the life and health insurance companies while the other covers property casualty and workers compensation insurance companies. Both were created by legislative action in the early 70's and have identical purposes. The legislation provided the mechanism for the prompt payment of covered claims of an insolvent insurance company doing business in the State of Idaho. This avoids financial loss to those Idaho citizens who relied on the protection provided by the insurance. The claims are paid with funds the Guaranty Association receives by assessing the other member insurance companies doing business in Idaho.

Idaho Code section 41-3616 allows life and health companies to recover assessments paid to the guaranty association by offsetting the assessment against premium tax to the extent of twenty percent of the amount assessed for each of the five years following the year in which the assessment was paid.

Idaho Code section 41-3616 provides property casualty and workers compensation companies the opportunity to increase rates and premium charged to its policyholders as the only way to recover assessments paid to its guaranty association

It was their position that 41-3616 in its present form could impose an unfair penalty on Idaho policyholders as well as jeopardize any competitive portion that an Idaho company might enjoy. Furthermore the United Heritage Financial Group felt that 41-4313 gives the life and health insurers a business advantage because 41-3616 does not provide for property casualty and workers compensation companies.

HB 512 would amend 41-3616 by removing the language relating to increased rates and premiums and in its place insert the language from 41-4313 which allows tax offsets for assessments paid to the guaranty association.

To the best of his knowledge there is no opposition to this bill and the Department of Insurance is aware of the bill.

The Fiscal Impact to FY05 will vary depending on insurance company insolvencies and assessments occurring between now and the end of the year. Insurance companies are required to file their 2004 premium tax returns with the state before March 1, 2005. If an assessment should occur between now and the end of the year, twenty percent would be reflected on that return. To the best of his knowledge at this moment in time there are no property casualty or workers compensation companies doing business in Idaho that would trigger an assessment this year.

In response to Representative Cuddy's request he had attempted to identify the insolvencies and assessments over the past five years. He provided the members with a report reflecting the assessment/refund history all assessments and refunds since 1971. He said that last year's assessment of $9,200,000 is by far the largest amount ever assessed and the only year in which an assessment was made since 1994. Hopefully 2003 was an anomaly and will not be repeated anytime soon. However if HB 512 had been in effect last year the fiscal impact each of the following five years would have been $1,800,00 less any amounts refunded upon liquidation.

Since the introduction of HB 512 there had been requests to amend the bill. Amendment 1 is to clarify premium tax paid to the Department of Insurance. Amendment 2 allows the Idaho Association of Loggers the offset of premiums paid to the Industrial Commission.

Woody Richards, Idaho Insurance Guaranty Association, testified that preliminarily the Guaranty Association takes no position regarding the legislation because it will not be affected by H 512. It will continue to do its job regardless of any action taken on the bill. The sponsor of the legislation indicated that there may be some questions, however, regarding the Guaranty Association and he wanted to make himself available to answer those questions.

Mr. Richards said that he had received a communication from the Industrial Commission which led to the first requested amendment and he had a subsequent discussion with the Industrial Commission which led to the second amendment .

As some of you may know, there are two premium taxes paid by insurance companies in Idaho. One is paid to the Idaho Department of Insurance and goes to the General Fund. The second us paid to the Industrial Commission administration fund. As he understood from the sponsor, the intent of HB 512 is to allow an offset to the premium taxes paid to the Department of Insurance. In order to make sure that there is no confusion the Industrial Commission had asked that the first amendment be added. The second amendment arises because there is one insurance company, Associated Loggers Exchange, that pays its 2.5% premium tax only to the Industrial Commission. Associated Loggers is a member of the Guaranty Association and pays assessment to the Guaranty Association. In order to keep the Associated Loggers on a level playing field in terms of being able to take an offset. The second amendment was authorized by the Industrial Commission to allow Associated Loggers to take its offset against the Industrial Commission premium tax.

Mr. Richards suggested that the Statement of Purpose/Fiscal Impact be amended to reflect that no loss to the Industrial Commission administration fund is anticipated at this time in FY 2005.

MOTION: Representative Ridinger moved to report HB 512 back to the floor with amendments attached to be placed on General Orders for consideration. He also moved to reprint the Statement of Purpose/Fiscal Impact to reflect that there would be no anticipated fiscal impact on the Department of Insurance or the Industrial Commission funds . Motion passed on a voice vote. Representative Collins was assigned as floor sponsor
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:20.




DATE: February 9, 2004
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 McGeachin
GUESTS: Robert Aldridge, Taxation, Probate, and Trust Section of the Idaho State Bar; Dan John State Tax Commission; David Lehman, Office of the Governor
Chairman Crow called the meeting to order and requested a silent roll call. Representative Martinez moved to approve the minutes of the meetings held on February 4, 2004 and February 5, 2004 as written. Motion passed on a voice vote.
RS13978: Chairman Crow announced the first item on the agenda was RS13978. She said the RS replaces HJR 5 and asked unanimous consent to HOLD HJR 5 in Committee. Consent was granted. Chairman Crow asked Representative Roberts to present the new RS. Representative Roberts reiterated that this RS replaces previous legislation dealing with a constitutional amendment requiring a two-thirds vote to raise taxes.

The Statement of Purpose is as follows: This resolution proposes to amend the Constitution to provide that on and after January 1, 2005 any changes in state taxes that create or increase a tax rate or remove or reduce a state tax exclusion, exemption, credit or deduction, shall require the approval of two-thirds of the entire membership of the house of representatives, approval of two-thirds of the entire membership of the Senate and the signature of the Governor.

If this legislation receives the needed 2/3 approval in both the House of Representatives and the Senate it will then be placed on the November 2004 ballot to be ratified by the voters of the State of Idaho.

There was an active debate as to the extent of restricting taxes or fees.

MOTION: Representative Wood moved to recommend RS13978 be introduced.
SUBSTITUTE MOTION: A substitute motion was made by Representative Ringo to return RS13978 to sponsor. Roll call was requested.
ROLL CALL VOTE: Voting Aye - Representatives Kellogg, Field, Smith, Ringo, Martinez, Henbest, Cuddy.

Voting Nay - Representatives Raybould, Barrett, Moyle, Schaefer, Collins, Roberts, Wood, Denney, McKague, Crow. Motion failed, 7-10-2

Original motion to recommend RS13978 be introduced passed on a voice vote. Representative Kellogg requested to be recorded as voting no.

HB 516: Chairman Crow announced the next item on the agenda was HB 516 and asked Mr. Aldridge to present the bill. Robert Aldridge, Taxation, Probate and Trust Section of the Idaho State Bar, testified that major revisions to the "circuit breaker" and '50-50" homeowners tax reduction provisions of the Idaho Code were made in 2001. This bill is furtherance of those prior revisions by making changes to carry out the best administration and purpose of the prior changes.

In 63-701, Definitions, parts 4 and 7 and other sections in the bill, reference to grantor trusts is eliminated. That status is no longer required to receive the benefits of the property tax reductions.

In 63-701, part 4, the definition of income in relation to dual principal residence applications is clarified.

In 63-703, procedure for filing claims, the application procedure is simplified, especially as to the affidavit in support of the application limiting the information to only information actually needed. The difference between an affidavit for trust ownership and an affidavit for entity ownership is also clarified. The use of the word "grantor" is changed to "claimant" since, as he previously stated, grantor status is no longer relevant. Section d is redundant and is eliminated.

In 63-707, procedure after claim approval, part l (c) is amended to properly state what the assessor shall include on the property tax reduction roll. Part 4 of 63-707 and part l of 63-709 reimbursement by State Tax Commission are contracted and amended to eliminate dual reference to the same determination and to provide a single date, the third Monday in November, for the provision of such data and payment by the State Tax Commission to the county. This makes the layout of the two sections more logical and compact and eliminates the conflict in dates in the two sections.

In 63-602G, property exempt from taxation - residential improvements, lengthy affidavit procedures are eliminated. The same informational requirements are already set forth in section 63-703(4) and a simple cross-reference to that section is substituted. This also eliminates differences and conflicts in the two code sections as to what information and supporting documents were required to be submitted.

Since making the change in the midst of a tax year would be difficult the bill also declares an effective date of January 1, 2004.





In response to a question whether these changes had gone through the resolution process and approved by the Bar Association, Mr. Aldridge said that they had not but the changes had been furnished to the Bar. . He said the resolution process is prior to December 1 st and would not be reviewed until next year. The changes had been reviewed by his Committee and the Tax Commission.

MOTION: After a short question and answer period Representative Smith moved to HOLD HB 516 time certain, February 23, 2004 in order for the Bar Association to review and have input. Motion passed on a voice vote.
Mr. Aldridge stated that his Committee had already reviewed the legislation and the Bar Association would not meet until next year.
HB 537: Chairman Crow announced the next item on the agenda was HB 537 and recognized Mr. John to present the bill. Dan John, State Tax Commission, testified that this bill changes the time when Idaho employers must file income tax withholding returns from quarterly to annually. The payment does not change, only the reconciliation of withholding report to be filed quarterly. This saves the Tax Commission and the employer needless contact. He stated that the Idaho Certified Accountants support this bill.
MOTION: Representative Raybould moved to send HB 537 to the floor with a do pass recommendation. Motion passed unanimously on a voice vote. Representative Raybould was assigned to be floor sponsor.
HB 538: Chairman Crow announced the next item on the agenda was HB 538 and recognized Mr. John. Dan John, State Tax Commission, testified that each fiscal year the state distributes to counties, cities, school districts and other local taxing districts an amount of state funds intended to replace revenues lost when agricultural equipment was exempted from property tax in 2001.

This bill changes where the money comes from to replace these funds. Under current law these funds are paid from the state refund account. When the refund account is depleted the State Tax Commission has to go to the Board of Examiners to increase the fund, this is an unnecessary step as the money comes from the same source. This bill will change the distribution to come from revenue received from the Sales Tax Act.

MOTION: Representative Roberts moved to send HB 538 to the floor with a do pass recommendation. Motion passed unanimously on a voice vote. Representative Moyle will sponsor the bill on the floor.
HB 567: Chairman Crow announced the next item on the agenda was HB 567 and recognized Mr. Lehman to address the legislation. David Lehman, Office of the Governor, testified that this bill removes the limitation on premiums paid for long term care insurance and allows the deduction for one hundred percent of the premium.

The Governor is the Chairman of the National Governors Association and his initiative is long term care solutions to reduce costs to medicare and medicaid by private long term care.

Mr. Lehman addressed the costs of long-term care and the availability of information provided for taxpayers to obtain long-term insurance.

MOTION: It was moved by Representative Wood to send HB 567 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Field was assigned to sponsor the bill on the floor.
ADJOURN: There being no further business to come before the meeting, Chairman Crow adjourned the meeting at 10:45 a.m.




DATE: February 10, 2004
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 Wood

Representatives Moyle and Denney

GUESTS: Dan Chadwick, Idaho Association of Counties; Brian Whitlock, Office of the Governor
RS 13759: Chairman Crow called the meeting to order at 10:00 a.m. and requested a silent roll call. She announced the first item on the agenda was RS13759 and asked Representative Cuddy to explain the proposed legislation. Representative Cuddy said the purpose of this legislation is to clarify the methods used when assessing new manufactured homes. This bill makes it clear that manufactured homes are assessed the same as stick built homes. The bill also defines occupancy.
MOTION: Representative Kellogg moved to recommend that RS 13759 be introduced. Motion passed on a voice vote.
RS 13781: Chairman Crow announced the next item on the agenda was RS 13781 and asked Mr. Chadwick explain the proposed legislation. Dan Chadwick, Executive Director of the Idaho Association of Counties, said this bill makes mandatory the disclosure of sales price for all real estate transactions. It is a fair and equitable way to collect types of information for property assessments purposes. Assessors rely on all kinds of information but unfortunately sales price is on a volunteer basis.

Some values on the high end eschew the system and are not carrying their share of the property tax burden.

The statement of purpose of this bill is to require mandatory disclosure of sales price for all real estate transactions. Transfer of ownership and the amount of consideration paid for such transfer would be certified and submitted to the county assessor by the purchaser within 30 days of the transfer. Disclosure of sales price information would be limited to licensed appraisers, real estate brokers, the Idaho State Tax Commission and persons with 5% ownership interest in the property. Idaho public records law is amended to exempt further disclosure and penalties for unauthorized disclosures are provided.

The bill provides county assessors, who are required by state law to value property at market-value with an additional tool to perform accurate and equitable appraisals.

There was a short discussion relating to confidentiality.

MOTION: Representative Barrett moved to return RS 13781 to the sponsor.
SUBSTITUTE MOTION: A substitute motion was made by Representative Ridinger to recommend that RS 13781 be introduced. Roll call was requested.
ROLL CALL VOTE: Voting Aye: Representatives Kellogg, Raybould, Ridinger, Field, Schaefer, Smith, Collins, Roberts, Ringo, Martinez, Henbest, Cuddy, Crow

Voting Nay: Representatives Barrett, McKague, McGeachin

Substitute motion to introduce RS 13781 passed, 13-3-3

RS 13811: Chairman Crow announced the next item on the agenda was RS 13811 and recognized Mr. Whitlock to explain the proposed legislation. Brian Whitlock, Office of the Governor, stated that this bill amends the Idaho income tax credit for new employees. An expanded credit of $1,000 will be available for any business that adds new employees whose annual earnings average $15.50 per hour or more and who are eligible to receive employer provided coverage under an accident or health plan.
MOTION: Representative Cuddy moved to recommend that RS 13811 be introduced. Motion passed on a voice vote.
HB 536: Chairman Crow announced the next item on the agenda was HB 536 and recognized Mr. Whitlock to present the legislation. Brian Whitlock, Office of the Governor, testified that this bill removes the sunset provision for two key elements of the Idaho Tax Code and makes permanent the tax credits for Research and Development and investment in Broadband.

These two measures were part of the 2001 historic tax relief package that passed this Legislature and was approved by the Governor. As you may recall when the Governor proposed these two elements of the package he suggested that we test them out for three years. The Legislature wisely expanded that to a 5-year trial period- January 1, 2001 to December 31, 2005 ­and we have seen tremendous benefit as a result of that decision .

With regard to the broadband tax credit, he shared with the Committee a packet of letters from various companies that have invested millions of dollars throughout the state, especially in the rural parts of Idaho, in part because of that incentive.

It is important to note that this is one investment that opens the door for technology and new business opportunities to exist where they have never been possible before.

Charlie Creason with Project Mutual Telephone in Rupert says, "Since passage of the broadband tax credit by the Idaho legislature, Project Mutual Telephone has invested over $10 million modernizing our local telecommunication network, bringing the availability of broadband to over 95% of our subscribers." He goes on to say, "To make the true potential of these networks a reality will require continued and additional investment."

Teton Telecom's vice president, Ron McCue wrote, "The development and deployment of broadband technology for rural Idaho is essential to retaining to our citizens as bringing roads and interstate highway systems to our state was in the last century. Our residents and the companies they work for truly face global competition. The use of broadband technology places us on an even footing to compete for jobs and for increased business to help us grow."

ATC Communications in Albion said this. "ATC has over 5,000 customers in four counties spanning more than 4,000 square miles. We are very rural in nature and this tax incentive has not only helped stimulate rural economic growth in our areas, it has also helped our company to make the necessary investments to bring Broadband to our rural customers."

Farmers Mutual Telephone Company in Fruitland invested $121,000 last year so that they could bring DSL to their customers. They"ve budgeted $215,000 for upgrades in 2004. "Without the Broadband Investment Tax Credit we would have to decrease our 2004 investment as well as that invested in future years."

The last letter is from Syringa Networks. " As a result of the Broadband Investment Tax Credit, DSL Service is available in Clyde, Idaho. Most folks in Idaho probably don't even know that Clyde is a small community northwest of Howe, Idaho." Mr. Whitlock said he saw a great headline after Clyde was connected. It read: "Clyde is on the right side of the digital divide."

These companies and others like them have made significant investments since the passage of the Broadband Tax Credit and there will be more. Our tax policy needs to encourage that kind of investment.

With regard to the Research and Development Tax Credit, at last count Idaho was one of 34 states that has an R&D income tax credit. In the State of the State address the Governor mentioned the imaging technology owned by Micron and how they have developed the camera and a chip that can fit into a pill. What a great medical breakthrough that is less invasive and less costly than other procedures.

Companies will only continue to thrive if they can continue research and development of new technologies and new products. As part of our Idaho tax policy we should seek to encourage that kind of research and development.

If there is one constant among Tax Practitioners, the CPA community and corporate tax managers in Idaho it is that lead-time is important for good tax planning. This bill does just that.

While current tax credits are not set to expire until December 31, 2005, eliminating that sunset will send a strong positive message to companies making investment in Research and Development and in Broadband deployment.

The fiscal impact of this bill does not take effect until FY2007. At that point they anticipate that the continuation of the Broadband credit will be $1.0 million if used. The continuation of the R&D credit is estimated to be $1.25 million if they are used.

The Governor believes those costs are a good investment. Especially when you consider the incentives that are provided by other states. When the R&D and Broadband incentives were put in place, Idaho was able to compete with any other state in the Northwest. We don"t want to lose these tools and our competitive advantage.

MOTION: After a short discussion, Representative Field moved to send HB 536 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Barrett requested to be recorded as voting no. Representative Crow will sponsor the bill on the floor.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 11:03 a.m.




DATE: February 11, 2004
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: Representative Shepard; John Watts Idaho Library Association; Ken Kraft; Blind Services Foundation, Inc.; Senator Goedde
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 of the meeting held on February 9, 2004 as written. Motion carried on a voice vote.
RS13819: Chairman Crow announced the first item on the agenda was RS 13819 and asked Representative Cuddy to explain the RS. Representative Cuddy said this legislation deals with method of taxing timberland on a bare land and yield basis. Owners of five acres of timberland can opt to delay payment of tax for ten years if the land is not harvested. If during this period the property title is transferred the existing code does not address how taxes are collected and disbursed between regular taxing and disbursement of these collections are to be handled.

On occasions timberland is sold and the taxes were paid or delayed, the county treasurer has no way to distribute the funds. This legislation is drafted to fix that problem.

MOTION: Representative Kellogg moved to recommend that RS 13819 be introduced. Motion passed on a voice vote.
RS 13834: Chairman Crow announced the next item on the agenda was RS 13834 and called on Representative Shepherd to submit the RS. Representative Shepherd testified that this proposed legislation adds a section to 39-1325A for the dissolution of a nonfunctioning district. Late last session she submitted a bill to address a problem dealing with a possible dissolution of the bankrupt hospital in East Shoshone. There were problems with that legislation and it was withdrawn.

This RS provides a technical correction and amends section 39-1325a to provide for an order of dissolution of a hospital district. When the completion of winding up and liquidating the district's business and affairs, the commissioners shall notify the social security administrator at the Idaho State Controller's office of the dissolution of a hospital district assets within ninety days.

MOTION: Representative Kellogg moved to recommend that RS 13834 be introduced. Motion carried on a voice vote.
RS 13914: Chairman Crow announced the next item on the agenda was RS 13914 and recognized Mr. Watts to explain the proposed legislation. John Watts, Idaho Library Association, stated that this proposal allows cities not connected to a library district to consolidate with established library districts that do not share a common boundary.

The purpose for any consolidation is to foster economies of scale, maximize resources, ensure up to date materials and information. Non-contiguous consolidation would require submission of a citizen's petition requesting the question be placed on the ballot, a public election ordered by city council and agreed to by the district board of trustees, an election held on one of the consolidated election dates and approval by a majority of voters.

MOTION: Representative Kellogg moved to recommend that RS13914 be introduced with a corrected Statement of Purpose.
SUBSTITUTE MOTION: A substitute motion was made by Representative Moyle to return RS13914 to sponsor. He explained his motion saying he had a problem with non-contiguous districts and this legislation requires a vote of only the residents of a city and not the district. Roll call was requested.
ROLL CALL VOTE: Voting Aye: Representatives Raybould, Barrett, Moyle, Roberts, Wood, Denney, McKague, Crow

Voting Nay: Representatives Kellogg, Ridinger, Field, Schaefer, Smith, Collins, McGeachin, Ringo, Martinez, Henbest, Cuddy. Motion failed, 8-11-0

Original motion to introduce passed on a voice vote. Representatives Moyle and McKague requested to be recorded as voting no.

RS 13917: Chairman Crow announced the next item on the agenda was RS 13917 and recognized Mr. Watts. He stated that county library districts were created first and city libraries were started at a higher levy rate.

This proposal would amend Section 33-2724 Idaho Code, allowing library districts to align their levy rates with Idaho's city library levy rate authority. City libraries now are allowed to levy up to .10 percent or one dollar per on thousand dollars of appraised value. Library districts are allowed to levy no more than six one hundredths percent or sixty cents per one thousand dollars. This increase in levy authorization will facilitate library districts in meeting the same maintenance and operating expenses, demands and costs comparable to city libraries.

This amendment would allow library districts to take the allowable annual increase in budget as needed up to the new maximum but still within the 3% growth cap limit. A permanent over-ride would still require a 2/3rd vote as required in Section 63-802 Idaho Code.

MOTION: Representative Raybould moved to recommend that RS 13917 be introduced with the understanding that when the bill is returned for a hearing the sponsor will show evidence that this bill requires a 2/3rds vote.
SUBSTITUTE MOTION: A substitute motion was made by Representative Barrett to return RS 13917 to sponsor. Roll call was requested.
ROLL CALL VOTE: Voting Aye: Representative Barrett, Moyle, Field, Schaefer, Roberts, Wood, Denney, McKague, Crow

Voting Nay: Representatives Kellogg, Raybould, Ridinger, Smith, Collins, McGeachin, Ringo, Martinez, Henbest, Cuddy. Motion failed, 9-10-0

Original motion to introduce passed. Representatives Moyle and McKague requested to be recorded as voting no.

HB 601: The Chairman announced the next item on the agenda was HB 601 and called upon Mr. Kraft to present the bill. Ken Kraft, Blind Services Foundation, Inc., testified that this bill permits the Blind Services Foundation, Inc. to make tax exempt purchases of low vision equipment to be utilized by the blind and visually impaired citizens in Idaho.
MOTION: Representative Wood moved to send HB 601 to the floor with a do pass recommendation. Motion carried on a voice vote. Representative Denney was assigned as the floor sponsor.
HB 610: Chairman Crow announced that the next item on the agenda was HB 610 and recognized Senator Goedde to present the bill. Senator Goedde testified that this bill provides an income tax credit for contributions to the Children's Village. He provided a hand-out depicting a short history of the Children's Village and the programs offered.
MOTION: Representative Kellogg moved to send HB 610 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Kellogg will sponsor the bill on the floor.
Chairman Crow said a letter and a report from the Shoshone-Bannock Indian Tribes has been distributed to the Committee. The report answers concerns expressed during last year's hearing on cigarette tax on reservations. (Attachment #1 letter and report available in the Legislative Library.)
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10;30 a.m.




DATE: February 12, 2004
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 Smith
Chairman Crow called the meeting to order at 10:00 a.m. and requested a silent roll call. Representative Cuddy moved to accept the minutes of the meeting held on February 10, 2004 as written. She stated that yesterday the Committee introduced RS 13819 and there were two substantial spelling errors on the Statement of Purpose. She asked for unanimous consent to reprint the Statement of Purpose, consent was granted.
Chairman Crow announced that this meeting was informational only. She introduced Mr. Roy Eiguren to make the presentation of public transportation local option.
Mr. Eiguren introduced speakers from different regions in Idaho supporting public transportation. He provided the members with a copy of a report on the "IDAHO TASK FORCE ON PUBLIC TRANSPORTATION."

Copy of the report is filed in the Legislative Library.

ADJOURN: Chairman Crow adjourned the meeting at 10:45 a.m.




DATE: February 17, 2004
TIME: 10:00 a.m.
PLACE: Room 404
MEMBERS: Chairman Crow, Vice Chairman (Kellogg) Nonini, 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 Deal; Steve Tobiason; Senator Stegner; Dan John, State Tax Commission; Representative Eskridge; Brian Whitlock, Office of the Governor; Mia Crosthwaite, Catholic Charities of Idaho; Representative Shepherd; Jon Cantamessa, Shoshone County Commissioner
Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to accept the minutes of the meetings held on February 11, 2004 and February 12, 2004 as written. Motion passed on a voice vote.
RS 14114: Chairman Crow announced the first item on the agenda was RS 14114 and asked Representative Deal to explain the proposed legislation. Representative Deal stated this bill simplifies the method used to compute payment of premium taxes by insurance carriers doing business in Idaho. The current statutes impose a two tiered premium tax rate to insurance carriers doing business in the State of Idaho, either at a rate of 1.4% or 2.75%. This particular issue has been worked on for three years. The two tiered tax system is discriminatory and the taxes have been paid with letters of protest.

On the first page of the bill, lines 40 through 43 modifies the present structure by adjusting the premium tax, over a six year time frame, to a single premium tax rate of 1.5%. A single premium tax rate of 1.5% will make Idaho more competitive in its efforts to attract insurance carriers to locate in Idaho as its "home" or "domiciliary" state. Page 3, lines 28 and 29 reflects the required percentage of assets invested. Page 4, lines 27 through 40, appropriates $1,000,000 to the Idaho health insurance access card fund. The future appropriations will be applicable percentages set out in section (e). Changing the premiums tax remaining exceeds fifty million dollars, instead of forty five million dollars, will be appropriated to the Idaho high risk pool. Twenty-five percent of the remaining excess above fifty million, instead of fifty- five million will be appropriated to the Idaho health insurance access card fund.





The change to a single premium tax rate for all insurance carriers will also satisfy current litigation to waive their process and will withdraw the lawsuit.

MOTION: Representative Henbest moved to recommend that RS14114 be introduced.
In response to a question relating to the changes in the percentage in the high risk pool and the access fund, Senator Stegner said the change was not much of a difference and this bill puts the two on an equal level. He was not opposed to a change.
SUBSTITUTE MOTION: After a lengthy discussion, Representative Moyle moved to recommend that RS14114 be introduced without the amendment to Section 41-406, Idaho Code.

Representative Moyle explained his motion saying premiums are a different issue. Roll call vote was requested.

ROLL CALL VOTE: Voting Aye - Representatives Nonini (Kellogg) Raybould, Barrett, Ridinger, Moyle, Field, Schaefer, Roberts, Wood, Denney, McKague, McGeachin, Crow

Voting Nay - Representatives Smith, Collins, Ringo, Martinez, Henbest, Cuddy

Motion to introduce the corrected RS 14114 passed, 13-6-0

RS 14120: Chairman Crow announced the next item on the agenda was RS 14120 and recognized Mr John to present the RS. 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 to changes made to the Internal Revenue Code after January 1, 2003, including the federal "Jobs and Growth Tax Relief Act of 2003." However no Idaho deduction will be allowed relating to the increased, from 30% to 50%, special allowance for first year "bonus depreciation" permitted by subsection (k) of section 168 of the Internal Revenue Code. 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. Any necessary adjustments to basis due to nonconformity with the bonus depreciation may be made during the lifetime of the property.

The General Fund impact for FY 2004 is a reduction of $1.5 million in the revenue stream. There is a General Fund reduction in the revenue stream of $1.8 million for FY 2005 and FY 2006. The General Fund fiscal impact diminishes starting in FY 2007 and this reversal will continue in future years to the point that the net fiscal impact to the state over the life of the asset is zero.

In response to a question relating to the disallowance of the federal "bonus" depreciation, Mr. John said it would be difficult to go back to section 168 of the Internal Revenue Code to pick up the 30% and the 50% depreciation.

MOTION: Representative Raybould moved to recommend that RS 14120 be introduced.
SUBSTITUTE MOTION: A substitute motion was made by Representative Ridinger to recommend that RS 14120 be sent directly to second reading. Motion passed on a voice vote. Representative Raybould was assigned as floor sponsor.
RS 13836C2: Chairman Crow announced that the next item on the agenda was RS 13836C2 and asked Representative McKague to explain the proposed legislation. Representative McKague said this legislation provides that the owner-occupied homestead used as the primary dwelling place of an individual who is at least seventy years of age and who is the recorded owner holding title or who has retained or been granted a life estate may apply for an exemption from the tax on that property each year. If the owner dies after the exemption has been approved it shall be in force for the rest of the year.
MOTION: Representative Moyle moved to recommend that RS 13836C2 be introduced. Motion passed on a voice vote.
RS 13882: Chairman Crow announced the next item on the agenda was RS 13882 and recognized Representative Eskridge to submit the proposed legislation. He remarked that a problem of citizens going to a junior college part time was brought to him from Boundary and Bonner Counties.

Currently Idaho Code allows that counties pay a portion of a resident student's community college tuition not to exceed $500 each semester for a two semester year for a full time student up to six semesters which would be a total of $3,000.

The purpose of this legislation is to recognize that community college students today do not necessarily complete their education within six semesters because they often have to work for a living while striving towards a college degree.

This legislation leaves the county exposure cap at $3,000 but would allow a longer period of time for students to complete their community college courses.

The legislation leaves in place the current cap of $3,000. However it is possible that this change could attract more students into community college courses thus expanding the counties overall budget. This cost could be offset because students completing college courses and increase their income earning potential which would increase their ability to pay taxes and contributions to the counties overall economy.

MOTION: Representative Roberts move to recommend that RS 13882 be introduced. Motion carried on a voice vote.
HB 649: Chairman Crow announced the next item on the agenda was HB 649 and recognized Representative Cuddy to present the bill. Representative Cuddy testified that the purpose for this legislation is to clarify the methods used when assessing new manufactured homes and defining occupancy.
MOTION: Representative Wood moved to send HB 649 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Cuddy will sponsor the bill on the floor.
HB 651: Chairman Crow announced the next item on the agenda was HB 651 and asked Mr. Whitlock to address the bill. Brian Whitlock, Office of the Governor, testified that this bill is another incentive which will further stimulate our economy and help provide new jobs that pay well and provide benefits.

Mr. Whitlock briefed the members with the history of the jobs credit which originally was for natural resource based revenue-producing enterprises. This was expanded in 2001 for one year only and applied only to net new jobs, not filling of a vacant position. Idaho businesses are anxious to expand and hire new employees and should encourage those employers to create attractive new jobs.

He enumerated the average pay for all various occupations reported by the Department of Labor. Last year the statewide average for all occupation was $15.50 per hour or $32,200 annually. With benefits this amount approximates $42,800 per year. If an employer will create desirable jobs with benefits the proposed tax credit incentive for that employer will be $1,000 per qualifying job.

This bill requires that the employee must work at the job for nine months in a year which means the job has to be created during the first quarter of the taxpayer's year. As a side note, he said the $500 credit still remains for net new jobs created in solely natural resource based revenue producing enterprises that do not meet the pay criteria of this bill.

MOTION: Representative Cuddy moved to send HB 651 to the floor with a do pass recommendation.
The Chairman acknowledge Mia Crosthwaite who had signed up to testify in favor HB 651. She stated she was representing the Catholic Charities of Idaho who believed that all humans had a right to work to support their families. This bill gives responsible companies a credit they deserve.

Motion with a do pass carried on a voice vote. Representative Cuddy was assigned to carry the bill on the floor

HB 661: Chairman Crow announced the next item on the agenda was HB 661 and recognized Representative Shepherd. She testified that the purpose of this bill is to provide a technical correction and amend section 39-1325a to provide for the property and distribution of assets and notification of the state controller. She deferred to Mr. Cantamessa.







John Cantamessa, Shoshone County Commissioner, stated that the Shoshone Hospital District went bankrupt in 2001. Their assets were bonded. This bill gives the county the ability to tax until the bond is paid off.

MOTION: Representative Field moved to send HB 661 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Shepherd 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: February 18, 2004
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 Denney and Representative Cuddy
GUESTS: Dr. James Weatherby, Boise State University, Chairman, Property Tax Task Force Committee; Randy Nelson, Associated Taxpayers Association; Alan Dornfest, Idaho State Tax Commission; Gene Kuehn, Canyon County Assessor; Max Vaughn, Minidoka Co. Assessor; Kerry Ellen Elliott, Idaho Association of Counties.
Chairman Crow called the meeting to order at 10:00 a.m. and requested a silent roll call.

Chairman Crow introduced Dr. James Weatherby, Chairman of the Property Tax Task Force Committee. Dr. Weatherby introduced members of the task force who were present. He provided the members with a copy of the PROPERTY TASK FORCE STUDY. He proceeded to review each page of the study asking for questions from the committee. (See attached complete study). A question and answer period followed.

Chairman Crow thanked Dr. Weatherby and the task force committee and commended them for their good work and the value of the report.

A copy of the report is filed in the Legislative Library.

ADJOURN: Chairman Crow adjourned the meeting at 10:45 a.m.




DATE: February 19, 2004
TIME: 10:00 a.m.
PLACE: Room 404
MEMBERS: Chairman Crow, Vice Chairman Nonini (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: Charles Campbell; Dan John State Tax Commission; Marilyn Knighton
Chairman Crow called the meeting to order at 10:00 a.m. and requested a silent roll call. Representative Cuddy moved to accept the minutes of the meeting held on February 17, 2002 and February 18, 2004 as written.

The Chairman informed the members that copies of the corrected Statement of Purpose for the insurance premium bill passed yesterday was before them for their review only.

Chairman Crow announced that without objection she was assigning the Constitutional Amendment bills HJR006, HJR007 and HJR010 to the Kellogg Subcommittee for further study. There was no objection.

RS 13605: Chairman Crow announced the first item on the agenda was RS 13605 and asked Representative Roberts to explain the proposed legislation. Representative Roberts stated that the purpose of this proposal is to amend Section 63-602G, Idaho Code, to provide authority and procedures for determination and collection of homeowner's exemptions from property tax in situations where the exemption is improperly claimed and allowed as a result of error, misstatement or misunderstanding.
MOTION: Representative Schaefer moved to recommend that RS 13605 be introduced. Motion passed on a voice vote.
RS14110: Chairman Crow announced the next item on the agenda was RS 14110 and asked Mr. Campbell to explain the proposed legislation. Charles Campbell stated he was representing himself as a playground installer. The purpose of this proposal is to exempt sales and use tax on non assembled playground equipment purchased by a tax-exempt entity directly from the manufacturer and installed by an independent contractor. The finished product installed has met all safety standards and conforms with the American Disability Act.





Loss of revenue to the general fund would be about $90,000 each fiscal year. An equal savings to the cities and schools that purchase the playground equipment should offset this expense.

In response to question relating to other contractors status relating to sales tax on material, Dan John, State Tax Commission, stated the statute which has been in place since 1965 is very specific that contractors will pay sales tax on material used for contracts with all government entities.

MOTION: Representative Wood moved to recommend that RS 14110 be introduced.

After a general discussion regarding setting a precedent Representative Wood amended her motion to introduce with a corrected RS to insert the word "public" before playground equipment with the changes in the title. Motion passed on voice vote.

RS 13975: Chairman Crow announced the next item on the agenda was RS 13975 and recognized Representative Cuddy. Representative Cuddy said the purpose of this proposed legislation is to expand the allowable acreage for shooting preserves. This bill would allow an increase from the existing 1,600 acre limit to a 4,000 acre limit. Grandfather rights would be retained on the original 1,600 acres but would not apply to the additional acreage. He requested that the bill be referred to the Resource and Conservation Committee.
MOTION: Representative Roberts move to recommend that RS 13975 be introduced and referred to the Resource and Conservation Committee. Motion passed on a voice vote.
HB 663: Chairman Crow announced the next item on the agenda was HB 663 and recognized Representative Cuddy to present the bill. Representative Cuddy testified that this bill is a result of his working with the Tax Commission, county treasurers, property owners and everyone concerned.

This legislation deals with section 63-1703 of the Idaho Code that allows for taxing forestland on a bare land and yield basis. When this method of taxation is used the property owner pays tax only on the land until the timber on the land is harvested or at the end of the ten year period. If during this period the property title is transferred the existing code does not address how taxes collected and disbursed between regular taxing and disbursement of these collections are to be handled. This legislation is intended to clarify the code in regard to collection and distribution.

He said the treasurers are confused how to handle the deferred tax when the land is sold and title companies sometimes do not know if there is an automatic lien on the property.

Chairman Crow recognized Ms. Knighton to address the bill. Marilyn Knighton stated she is the Gem County Treasurer and was in support of this bill. She said bill adds one sentence change, "In the event the payment is offered or made, it shall be accepted by the county treasurer and applied in the manner of payment of other property tax." She elaborated on the various situations that occur on sale of property with an existing lien.
MOTION: Representative Raybould moved to send HB 663 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Cuddy will carry the bill on the floor.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:33 a.m.




DATE: February 20, 2004
TIME: 10:00 a.m.
PLACE: Room 404
MEMBERS: Chairman Crow, Vice Chairman Nonini (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 Stevenson; Representative Langhorst

Chairman Crow called the meeting to order and requested a silent roll call. She announced that Representative Trail had requested that HB 530, Income tax deduction, teachers expenses, filed as a personal filed bill be held. Without objection HB 530 was HELD.

RS 13875: Chairman Crow announced the first item on the agenda was RS 13875 and asked Representative Stevenson to explain the proposed legislation. He stated that his cemetery districts had been frugal before the 3% cap and their levy was at .001 and now cannot go above that amount.

This proposed bill amends cemetery maintenance district code whereby a sixty-six and two-thirds percent vote of the voters voting on the question may increase the district up to four hundredths of one percent.

MOTION: Representative Cuddy moved to recommend that RS 13875 be introduced. Motion carried on a voice vote.
HB 543: Chairman Crow announced the next item on the agenda was HB 543 and recognized Representative Langhorst to present the bill. Representative Langhorst expressed that when HB 452 was passed last year he assured a constituent of his that it would apply to his furniture store.

The Tax Commission informed him correctly that the transactions prior to the effective date of the sales tax increase the five percent only applied to contracts on real property made prior to the effective date of the sales tax increase.

This legislation clarifies the definition of those transactions which qualify for an exemption from last years one cent increase in the state sales tax.

In response to questions from the Committee, Dan John, State Tax Commission, said this bill is far reaching and could go to anyone with existing contracts, such as Health Club members, leased cars, etc.

Terminology in HB 452 was patterned by a bill passed in the 80s and applies to persons listed in the statute for persons engage in real estate. For example contracts on building and road. The original bill had a fiscal impact of $6 to $9 million and to date the impact is around $500.

In closing remarks Representative Langhorst stated this bill is not far reaching because not many would make a claim for the one-cent additional tax. This bill reflects what the intentions were on the floor.

MOTION: Representative Ringo moved to send HB 543 to the floor with a do pass recommendation. Motion carried on a voice vote. Representative Langhorst 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: February 23, 2004
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 Henbest
GUESTS: Allyn Dingle, Attorney; Robert Aldridge, Taxation, Probate and Trust Section of the Idaho Bar
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 February 19, 2004 as written. Motion passed on a voice vote. The Chairman stated that three Senate bills relating to Estate legal procedures had been referred to this committee and without objection the bills will be referred to the Judiciary, Rules and Administration Committee. There was no objection.
RS 14143: Chairman Crow announced the first item on the agenda was RS 14143 and asked Representative Roberts to explain the proposed legislation. He stated that this proposal is the result of four months work with the Joint Finance and Appropriation Committee staff and others. They went into the Idaho Code reviewing the current expenditure limit statute. He provided a hand out depicting the "Expenditure Limitations & Appropriations Comparison", a chart on how the proposed legislation will be instituted and the "Taxpayer Reserve Fund."

The purpose of this proposal - Section 1 amends the legislative expenditure limit language in Idaho Code 67-6803. It provides that beginning with fiscal year 2006 budget and each year thereafter general fund expenditures shall not exceed a rolling three year average of population and consumer price index growth. Exceptions to this limitation may be approved for programs transferred to the state from political subdivisions of the state or for deficiency warrants issued for emergency expenditures.

Section 2 sets up the Taxpayer Reserve Fund which will collect unexpended and unencumbered moneys at the end of each fiscal year. If the balance in the Taxpayer Reserve Fund equals or exceed three percent of the revenues to the general fund then it shall automatically be refunded to the taxpayers.

MOTION: Representative Wood moved to recommend that RS 14143 be introduced. Motion passed on a voice vote. Representatives Kellogg and Ringo requested to be recorded as voting no.
RS14158: Chairman Crow announced the next item on the agenda was RS 14158 and recognized Representative McGeachin to submit the proposed legislation. She asked that this proposal be recommended to be introduced and referred to the Transportation Committee.

The purpose of this legislation is to exempt certain military personnel from licensure if they have been licensed by the military to operate an official motor vehicle in the military service. This will help to alleviate any problems that military personnel may experience when attempting to update an Idaho drivers' license during times of war and any other time.

MOTION: Representative Barrett moved to recommend that RS 14158 be introduced and referred to the Transportation Committee. Motion passed on a voice vote.
RS 14159: Chairman Crow announced the next item on the agenda was RS 141590 and asked Allyn Dingel to explain the proposed legislation. He said he had a passion against domestic violence and the Women's and Children's Alliance that used to be the YWCA is there to help.

The purpose of this proposal is to add a tax credit for contributions to the Women's and Children's Alliance. The organization is a nonprofit organization that provides secure shelter, transitional homes, counseling, case management and comprehensive supportive services to women and children escaping domestic and /or sexual violence.

MOTION: Representative Kellogg moved to recommend that RS 14159 be introduced. Motion carried unanimously.
HB 516: Chairman Crow announced the next item on the agenda was HB 516 which was "held time certain" on January 21, 2004. She asked Robert Aldridge to address the bill. Mr. Aldridge gave a brief history of the revisions to the "circuit breaker" and the "50-50" homeowners tax reduction. He then delineated the changes section by section. (See the minutes of January 21, 2004 for detailed revisions.)

In response to Representative Smith concerns over substantial changes being made and not approved by the State Bar, Mr. Aldridge said this is not a State Bar bill. The Tax Commission and the State Assessors requested he refine the existing law and current practices. There are no substantive changes. This bill eliminates redundancy and confusion.

MOTION: Representative Moyle moved to send HB 516 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Smith requested to be recorded as voting no. Representative Moyle was assigned to carry the bill on the floor.

ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:40 a.m.




DATE: February 24, 2004
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 Denney and Henbest
GUESTS: Representative Eskridge; Mike Brassey, Suncor Development Company; Representative Deal
Chairman Crow called the meeting to order and requested a silent roll call. She announced the first item on the agenda was RS 13822 and asked Representative Eskridge to explain the proposed legislation.
RS 13822: Representative Eskridge said this bill comes from the interim committee on energy. This bill is an economic tool to provide additional employment and provide a viable energy policy and reliable energy supply.

This proposed legislation will provide an investment tax credit against state income taxes for investments in wind turbines, solar energy, low impact hydro, industrial waste, animal waste, municipal waste, geothermal resources and other renewable resources. This credit is patterned after the broadband tax credit that was enacted in 2001. The credit escalates if a qualifying facility is located in certain economically depressed counties. The credit is for new investment for tax years 2004 through 2009.

The strategic plan of the Energy Division of the Department of Water Resources is to have 300 MW of wind power installed in Idaho by the year 2010. If we were to break this out into 50 MW per year new energy coming on line this would be an annual total investment of $4,250,000 based on the cost of $850 KW. The maximum credit that could be taken per year would be $340,000 if the facility were to be in the qualifying counties in the legislation. If the remainder of alternative energy is added at about fifty percent capacity of wind power the maximum credit that would be taken would be $200,000 annually. Estimated credit for the first year would be $540,000, second year $1,080,000, third year $1,620,000, fourth year $2,160,000, fifth year $2,700,000 and the sixth year $3,240,000. This credit would not take into account any increased sales or income taxes paid as a result of the construction of a facility.

MOTION: Representative Cuddy moved to recommend that RS 13822 be introduced. Motion carried on a voice vote.
RS 13823C1: Chairman Crow announced the next item on the agenda was RS 13823C1 and asked Representative Eskridge to submit the proposed legislation. He explained that this legislation is an additional tax incentive to use alternative energy sources to produce electricity.

This proposed legislation would provide an income tax credit of one-half cent per kilowatt for electric energy generated by wind turbines, solar energy, low impact hydro industrial waste, animal waste, municipal waste, geothermal resources and other renewable resources. The facility would have to be constructed after January 1, 2004 to qualify.

MOTION: Representative Cuddy moved to recommend that RS13823C1 be introduced. Motion passed on a voice vote. Representative McKague requested to be recorded as voting no.
RS 14116C1: Chairman Crow announced the next item on the agenda was RS 14116C1 and recognized Mr. Brassey to explain the proposed legislation. Mike Brassey stated he was representing the Sunco Development Company headquartered in the State of Arizona that has entered into a development agreement with the McCleod Family to develop the family's ranch located north of Boise.

This proposed legislation authorizes cities and counties to approve the creation of taxing districts to fund public infrastructure within the district. A district can be formed if 100% of the property owners within the proposed district sign a petition requesting the formation of the district. The land to be included in the district must be more than 160 acres in size. A board made up of the city or county officials in which the district is located will operate the district when it is formed. The district can issue general obligation and revenue bonds to finance the construction of infrastructure within the district. Bonds issued by a district are not an obligation of the city or county in which the district is located. The creation of a district does not supercede or result in the elimination of any existing taxing system or system of fees.

In a normal case, a developer is responsible for financing and providing infrastructure such as roads within a new development at the developer's cost. The buyers of land or building or buildings within the development pay the developer's costs through the cost of the land or buildings. Under this proposed legislation the buyers would pay the cost through property taxes or fees for services. The benefit to the developer is that there is a reduction in the cost of the development.

The risk that people who already live in a community will pay for new growth is reduced under this proposal. This proposal draws a line around large new growth. It does not solve all of the problems related to new growth but it does assure that the infrastructure cost for that growth is not paid by existing residents of the city or county.









The benefit to the purchasers is the receipt of expensive infrastructure such as parks, bridges and railroad under or overpasses that would normally add high costs to the purchase price, but are paid over time under the taxing district concept.

MOTION: After a brief question and answer period, Representative Barrett moved to return RS 14116C1 to sponsor.
SUBSTITUTE MOTION: A substitute motion was made by Representative Roberts to recommend that RS 14116C1 be introduced. Roll call was requested.
ROLL CALL VOTE: Voting Aye: Representatives Kellogg, Raybould, Field, Schaefer, Smith, Collins, Roberts, Ringo, Martinez, Cuddy, Crow.

Voting Nay: Representatives Barrett, Ridinger, Moyle, McKague, McGeachin

Motion to introduce passed, 11-5-3.

HB 724: Chairman Crow announced the next item on the agenda was HB 724 and recognized Representative Deal to present the bill. He briefed the members on the background of the insurance premium tax on gross premiums and the two levels of taxation. If the company invests twenty-five percent of their assets in Idaho the rate is 1.4%. Companies who do not take advantage of the investment option pay a tax rate of 2.75%. There is the issue of litigation and payment under protest because of the two tiered discriminatory tax rate.

This bill simplifies the method used to compute payment of premium taxes by insurance carriers doing business in the State of Idaho. It modifies the present structure by adjusting the premium tax over a six year time frame to a single premium tax rate of 1.5%. Representative Deal delineated the changes in the bill and stated that this is a clean bill dealing only with the rate change. He provided the members of letters from Jim Jones & Associates, representing the General Fire & Casualty Company; Robert R. Baldwin, Associate Tax Counsel for Metlife and James Williams, Second Vice President and Associate General Counsel for Massachusetts Mutual Life Insurance Company. Mr. Baldwin and Mr. Williams submitted joint written testimony in support of House Bill 724. Attachment of full text filed in the Legislative Library.

Excerpt from a letter submitted by Jim Jones & Associates, representing the General Fire & Casualty Company ­"will dismiss the lawsuit and waive any claim for recovery of alleged premium tax overpayments in exchange for the State reducing the premium tax to the uniform 1.5% rate over the six-year period 2005-2010)."

Excerpt from the written joint testimony submitted by Mr. Baldwin, Metropolitan Life Insurance Company and Mr. Williams, Massachusetts Mutual Life Insurance Company - "For many years, MetLife, Mass Mutual and a number of other foreign insurance companies have paid their Idaho premium taxes under protest and these protests have been viewed as perfect tax claims. At last count, we have been able to catalog approximately $36 million in such claims. If HB 724 is enacted and becomes law, MetlLife, Mass Mutual and others in the list of companies comprising the $36 million in foreign company claims and protests will dismiss and withdraw all their claims and protests".

MOTION: Representative Moyle moved to send HB 724 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Deal will sponsor the bill on the floor.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:45 a.m.




DATE: February 25, 2004
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 Representative Cuddy
GUESTS: Representative Eskridge
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 February 23, 2004 as written. Motion passed on a voice vote.
HB 717: Chairman Crow announced the first item on the agenda was HB 717 and recognized Representative Eskridge. He requested that HB 717 be held in Committee. He apologized for not notifying the Chairman of this action. He explained that he was not aware of a problem the Bonner County Commissioner had with this bill extending into the future. The problem will be studied during the interim until the next legislative session.
MOTION: Representative Raybould moved to HOLD HB 717. Motion passed.
HB 739: Chairman Crow announced the next item on the agenda was HB 739 and recognized Representative Roberts to present the bill. Representative Roberts stated that the county assessors are having problems with people who file for the homeowner's exemption who do not qualify.

The statement of purpose for this bill is to amend Section 63-602

G, Idaho Code, to provide authority and procedures for determination and collection of homeowner's exemptions from property tax in situations where the exemption is improperly claimed and allowed as a result of error, misstatement or misunderstanding.

MOTION: Representative Raybould moved to send HB 739 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Roberts will carry the bill on the floor.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 9:15 a.m.




DATE: February 26, 2004
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 Deal; Janice Johnson, Women's and Children's Alliance
Chairman Crow called the meeting to order and requested a silent roll call. Representative Ridinger moved to accept the minutes of the meetings held on February 24, 2004 and February 25, 2004 as written.
RS 13609: Chairman Crow announced the first item on the agenda was

RS 13609 and asked Representative Roberts to explain the proposed legislation. Representative Roberts stated that this is a clean-up proposal to HB 317 passed last year dealing with investment tax credit on capital improvements.

The statement of purpose is to amend Section 63-3029B, Idaho Code, to provide that all moneys collected by the State Tax Commission as a result of certain property ceasing to qualify for the investment tax credit and where the owner has elected a personal property tax credit in lieu of investment tax credit be remitted to the county within which the property was located when the property tax exemption was claimed.

MOTION: Representative Wood moved to recommend that RS 13609 be introduced. Motion passed on a voice vote.
RS 13867: Chairman Crow announced the next item on the agenda was RS 13867 and recognized Representative Ridinger. He stated that this proposed bill reinstates the income tax credit for eligible expenditures to landowners implementing best management practices to improve natural resources for water quality, threatened and endangered species.

The land owner applies to the Soil Conservation Commission for approval of natural resource programs to qualify for the tax credit and shall not exceed two thousand dollars. The Commission then submits their approval of the program to the State Tax Commission for the eligible tax credit.

MOTION: Representative Kellogg moved to recommend that RS 13867 be introduced with a corrected Statement of Purpose. Motion passed on a voice vote.
RS 14202: Chairman Crow announced the Committee would consider RS 14202 and asked Representative Denney to explain the proposed legislation. He stated that some school districts are using the authorization for bonding authorized in HB 315 which was passed last year to pass bonds to refinance prior obligations.

This legislation amends Section 33-906, Idaho Code, Bond Levy Equalization Support Program so that provisions of this section may not be used to subsidize projects previously subsidized by state grants.

MOTION: Representative Kellogg moved to recommend that RS 14202 be introduced. Motion passed on a voice vote.
RS 13920C1: The Chairman announced the next order of business would be RS 13920C1 and recognized Representative Deal. He explained that property taxes are rapidly escalating which is particularly hard on the elderly. This problem has been worked on by several people for three years trying to find a way to solve this problem.

The statement of purpose proposes to cap the percent of increase that can be experienced in any one year by residential property owner for his/her primary residence. Residential property owners in various areas have been levied high property valuations as a result of homes in their locale selling at prices considerably higher than the price originally paid by existing home owners, even though they may have only owned their homes for a short period. This has resulted in property tax increases up to as much as 100-200 percent or higher, resulting in a hardship on residential owners, especially those on fixed incomes. This proposed legislation avoids this hardship by capping assessed valuation increases to no more than three percent per year.

When the property is sold the market value will be put in place. The cap will apply to owners of the primary residence who qualify for the exemption provided for in 63-602G, the 50-50 homeowners exemption. He said this may be a band-aid approach but something needs to be done to slow the ever-growing property taxes.

There was a general discussion as to the tax shift and the causes of escalating property taxes.

MOTION: Representative Kellogg moved to recommend that RS13920C1 be introduced. Motion passed on a voice vote.
HB 753: The Chairman announced that the last item on the agenda was HB 753 and asked Mrs. Johnson to present the bill. Janice Johnson, Executive Director of the Women's and Children's Alliance (WCA), testified that the WCA are community leaders in providing safe shelter, support and hope to women and children victimized by domestic and sexual violence.



Clients have the opportunity to receive professional skill training to assist them in finding and retaining jobs. This training will be driven by the funds dedicated to the WCA through the Susan P. Sherlock Training Scholarship Fund.

This tax credit will attract donations and the WCA needs any kind of revenue to continue their services that are a benefit to the State.

MOTION: Representative Kellogg moved to send HB 753 to the floor with a do pass recommendation. Motion passed unanimously on a voice vote.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 10:45 a.m.




DATE: March 1, 2004
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 Bruce Newcomb; Brad Hoaglun, Outfitters and Guides Association; Randy Nelson, Associated Taxpayers of Idaho; Marilyn Knighton, Gem County Treasurer; Randall . Miller; Wayne Roark
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 February 26, 2004 as written. Motion carried on a voice vote. The Chairman said that Representative Langford had requested her bill on an agricultural land preservation tax, HB 594 which was filed as a personal bill, be withdrawn. Without objection HB 594 was held.
RS 14203: Chairman Crow announced the first item on the agenda was RS 14203 and recognized Speaker Newcomb to explain the proposed legislation. Speaker Bruce Newcomb stated this proposed legislation amends provisions passed last year allowing a taxpayer to elect a two-year exemption from property tax in-lieu-of the investment tax credit against income taxes.

1. The bill clarifies the election is available for qualified property placed in service in calendar year 2003.

2. It clarifies the determination of a loss year.

3. It limits disclosure of tax information exchanged between the State Tax Commission and County Assessors.

4. It excludes taxpayers whose rates or returns are regulated according to federal or state law.

5. It provides for the recapture of the property tax benefit of property ceasing to qualify for the investment tax credit or for the election.

The purpose of the legislation last year was to retain business in Idaho and provide an incentive for businesses to come to this state. The problem with the original bill was that it could possibly go back twenty years to carry forward a loss. This amendment closes that loophole. The recapture of property taxes would be returned to the counties instead of the State. The bill will be effective on and after January 1, 2003 - the effective date of the original legislation.

In response to a question Speaker Newcomb said this bill is similar to Representative Roberts' bill which was introduced last week in that the counties would get money back from the recaptured exemption.

MOTION: Representative Roberts moved to recommend that RS 14203 be introduced. Motion passed unanimously.
RS 14171: Chairman Crow announced the next item on the agenda was RS 14171 and asked Mr. Hoaglun to present the proposal. Brad Hoaglun, Idaho Outfitters & Guides Association, explained that this proposed legislation replaces HB 541 which was introduced earlier this year. Since that time there were concerns expressed to Section 6 which has been removed in this proposed legislation. The county assessors need this legislation to address issues brought by Lemhi County and other counties to make the law work.

The statement of purpose is to clarify the taxation of agricultural property when the land is leased for the grazing of livestock. The new language defines a bona fide lessee as a for-profit business that grazes livestock that will be sold or used in their business.

Additional language puts into statute that any sale or lease of hunting or fishing rights on the property does not change the tax status of the land if it meets the definitions of 63-604, land actively devoted to agriculture.

There was a brief question and answer period as to for-profit enterprises.

MOTION: Representative Cuddy moved to recommend that RS 14171 be introduced with a corrected Statement of Purpose. Motion passed on a voice vote. Representative Barrett requested to be recorded as voting no.
HB 716: Chairman Crow announced the next item on the agenda was HB 716 and recognized Representative McKague to present the bill. She stated that this bill represents middle income seniors. Sometimes homeowners over the age of seventy sacrifice their quality of life to pay property taxes. They believe they have paid their fair share in their lives.

This legislation allows for property tax exemption for $150,000 assessed valuation. It provides owner-occupied homestead used as the primary dwelling place of an individual who is at least seventy years of age and is the recorded owner holding title or who has retained or been granted a life estate. They may apply for an exemption for the tax on that property each year. If the owner dies after the exemption has been approved it shall be in force for the rest of the year. After the property is sold it will be assessed at market value and the counties would recoup the losses.

She reviewed the bill section by section. In response to a question as why there was no income limit, Representative McKague responded saying lower income people can qualify under the "circuit breaker" based on income and medical bills. This bill frees up money for middle income people to put towards health problems, this is a fairness issue.

Randy Nelson, Associated Taxpayers of Idaho, provided the members with a hand out analyzing the fiscal impact of HB 716. (Attachment #1) He said background documentation and assumptions for HB 716 analysis are listed in the handout. The bottom line is the first underlined section where he had estimated the additional HB 716 exempt value to be $4,696,730,000. That is the homeowner exemption and is based on average 2005 homestead values. This is a conservative estimate.

He also estimated the impact of HB 716 will have on the state funded "circuit breaker" program. The first diamond of the hand-out reflects the reduced "circuit breaker" claims of $9,139,063. That assumes everyone will elect to take the HB 716 exemption because most of these claimants would likely have 100% of their taxable property values well within what HB 716 exempts. But, if 20% of the "circuit breaker" qualified claimants are already having their entire property taxes paid under that program this impact is likely closer to 80% of the $9,139,063 estimate or $7,311,250.

The second diamond in the hand-out reflects the impact to public school funding on the property tax by multiplying the HB 716 additional property value by the school general M&O levy. The result is an estimated tax reduction of $14,090,000 but if you also account for the higher multipliers for the Boise School District this will be closer to $14,439,000.

The last thing he looked at was the tax shift component. He estimated what the 2005 property tax values would be for owner-occupied residential homesteads, all other property and the statewide total.

The analysis reflects the 2005 estimated values before the HB 716 exemption and 2005 after $4,696,730,000 in taxable value for owner-occupied homesteads. The property tax side after HB 716 there are $14,909,000 less property taxes to be collected. That is due to the reduced school M&O amount.

The tax rates for all taxpayers are increased by about 5% in order to collect the $1,193,504,000 estimated property taxes after HB 716. Under this scenario owner-occupied homesteads will have their property taxes reduced by $49,255,000 while all other taxpayers will be paying an additional $35,165,000.

Although there are $14,909,000 less total property taxes, the other property taxpayers are paying more to make up for the additional exempt property values. Over time this impact will escalate as the 70 plus age population becomes a larger share of our society and as homeowner property values increase.

CON: Marilyn Knighton, Gem County Treasurer, stated she was testifying in behalf of the Idaho Association of Counties (IAC) in opposition to HB 716. It is the AIC policy to oppose all increases in property tax exemptions because of the tax shift. It is only fair for taxpayers to pay their share of property values. The impact to school districts is more significant because of the drop in their revenue. It would be better to raise the level of the "circuit breaker" to encompass those people over 70.

People would take advantage of this exemption rather than the "circuit breaker." HB 716 does not include fees or income that apply to the "circuit breaker." Increasing the tax exemption represents a tax shift.

PRO: Randall C. Miller, representing himself, testified that the two most vulnerable groups are seniors and children. Senior citizens live on fixed incomes and must choose between taking their medications and food to pay their property taxes. HB 716 is an opportunity to correct the property tax because senior citizens need help.
PRO: Wayne Roark stated he was representing himself in support of HB 716 as a homeowner and is forced to sell because his property taxes are too high.
Representative McKague said there is the need to protect middle income people who have already paid their fair share of taxes over the years.
MOTION: After a brief question and answer period Representative Wood moved to send HB 716 to the floor with a do pass recommendation.
SUBSTITUTE MOTION: A substitute motion was made by Representative Ringo to hold HB 716 in committee.
AMENDED SUBSTITUTE MOTION: An amended substitute motion was made by Representative Raybould to hold HB 716 time certain at the discretion of the Chairman. Motion passed on a voice vote. Representative Barrett and Representative 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 11:04 a.m.




DATE: March 3, 2004
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:



Representative Moyle
GUESTS: Mike Brassey, Suncor Development Company; Bob Taunton, Suncor Development Company; Shawn Dralle, RBC Dain Rauscher; Representative Eskridge; Representative Doug Jones; Rich Raybill; Phil Homer, Idaho Association of School Administrators
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 March 1, 2004 as written. Motion passed on a voice vote.
HB 759: Chairman Crow announced the first item on the agenda was HB 759 and asked Mr. Brassey to present the legislation. Mike Brassey stated he was representing Suncor which is a development company head-quartered in the State of Arizona that has entered into a development agreement with the McCleod family to develop the family's ranch located north of Boise.

This legislation authorizes cities and counties to approve the creation of taxing district to fund public infrastructure within the district. This legislation provides for the formation of a public infrastructure improve-ment district through a petition filed by 100% of the owners of all the area in which the proposed district would be located. A district would be formed for the purpose of building new public infrastructure improvements to serve new growth and development and to provide for the payment of those costs by district.

The formation petition would be filed with the county commissioners or the city council of the county or city in which the proposed district board would be located. The board would be comprised of county commissioners or the city council of the county or city in which the district would be located. After formation a district would be able to issue general obligation and revenue bonds following notice, hearing and election. General obligation bonds would require a 2/3rd super majority vote of the qualified electors of the district. Revenue bonds would require either a 2/3rd majority or a simple majority as controlled by Article VIII section 3 of the Idaho Constitution.

This legislation provides a mechanism for paying for infrastructure for the property within the district. Only the property within the district that is specially benefitted by improvements will pay the cost of those improvements.

A district can be formed if all of the property owners (this could be only one owner) within the proposed district sign a petition requesting the formation of the district. The land to be included in the district must be more than 160 acres in size. There is no maximum size limit. This legislation does not deal with police protection or fire protection which are paid by property taxes.

The benefit to the purchaser is the receipt of expensive infrastructure such as parks, bridges and railroad under or overpasses, this would normally add high cost to the purchase price but is paid over time under the taxing district concept.

Bob Taunton, General Manger of Suncor Development Company, testified that this legislation allows a developer to finance roads, parks, trails and landscaping up front. The resale market is good in spite of the tax burden because of the better quality of life. This legislation has advantages for the developer and the buyer as the amenities up are added front rather than phasing in over a long period of time. The bill does not affect local funds of counties or cities.
Shawn Dralle stated she was an investment banker for RBC Dain Rauscher and had been working with the Suncor and other developers for fifteen years. In response to questions from the Committee, she said when a bond is sold there are statute and regulatory rules that demand security for payment in order to make the bonds saleable. The market revolves around the developers financial assurance, not just the land value.
Mr. Brassey said the district can issue general obligation and revenue bonds to finance the construction of infrastructure within the district that will be owned by a public entity. He asked the committee's approval to create a new RS to make the following changes: Page 7, line 36 delete "and without"; page 9 line 35 add "Prior to each such issuance, the district board shall consider the need to provide assurance for the payment of principal and interest through additional collateral, payment guarantee or otherwise."
UNANIMOUS CONSENT: Unanimous consent was granted to HOLD HB 759 upon the imminent arrival of a new RS.
HB 760: Chairman Crow announced the second item on the agenda was HB 760 and recognized Representative Eskridge. He stated this legislation if brought to you from the interim energy committee and is in response to our growing recognition that we are at the capacity of our low cost hydro system. To supplement we are becoming more reliant upon gas fired generation which carries a higher price and is a volatile fuel source subject to supply and price uncertainty. Renewable energy gives us the opportunity to diversify our energy supply and thus provide supply and price stability.

In addition, the development of renewable energy resources also provides an economic development tool. By encouraging development of wind, geothermal biomass and other renewable resources within our borders, we provide additional employment opportunities, property tax benefits and other economic benefits.

At the same time renewables need a jump start to encourage development of these resources. HB 760 provides that jump start through a tax incentive method. Very simply it is patterned after the broadband tax credit. The legislation would provide an additional 3.0% investment tax credit for a renewable energy project and another 2% investment tax credit if the project is developed in an economically stressed county.

MOTION: Representative Field moved to send HB 760 to the floor with a do pass recommendation.
SUBSTITUTE MOTION: A substitute motion was made by Representative Cuddy to send HB 760 to General Orders with Committee Amendments attached. Amend Section 2 to include language that is in the "broadband investment tax credit for transferability."
ROLL CALL VOTE: Voting Aye: Representative Kellogg, Raybould, Barrett, Ridinger, Schaefer, Collins, Roberts, Denney, McKague, McGeachin, Cuddy, Crow

Voting Nay: Representatives Field, Smith, Wood, Ringo, Martinez, Henbest

Motion passed, 12-6-1

HB 761: Chairman Crow announced the next item on the agenda was HB 761 and recognized Representative Eskridge. He testified that this is another bill to add inducement for developing renewable energy.

This legislation would provide an income tax credit of one-half cent per kilowatt for electric energy generated by wind turbines, solar energy, low impact hydro industrial waste, animal waste, municipal waste, geothermal resources and other renewable resources.

Representative Doug Jones spoke in support of HB 760 & Hb 761 briefly outlining the benefits of using renewable products such as dairy, ethanol plant and straw power generator components.
Rich Raybill testified in favor of HB 761 and supported amending the bill to include the transferability of the tax credit. He said that in the wind power industry it takes years to be profitable.
MOTION: Representative Wood moved to send HB 761 to the floor with a do pass recommendation.
SUBSTITUTE MOTION: Representative Ridinger moved to send HB 761 to General Orders with Committee Amendments attached. Amend Section 1 to include language that is in the "broadband investment tax credit for transferability." Motion passed on a voice vote.
HB 780: Chairman Crow announced the next item on the agenda was HB 780 and recognized Representative Denney. He explained that this legislation deals with interest grants for property tax levies for health and safety of school buildings. Since the legislation passed last year and was effective in September of 2002 some districts used the grants to re-finance old bonds. This was not the intention of the original legislation. Some districts are using the subsidy which amounts to double dipping. The bill amends Section 33-96, Idaho Code, Bond Levy Equalization Support Program, so that provisions of this section may not be used to subsidize projects previously subsidized by state grants.
Phil Homer, Idaho Association of School Administrators, testified in support of HB 780.
MOTION: Representative Kellogg moved to send HB 780 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Denney will sponsor the bill on the floor.
ADJOURN: There being no further business to come before the meeting, Chairman Crow adjourned the meeting at 10:03.




DATE: March 5, 2004
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 Schaefer, Field, Henbest
GUESTS: Speaker Newcomb; Phil Homer, Idaho Association of School Administrators; Russ Hendricks, Idaho Farm Bureau; Jason Hancock, Legislative Services Office
Chairman Crow called the meeting to order and requested a silent roll call. She announced the first item on the agenda was HB 799 and recognized Speaker Newcomb to present the bill.
HB 799: Speaker Newcomb testified that the bill before the Committee was implemented last year and there were some drafting errors. The unintended consequence enabled companies to carry forward losses for twenty years. By rule the State Tax Commission limited the carry forward loss to two years. The bill needs to be amended to change the effective date to 2003 instead of 2004.

Mr. Speaker said all of the rebates should go to the counties which is not included in this bill. Part of Representative Roberts' HB 782 would return the erroneously taken investment credit and would be returned to the counties where the property was located. Mr. Speaker felt this would be fair.

Representative Roberts said he would withdraw HB 781 if HB 799 is amended to reflect part of bill to return the money to the counties affected.

The Statement of Purpose reflects the following amendments to the bill:

1. The bill clarifies that the election is available for qualified property placed in service in calendar year 2003. 2. It clarifies the determination of a loss year. 3. It limits disclosure of tax information exchanged between the State Tax Commission and county assessors. 4. It excludes taxpayers whose rates or returns are regulated according to federal or state law. 5. It provides for the recapture of the property tax benefit of property ceasing to qualify for the investment tax credit or for the election. The bill will be effective on and after January 1, 2003, the effective date of the original legislation.

Suggested amendment: Page 6, line 26 - delete "2004" insert "2003." Add "(f) All moneys collected by the state tax commission pursuant to this subsection, which amounts are continuously appropriated for this purpose, shall be deposited with the state treasurer and placed in the state refund account, as provided by section 63-3067, Idaho Code, to be remitted to the county within which the property was located that was not a qualified investment or ceased to qualify during the recapture period. The county shall distribute this remittance to all appropriate taxing districts based on the proportion each appropriate taxing district's levy is to the total of all the levies of the taxing districts for the tax code area where the property was located for each year the exemption was granted. If any taxing district is dissolved or disincorporated, the proportionate share of the remittance to be distributed to that taxing district shall be deposited in the county current expense fund.

(g) For purposes of the limitation provided by section 63-802, Idaho Code, moneys received pursuant to this subsection shall be treated as property tax revenue by taxing districts."

MOTION: Representative Moyle moved to report HB 799 back with Committee amendments attached to be placed on General Orders for consideration. Seconded by Representative Roberts. Motion passed on a voice vote.
RS 14145C1 Chairman Crow announced the next it on the agenda was RS 14145C1 and asked Representative McGeachin to explain the proposed legislation. She said the purpose of this legislation is to permit the American Legion, a valid Idaho non-profit veterans service organization, to make tax exempt purchases. This legislation would give the American Legion the same exemption that is extended to a number of other groups covered in Idaho Code and would help the Gem Boys State and Girls State programs. The money saved would be direct assistance toward veterans and their children.
MOTION: Representative Barrett moved to recommend that RS 14145C1 be introduced. Motion carried on a voice vote.
RS 14233: Chairman Crow announced the next item on the agenda was RS 14233 and recognized Representative Moyle. He said this proposed legislation is to encourage greater voter turnout at bond elections and at elections to exceed the three percent property tax cap. It would require a minimum voter turnout of thirty percent of the qualified electors or electors authorized to vote at a bond election for the bond to be approved.

If two-thirds of the voters and minimum of thirty percent of the qualified electors, the new budget amount shall be the base budget for the purposes of the three percent property tax cap.

MOTION: Representative Wood moved recommend that RS 14233 be introduced. Motion passed on a voice vote.
HB 754: Chairman Crow announced the next item on the agenda was HB 754 and recognized Representative Roberts to present the bill. Representative Roberts testified that this legislation deals with legislative expenditure limitation by amending 67-6803, Idaho Code. The bill ties the state's budget growth to the increase in state's population and consumer price index. This bill makes a base for reasonable growth in government and stabilizes expenditures and establishes a Taxpayers Reserve Fund. On typical years this cap would probably not be in effect but will hold down expenditures on years that money is available.

He illustrated the expenditure limitations and appropriations comparison with a graph. (Attachment #1) The second part of the hand-out depicted the process by which the Taxpayers Reserve Fund would receive surplus moneys to by refunded to taxpayers.

Representative Roberts stated that this bill is all about protecting the taxpayers when revenues come in high. In response to questions relating to restricting the legislature, he responded by saying if the this bill restricts a future Legislature he thought that's a good thing.

Representative McGeachin said the intent of this legislation is to stabilize the budget process. This bill creates a policy to live within the budget. She passed out a copy of a graph illustrating the Expenditure Limitations & K-12 appropriations comparison in theory. (Attachment #2) The graph reflects the level of spending under this bill could have been lower.
MOTION: Representative Wood moved to send HB 754 to the floor with a do pass recommendation.
Phil Homer, Idaho Association of School Administrators, stated that he doubted the wisdom of dealing with theory. All are in agreement that schools must remain stable to meet all their requirements. He supported charter schools and virtual schools but home schooling must be factored in when public schools have to pick up students. He voiced his concern about a flat budget cycle. When times get good schools make up little ground to help meet demands. In theory HB 754 might work but he was worried that it might not.
Russ Hendricks testified that the members of the Idaho Farm Bureau support HB 754. As taxpayers, his members have long felt that problems with government budgets are not caused by a lack of tax revenues but rather by spending more than is necessary. HB 754 simply places reasonable limits on the growth of government.

We have heard from those who would characterize spending limits as putting the Legislature on "autopilot." We disagree with this assertion. In fact, just the opposite is true. The current system seems to promote spending money on just about any good cause that comes along. As long as there is money coming in it is hard to say no. It is always easy to spend money.

Under the proposed spending limitation it would cause the Legislature to return to the serious business of taking a hard look at each proposal and prioritizing when items truly fall within the role of government to provide.

We believe this bill would take out the volatile boom and bust cycles that we have experienced in the past and would remove the need for emergency tax increases.

Representative Roberts declared that there were technical errors in the bill and yielded to Jason Hancock from Legislative Services Office to explain the errors. He stated that there were mathematical and technical errors on page 3 which needs to be amended.
SUBSTITUTE MOTION: A substitute motion was made by Representative Raybould to report HB 754 back with Committee amendments attached to be placed on General Orders for consideration. Seconded by Representative Moyle. Roll call vote was requested.
ROLL CALL VOTE: Voting Aye: Representative Crow, Raybould, Barrett, Moyle, Collins, Roberts, Wood, Denney, McKague, McGeachin, Cuddy.

Voting Nay: Representatives Kellogg, Ridinger, Smith, Ringo, Martinez.

Substitute Motion passed, 11-5-3

ADJOURN: There being no further to come before the Committee, Chairman Crow adjourned the meeting at 9:40 a.m.




DATE: March 8, 2004
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
ABSENT/

EXCUSED:



Representatives Field, Henbest
GUESTS: Senator Kennedy; Woody Richards, Surplus Lines Association; Rich Rayhill, Ridgeline Energy
Chairman Crow called the meeting to order and requested a silent roll call. Representative Ringo moved to accept the minutes of the meetings held on March 3, 2004 and March 4, 2004 as written. The Chairman assigned HB 716, Property tax exemption, over 70 years of age, sponsored by Representative McKague and HB 781, Property tax exemption/home value increases, sponsored by Representative Deal to the Raybould Subcommittee for further study.
UNANIMOUS CONSENT: The Chairman asked for unanimous consent to HOLD HB 782 which was incorporated in HB 799 sponsored by Speaker Newcomb. Consent was given.
RS 13530C1: Chairman Crow announced the first item on the agenda was RS 13530C1 and asked Senator Kennedy to explain the proposed legislation. Senator Kennedy stated that the purpose of this proposed legislation is to protect homeowners age 65 or older or disabled, 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. This exemption would apply only to owner occupied primary residential properties. The freeze would continue so long as they continued to meet the qualifications and own and live in the home.

There would be no fiscal impact on the general fund in FY 2005. Thereafter, the impact on the general fund would be a reduction in the amount of state funds required for the "circuit breaker" program, an estimated $800,000 in the first year FY 2006. Most who qualify for this exemption now qualify for the "circuit breaker." There would be a property tax reduction to eligible households of $1.8 million in 2006, about $45 per eligible taxpayer. There would be no reduction in the amount of property taxes collected by cities, counties or other local government entities. Annual increases for schools resulting from inflation in residential values would be less than without this change. Based on recent rates of inflation the difference would be $410,000 starting in FY 2006.

There was a brief question and answer period relating to the tax shift.

MOTION: Representative Ringo moved to recommend that RS 13530C1 be introduced. Motion carried on a voice vote. Representatives Crow and Kellogg requested to be recorded as voting no.
RS 13531: Chairman Crow announced the next item on the agenda was RS 13531 and recognized Senator Kennedy. He testified that the purpose of this proposed legislation 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" in 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 maximum percentage of the exemption which is fifty percent of the assessed value of residential improvement.

Residential values have been rising faster than the values of other kinds of property. Once the homeowner reaches the upper limit of $100,000 market value for residential improvements. There is no longer any mitigation for inflation so taxes increase by accelerated rate. Since 1990 the total residential property taxes in Idaho have increased by 194 percent while the total for all non-residential property has increased by 82 percent. The current maximum homeowner's exemption was established in 1983 and has never been adjusted for inflation.

There would be no fiscal impact on the general fund. Cities, counties and other local taxing districts could collect the same amount under the budget cap. Eligible homeowners would see a property tax reduction of about $1.7 million in the first year which would be paid by non-eligible property taxpayers.

MOTION: Representative Kellogg moved to return RS 13531 to sponsor.
SUBSTITUTE MOTION: A substitute motion was made by Representative Barrett to recommend RS 13531 be introduced. Motion carried on a voice vote. Representatives Crow, Kellogg, Raybould requested to be recorded as voting no.
RS 14253: Chairman Crow announced the next item on the agenda was RS 14253 and asked Mr. Richards to submit the proposed legislation. Woody Richards, Surplus Lines Association, testified that this legislation is a trailer bill for HB 724. The bill failed to uniformly change the insurance premium tax which is addressed in both Idaho Code Sections 41-1229 and 41-1233. The premium tax change for surplus lines is being done in one step to avoid confusion for premium taxpayers and to save reprogramming costs each year.
MOTION: Representative Smith moved to recommend that RS 14253 be introduced. Motion passed on a voice vote.
RS 14255: Chairman Crow announced the next item on the agenda was RS 14255 and recognized Mr. Rayhill to present the proposed legislation. Rich Rayhill, Ridgeline Energy, said this proposal exempts renewable energy producing equipment and supplies from the sales tax. He outlined exemptions for renewable energy projects in surrounding states. Now only Idaho imposes a sales tax which makes Idaho renewable energy projects uncompetitive and eliminates any chance for Idaho success in the upcoming bids. This proposal is intended to create parity among state sales tax policy in the Northwest and provide Idaho renewable energy a meaningful opportunity to compete for contracts worth hundreds of millions of dollars.

Presently rural counties in Idaho have the potential to add 5 to 10 large windfarm projects. Each project would result in investment of $120 million, $30 million of which would be spent on local construction using Idaho workers. Once operational each windfarm would provide hundreds of thousands of dollars per year in royalty payments to landowners, local jobs and over $1 million in property taxes. The property tax revenue comes with virtually no increase in the demand on county services.

The direct benefit to local economies is calculated to be $1.7 million per year from each project. This figure is subject to a multiplier effect which in the Bonneville/Bingham area is calculated to range between 2.6 and 2.8 which increases this amount close to $5 million. Even without the multiplier, over the 40 year expected life this brings in $68 million dollars per project.

If projects are exempted from the sales tax Idaho can win contracts and counties will receive millions of dollars. Diversification of energy production will reduce power rates. New energy sources will produce jobs and growth of renewable energy will yield a tremendous, positive fiscal impact throughout the state.

MOTION: Representative Wood moved to recommend RS 14255 be introduced. Motion carried on a voice vote. Representatives Kellogg 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 9:20 a.m.




DATE: February 9, 2004
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 McGeachin
GUESTS: Robert Aldridge, Taxation, Probate, and Trust Section of the Idaho State Bar; Dan John State Tax Commission; David Lehman, Office of the Governor
Chairman Crow called the meeting to order and requested a silent roll call. Representative Martinez moved to approve the minutes of the meetings held on February 4, 2004 and February 5, 2004 as written. Motion passed on a voice vote.
RS13978: Chairman Crow announced the first item on the agenda was RS13978. She said the RS replaces HJR 5 and asked unanimous consent to HOLD HJR 5 in Committee. Consent was granted. Chairman Crow asked Representative Roberts to present the new RS. Representative Roberts reiterated that this RS replaces previous legislation dealing with a constitutional amendment requiring a two-thirds vote to raise taxes.

The Statement of Purpose is as follows: This resolution proposes to amend the Constitution to provide that on and after January 1, 2005 any changes in state taxes that create or increase a tax rate or remove or reduce a state tax exclusion, exemption, credit or deduction, shall require the approval of two-thirds of the entire membership of the house of representatives, approval of two-thirds of the entire membership of the Senate and the signature of the Governor.

If this legislation receives the needed 2/3 approval in both the House of Representatives and the Senate it will then be placed on the November 2004 ballot to be ratified by the voters of the State of Idaho.

There was an active debate as to the extent of restricting taxes or fees.

MOTION: Representative Wood moved to recommend RS13978 be introduced.
SUBSTITUTE MOTION: A substitute motion was made by Representative Ringo to return RS13978 to sponsor. Roll call was requested.
ROLL CALL VOTE: Voting Aye - Representatives Kellogg, Field, Smith, Ringo, Martinez, Henbest, Cuddy.

Voting Nay - Representatives Raybould, Barrett, Moyle, Schaefer, Collins, Roberts, Wood, Denney, McKague, Crow. Motion failed, 7-10-2

Original motion to recommend RS13978 be introduced passed on a voice vote. Representative Kellogg requested to be recorded as voting no.

HB 516: Chairman Crow announced the next item on the agenda was HB 516 and asked Mr. Aldridge to present the bill. Robert Aldridge, Taxation, Probate and Trust Section of the Idaho State Bar, testified that major revisions to the "circuit breaker" and '50-50" homeowners tax reduction provisions of the Idaho Code were made in 2001. This bill is furtherance of those prior revisions by making changes to carry out the best administration and purpose of the prior changes.

In 63-701, Definitions, parts 4 and 7 and other sections in the bill, reference to grantor trusts is eliminated. That status is no longer required to receive the benefits of the property tax reductions.

In 63-701, part 4, the definition of income in relation to dual principal residence applications is clarified.

In 63-703, procedure for filing claims, the application procedure is simplified, especially as to the affidavit in support of the application limiting the information to only information actually needed. The difference between an affidavit for trust ownership and an affidavit for entity ownership is also clarified. The use of the word "grantor" is changed to "claimant" since, as he previously stated, grantor status is no longer relevant. Section d is redundant and is eliminated.

In 63-707, procedure after claim approval, part l (c) is amended to properly state what the assessor shall include on the property tax reduction roll. Part 4 of 63-707 and part l of 63-709 reimbursement by State Tax Commission are contracted and amended to eliminate dual reference to the same determination and to provide a single date, the third Monday in November, for the provision of such data and payment by the State Tax Commission to the county. This makes the layout of the two sections more logical and compact and eliminates the conflict in dates in the two sections.

In 63-602G, property exempt from taxation - residential improvements, lengthy affidavit procedures are eliminated. The same informational requirements are already set forth in section 63-703(4) and a simple cross-reference to that section is substituted. This also eliminates differences and conflicts in the two code sections as to what information and supporting documents were required to be submitted.

Since making the change in the midst of a tax year would be difficult the bill also declares an effective date of January 1, 2004.





In response to a question whether these changes had gone through the resolution process and approved by the Bar Association, Mr. Aldridge said that they had not but the changes had been furnished to the Bar. . He said the resolution process is prior to December 1 st and would not be reviewed until next year. The changes had been reviewed by his Committee and the Tax Commission.

MOTION: After a short question and answer period Representative Smith moved to HOLD HB 516 time certain, February 23, 2004 in order for the Bar Association to review and have input. Motion passed on a voice vote.
Mr. Aldridge stated that his Committee had already reviewed the legislation and the Bar Association would not meet until next year.
HB 537: Chairman Crow announced the next item on the agenda was HB 537 and recognized Mr. John to present the bill. Dan John, State Tax Commission, testified that this bill changes the time when Idaho employers must file income tax withholding returns from quarterly to annually. The payment does not change, only the reconciliation of withholding report to be filed quarterly. This saves the Tax Commission and the employer needless contact. He stated that the Idaho Certified Accountants support this bill.
MOTION: Representative Raybould moved to send HB 537 to the floor with a do pass recommendation. Motion passed unanimously on a voice vote. Representative Raybould was assigned to be floor sponsor.
HB 538: Chairman Crow announced the next item on the agenda was HB 538 and recognized Mr. John. Dan John, State Tax Commission, testified that each fiscal year the state distributes to counties, cities, school districts and other local taxing districts an amount of state funds intended to replace revenues lost when agricultural equipment was exempted from property tax in 2001.

This bill changes where the money comes from to replace these funds. Under current law these funds are paid from the state refund account. When the refund account is depleted the State Tax Commission has to go to the Board of Examiners to increase the fund, this is an unnecessary step as the money comes from the same source. This bill will change the distribution to come from revenue received from the Sales Tax Act.

MOTION: Representative Roberts moved to send HB 538 to the floor with a do pass recommendation. Motion passed unanimously on a voice vote. Representative Moyle will sponsor the bill on the floor.
HB 567: Chairman Crow announced the next item on the agenda was HB 567 and recognized Mr. Lehman to address the legislation. David Lehman, Office of the Governor, testified that this bill removes the limitation on premiums paid for long term care insurance and allows the deduction for one hundred percent of the premium.

The Governor is the Chairman of the National Governors Association and his initiative is long term care solutions to reduce costs to medicare and medicaid by private long term care.

Mr. Lehman addressed the costs of long-term care and the availability of information provided for taxpayers to obtain long-term insurance.

MOTION: It was moved by Representative Wood to send HB 567 to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Field was assigned to sponsor the bill on the floor.
ADJOURN: There being no further business to come before the meeting, Chairman Crow adjourned the meeting at 10:45 a.m.




DATE: March 15, 2004
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: Speaker Bruce Newcomb; Steve Ahrens, Idaho Association of Commerce and Industry; Brad Hoaglun, Idaho Outfitters & Guides Association; Mike Brassey, Suncor Development Company
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 March 9, 2004 as written. She assigned HB 826 and HB 827 to the Raybould Subcommittee to be considered along with other property tax exemptions.
SB 1439: Chairman Crow announced the first item on the agenda was SB 1439 and recognized Mr. Speaker to present the bill. Mr. Speaker testified that this bill is similar to a bill last year but without taxing authority. It is restricted to counties only and allows counties to create an intermodal commerce authority. The State can give grants if the criteria is met, and the ability of a port authority to get loans must stand on its own.

This proposal creates a new section 70-2201 authorizing the creation of a county-based intemodal commerce authority. The local commerce authority shall not have taxing authority and is designed to create, stimulate and advance commerce and economic development in the local jurisdiction and for all Idaho. Any board of county commissioners may create or abolish the intermodal commerce authority. A board of local intermodal commissioners shall serve as the management team. A county-based intermodal commerce authority may acquire assets and revenue from loans or it may issue and secure bonds according to article VIII, section 3B of the Idaho Constitution, but only to the limit of assets held by the intermodal authority and other revenue generated by economic operations of the authority. The authority is empowered to receive federal, state or local money including gifts, grants, direct appropriations and to enter into contracts, acquire, hold and lease property only for purposes of promoting local and statewide economic growth and commerce, maintaining facilities for commerce, commodity shipping, transportation transfer and storage.



In response to questions posed by the Committee, Speaker Newcomb stated no way would the State or county be responsible for or underwrite a loan to the intermodal commerce authority.

Steve Ahrens, Idaho Association of Commerce and Industry, testified in favor of SB 1439 saying the Association was against the bill last year because of the taxing authority. This bill is different and the Association supports this design for economic development. During the interim the concept was worked on to produce an economic development authority without the sticking point of property tax.
PRO: Attached are letters in support of SB 1439:

Intermountain Forest Association; Food Producers of Idaho, Inc; Idaho Grain Producers Association; Avista Corp; Idaho Association of Counties

Mr. Speaker advised the members there had been lots of work put into the development of this legislation for two years. This is an attempt to help rural counties. The Simplot company donated their facility to the City of Burley and the implementation of this bill will give a hand for economic development in the future.
Representative Moyle apologized for not having prepared amendments to SB 1439 and recommended the bill be amended as follows:

Page 5, line 10 after the word "authority" delete "may" and insert "shall"

Page 6 delete "Section 70-2214", this deletes the tax exemption.

Representative Barrett voiced concerns with Section 70- 2205 "Cooperation of County" and recommended it be amended to limit responsibilities to the intermodal commerce authority.

There was a brief question and answer period relating to bond security and liability.

MOTION: Representative Moyle moved to send SB 1439 with the two committee amendments attached to be placed on General Orders with Committee amendments attached for consideration. Motion carried on a voice vote. Speaker Newcomb will sponsor the bill on the floor
HB 800: Chairman Crow announced the next item on the agenda was HB 800 and recognized Mr. Hoaglun to present the bill. Mr. Hoaglun representing the Idaho Outfitters & Guides Association, said problems have arisen relating to the agricultural exemption. The bill needs to be amended as follows:

This legislation clarifies the taxation of agricultural property when that land is leased for the grazing of livestock. The new language defines a bona fide lessee as a for-profit business that grazes livestock that will be sold or used in their business.

Additional language puts into statute that any sale or lease of hunting or fishing rights on the property does not change the tax status of the land if it meets the definitions of 63-604, land devoted to agriculture.



Representative Wood stated that this legislation needs to be amended to clarify the taxation of agricultural property when that land is leased for the grazing of livestock. New language defines a bona fide lessee as a for-profit business that grazes livestock A definition of for-profit is included.

MOTION: Representative Wood moved to send HB 800 to the floor with committee amendments attached to be placed on General Orders for consideration. Motion carried on a voice vote. Representative Roberts will sponsor the bill on the floor
HB 832: Chairman Crow announced the next item on the agenda was HB 832 and asked Mr. Brassey to address the bill. Mike Brassey representing the Suncor Development Company submitted that this legislation relates to taxation and to local government providing for the formation of a public infrastructure improvement district by a petition filed by 100 % of the owners of all the land in which the proposed district would be located.

This legislation has been reviewed extensively by Tax Commission staff, Highway district staff, county and city associations. There have been changes made to the original bill which were reviewed on March 9, 2004. There were several questions as to maintaining the infrastructure. Mr. Brassey responded stating before the formation of the district the developer must file the development plat with the county planning and zoning and highway districts. In essence the purpose of this is to create an infrastructure financing vehicle.

Steve Ahrens, Idaho Association of Commerce and Industry, said HB 832 is a unique concept creating a district with one owner. IACI has looked at this legislation intensely and supports this bill which has much to offer in taxing of development projects. In response to a question, Mr. Ahrens said the homeowner has information of taxes up-front.
To wrap up the testimony, Mr. Brassey stated that improvements such as roads would be transferred to government entities in the same way such property is now transferred.
MOTION: Representative Kellogg moved to send HB 832 to the floor with a do pass recommendation.
SUBSTITUTE MOTION: A substitute motion was made by Representative Moyle to HOLD HB 832 in Committee. Roll call was requested.
ROLL CALL VOTE: Voting Aye: Representatives Barrett, Moyle, Wood, Denney, McKague, McGeachin, Martinez.

Voting Nay: Representatives Kellogg, Field, Schaefer, Smith, Collins, Roberts, Ringo, Henbest, Cuddy, Crow. Motion failed, 7-10-2

Motion to recommend a do pass carried. Representative Moyle requested to be recorded as voting no. Representative Smith will sponsor the bill on the floor.

HB 810: Chairman Crow announced the next item on the agenda was HB 810 and recognized Representative McGeachin. She testified that on page 1, line 28 and 29, exempt sales to, or purchases by, a veteran service organization which will be sales tax exempt under section 501 (c) (19). Page 3, line 28 through 32 defines "veterans service organization."

She gave a dissertation on the American Legion, a valid Idaho non-profit Veterans Service Organization, activities, including their creed. She also read excerpts of the Internal Revenue Code defining veterans associations who qualify for the non-profit organization.

MOTION: Representative Barrett moved to send HB 810 to the floor with a do pass recommendation. Motion carried on a voice vote. Representative McGeachin will sponsor the bill on the floor. Representative Kellogg requested as voting no.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 11:08 a.m.




DATE: March 17, 2004
TIME: 8:30 a.m.
PLACE: Room 404
MEMBERS: Chairman Raybould, Representatives Moyle, Schaefer, Collins, McKague, Martinez,
ABSENT/

EXCUSED:

None
GUESTS: Archie Banbury, Valley County Assessor; Phil Homer, Idaho Association of School Administrators; Marilyn Knighton, Treasurer IAC; Todd Lakey, Canyon County Commissioner; Dan John, State Tax Commission.

Chairman Raybould called the meeting to order at 8:30 a.m. and requested the secretary take a silent roll call. He asked the committee to hear and discuss all four of the bills before a motion is made. He also explained that testimony will be heard after all of the bills have been presented to the committee.

HB 716:







HB 781:






Chairman Raybould announced the first item on the agenda was HB 716 and recognized Representative McKague to present the bill. Representative McKague stated this legislation allows for a property tax exemption for $150,000 assessed valuation for seniors over seventy years of age. The property must be owner-occupied residences. The owners may apply for the tax exemption on that property each year. If the property is sold it will be assessed at market value and the counties would recoup the losses.

Next on the agenda was HB 781 with Representative Deal presenting the bill. He explained the escalating of property values has become a serious financial burden on the elderly. This has been a concern for legislators for several years and legislators have been working to solve this problem.

The statement of purpose reflects that the proposal to cap the percent of increase that can be experienced in any one year by residential property owners for his/her primary residence. Higher property values in certain areas result in homes being assessed at prices considerably higher than the prices originally paid which has resulted in a hardship for the elderly. This proposed legislation avoids this hardship by capping assessed valuation increases to no more than three percent per year. When the property is sold the market value would be reviewed. The cap would apply to owners of the primary residence who qualify for the exemption provided in 63-602G, 50/50 homeowners exemption.

Representative Deal asked to yield to Representative Eskridge.

Representative Eskridge spoke in support of an emotional issue regarding people in his district who are forced to sell their homes because of the increasing property taxes. This is due to increase in the market value of homes which are purchased at a higher price in their area. He further stated that this is a real problem for homeowners and there is a possibility that there will be an Initiative brought before the voters if there is no help from legislation.

General discussion followed as to the tax shift and the need to help the property owner.



HB 825:

The Chairman called upon Senator Kennedy to explain the proposed legislation. Senator Kennedy stated that the purpose of this legislation is to protect homeowners age sixty-five or older or disabled, from increased property taxes resulting from increases in taxable value. This applies to household income before taxes, if it 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. This exemption would apply only to owner occupied primary residential properties. The freeze would continue so long as the owners continued to meet the qualifications and own and live in the home.

Fiscal impact was discussed with a brief question and answer period relating to the tax shift.

HB 826:



























MOTION:

Chairman Raybould announced the next item on the agenda was HB 826 and recognized Senator Kennedy. He testified that the purpose of this proposed legislation 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" in the National Consumer Price Index. If the CIP 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 maximum percentage of the exemption which is fifty percent of the assessed value of residential improvement.

There would be no fiscal impact on the general fund. Cities, counties and other local taxing districts could collect the same amount under the budget cap.

Chairman Raybould then called upon Archie Banbury, Valley County Assessor. Mr. Banbury expressed hope for a bill which would be a combination of the four bills which will satisfy the problems of property owners.

Marilyn Knighton, Treasurer IAC spoke in favor of a 'true fix' of the property tax problem.

Todd Lakey, Canyon County Commissioner, asked for a good solution from a possible combination of parts of all of the bills.

Chairman Raybould asked Dan John to offer information regarding the bills. He stated in studying all of the concepts together and taking the best parts of each one, there is still on thing that is consistent...someone else pays the tab.

Representative Moyle moved to return all four bills to the full committee with a recommendation to HOLD in committee with the suggestion of possible further review by an interim committee.

There being no further business to come before the subcommittee Chairman Raybould adjourned the meeting at 9:03 a.m.





DATE: March 19, 2004
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
ABSENT/

EXCUSED:

None
GUESTS: Roy Eiguren, ValleyRide
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 15, 2004 as written.
SUBCOMMITTEE REPORT: Representative Raybould submitted the Raybould Subcommittee report and said the Committee heard testimony on HB 716, Property tax exemption, over 70­sponsored by Representative McKague; HB 781, Property tax exemption/home value increase - sponsored by Representatives Deal. Campbell, Eskridge and Senator Keough; HB 825, HB826, Property tax homeowner exemption and adjustment - sponsored by Senator Kennedy. The Committee recommendation was to hold these bills in Committee with the suggestion of possible further review by an interim committee.
MOTION: Representative Raybould moved to HOLD HB 716, HB 781, HB 825, HB 826 in Committee. Motion passed on a voice vote. Representative Henbest voted no.
Chairman Crow announced there seventeen bill in Committee that need action. They are as follows:
HB 476 School dist, property tax repl, personal bill filed by Representative Robison.
HB 550 Schools, unsafe, unhealthy, levy, personal bill filed by Representative Ringo
HB 582 Income tax, individual, credit, personal bill filed by Representative Ringo
HB 599 Property tax, rural homesite development, sponsored by Representative Roberts
HB 600 Property, tax sale, process, sponsored by Rep. Eberle
HB 650 Real property, transfer, certificate, sponsored by Idaho Association of Counties
HB 660 Library distr, levy, sponsored by John Watts
HB 662 Library distr, libraries join, when, sponsored by Mr. Watts
HB 689 Auditorium dist fund, use, sponsored by David Kerrick
HB 690 Hotel/motel tax, graduated rate, sponsored by David Kerrick
HB 746 Cemetery dist, property tax levies, sponsored by Representative Stevenson
HB 788 Income tax credit/natural resources, sponsored by Senator Stennett
HB 827 Alternative energy/sales tax exemption, sponsored by Rich Rayhill
SB 1437 Streamlined sales tax agreement, sponsored by Senators Andreason, Bunderson and Rep. Snodgrass

Held in the Kellogg Subcommittee:
HJR 006 Taxpayers Bill of Rights, sponsored by Reps Barrett and Wood
HJR 007 Taxpayers bill of Rights, sponsored by Rep. Barrett
HJR 010 State taxes, change, 1/3rd majority , sponsored by Reps Roberts and McGeachin

MOTION: Representative Kellogg moved to HOLD the above listed bills in Committee. Motion carried on a voice vote. Representative Ringo requested to be recorded as voting no.
SB 1422aa Chairman Crow announced the only item on the agenda was SB 14422aa and recognized Mr. Eiguren to present the legislation. Roy Eiguren stated he was representing Valley Ride a public transit company. The purpose of this legislation is to clarify that regional public transportation authorities, as political subdivisions of the State of Idaho, are to be treated like other political subdivisions of the State of Idaho with respect to the imposition of fuel taxes.

There are two public transit systems in Idaho; ValleyRide and Targee transit system located in Bonneville County. Currently there is a dispute between ValleyRide and the State Tax Commission requiring the payment of the special fuel tax. The Tax Commission maintains that there is a conflict in the Code and to prevent litigation this bill clarifies this difference.

MOTION: Representative Ridinger moved to send SB 1422aa to the floor with a do pass recommendation. Motion passed on a voice vote. Representative Crow will sponsor the bill on the floor.
ADJOURN: There being no further business to come before the Committee, Chairman Crow adjourned the meeting at 8:40 a.m.