Gov. Otter proposes big leap for education funding

BOISE - Idaho Gov. C.L. (Butch) Otter highlighted multiple priorities during his ninth State of the State address Monday, including proposing the largest increase in public school funding since 2008.

Otter's 2016 budget recommendation includes $1.476 billion for K-12 education, a $101 million, 7.4 percent increase over 2015. His overall general fund budget is up 5.2 percent, to $3.09 billion.

During the State of the State, the governor also proposed a five-year plan to eliminate the state's top corporate and individual tax bracket, urged lawmakers to finally address "the elephant in the room" and improve transportation funding, challenged rural communities to approve community college taxing districts and offered support for reforming and possibly expanding Medicaid.

Following the speech, Otter said this was the largest jump in education funding he's ever proposed.

"I think it's warranted," he said. "Public schools are the most fundamentally proper role of government. They're essential to the health of our families, our communities and our economy."

The budget recommendation includes $32 million as a first step toward a new "career ladder" pay plan that would increase pay for rookie and veteran educators by about $200 million. It also bumps discretionary funding by $20 million, building on a $35 million increase that was approved last year.

Rep. Maxine Bell, R-Jerome, co-chairwoman of the joint budget committee, said there's little chance lawmakers will scale back the $101 million, given the vocal support Republicans expressed for education during the 2014 elections.

However, if education stakeholders can't agree on the details of the career ladder plan and how the ladder ties in with new teacher accountability measures, Bell said budget writers may put more into discretionary funding and less into teacher pay.

Local school districts use discretionary dollars to cover utilities, health insurance and other basic needs.

House Minority Leader John Rusche of Lewiston found little to disagree with about the governor's priorities, saying Idaho Democrats have been pushing many of these issues for years.

"I think the governor is hearing the same thing (from Idaho citizens) that we've been hearing," he said. "We've tried cutting education, we've tried limiting support for infrastructure maintenance and we've found our way to the bottom of the economic barrel. We wish the governor Godspeed (on his priorities). We're with him on this."

Now that the governor has offered his recommendations, the joint budget committee will begin hearing from agency directors. It's expected to complete the budget-setting process in mid-February. The germane committees will also consider the governor's policy recommendations.

Other priorities Otter cited during the State of the State address include:

Community colleges

Pointing to the remarkable success of the College of Western Idaho, which quickly became the largest community college in the state after Ada and Canyon County voters approved it in 2007, Otter challenged rural areas to create their own community college taxing jurisdiction as a means to address their education and workforce development needs.

CWI "forever changed the way education is delivered here in Idaho's most populated area," he said. "(It's) providing affordable, accessible and responsive resources for both students and employers to meet their education and career-training goals."

Much of the funding for community colleges comes from tuition and local property taxes. However, the state general fund support amounted to $32 million in 2015.

That would necessarily increase if communities accept the governor's challenge, but Sen. Dean Cameron of Rupert, the other budget committee co-chairman, said that's a good problem to have.

The state wants 60 percent of high school graduates to go on for postsecondary education by 2020, he said, but soaring university tuition rates work against that goal. Community colleges can help bridge the gap.

"I loved it," Cameron said. "I thought the governor's challenge was very appropriate."

Transportation funding

Although the governor didn't offer any specific ideas, he said it's time for the Legislature to "address the elephant in the room" and tackle the highway maintenance funding shortfall.

"The maintenance backlog we already have makes it even more important to figure out how to pay for the hundreds of millions of dollars in improvements needed to protect Idaho lives and the corridors of commerce," Otter said. "After education funding, investing in infrastructure is among the smartest, most cost-effective uses of taxpayer dollars."

The governor said he would welcome legislation to address the issue, although he quashed the idea of using transportation-related sales tax revenue, since it would take money away from education and other general fund priorities.

Streamlined sales tax

Given that Congress may be ready to pass the Marketplace Fairness Act, which lets states collect sales tax on online purchases, Otter said it's time for Idaho to change its tax codes to allow the practice.

"Not only is this a fundamental matter of fairness for those brick-and-mortar businesses in our communities," he said, "it's also a matter of securing our own long-term prosperity."

The sales tax on online purchases made in Idaho amounts to about $82 million per year, he said, and that will likely grow as online shopping becomes a larger and larger share of retail sales.

Medicaid expansion

Although he's encouraged by opportunities to reform Medicaid, including adopting personal responsibility measures and paying providers for healthy outcomes, rather than by volume, Otter isn't necessarily ready to support Medicaid expansion.

He essentially deferred to legislators on the issue, saying he wants to see what they propose before tipping his hand.

Rusche said there's no doubt expanding Medicaid to cover more low-income Idahoans would save lives and save counties and the state millions of dollars in indigent health care costs.

However, Senate President Pro Tem Brent Hill, R-Rexburg, said this issue goes beyond dollars and cents.

"There are some outstanding incentives for expanding Medicaid," he said in a meeting with reporters last week. "The problem is we have to deal with political realities. Every argument that's made for expanding Medicaid was an argument made for passing the Affordable Care Act - and I don't know any Republicans who would vote for the ACA."

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Spence may be contacted at bspence@lmtribune.com or (208) 791-9168.