Untitled Document

2009 State of the State/Budget Message

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As was reported last month, my plan boils down to three points.

First, accountability and efficiency.

Money we already have and any new revenue we generate must be put to work as efficiently as possible. We must be able to see measurable results from those efficiencies to ensure that they meet our expectations.

That’s why I directed the Idaho Transportation Department last month to immediately cut its administrative costs by 10 percent. That’s consistent with the kind of efficiencies that other agencies are being required to identify, even though ITD’s revenue is not part of the General Fund.

In addition, ITD will be submitting an annual accountability report to me, the Idaho Transportation Board, and the chairs of the House and Senate Transportation committees. That report will detail all the revenue generated for transportation work each year, and exactly where and how it’s spent.
The report also will provide updates on ITD’s progress toward implementing the recommendations of all legislative audits and outside reviews of the agency’s operations.

Additional accountability measures will be put in place – and they will be closely monitored to ensure that all transportation dollars are put to their best and most efficient use.

But no amount of efficiency – however important – will make up for the hard fact that we have let our investment deteriorate. We have not kept up with the kind of maintenance and repairs that any good enterprise must make a priority for such a basic capital resource. And we have not kept up with our population growth or the demands of our citizens and economy.

Simply put, our transportation revenue system isn’t designed to meet our needs today.

So the second part of my plan is generating new revenue.

I’m proposing to increase our fuel tax by 2 cents a gallon in each of the next five years – for a total of a 10-cent increase in the tax, to 35 cents a gallon.

That will bring in about $17.6 million in additional fuel tax revenue the first year. And after five years it will generate a total of about $88 million a year extra for transportation.

To put that in perspective, we raised the fuel tax to 25 cents 13 years ago. And now here we are trying to accomplish 2009 goals with 1996 dollars. Everyone in this room or listening to me throughout Idaho today – everyone who has a household budget or runs a business – knows that just doesn’t work.

So I also will be asking you to approve increases in our vehicle registration fees in a way that updates our system while continuing to take the age of vehicles into account.

My plan will raise about $15 million in new revenue from registration fees in the first full year it’s implemented. After five years, the registration changes I’m proposing will generate about $51 million a year in additional revenue.

I also am proposing a 6-percent excise tax on car rentals, and that we eliminate the ethanol exemption from the fuel tax. And I want to shift the 5 percent of fuel tax revenue that the Idaho State Police NOW gets in order to put another $16 million a year into our roads and bridges.

Along with registration fee and fuel tax increases for truckers, the third part of my plan includes establishing a task force on truck transportation to study the validity of – and perceived inequities in – Idaho’s truck registration system.

At the same time, I’m going to take the advice of House Transportation Chairman JoAn Wood.
And by the way, I want to thank JoAn AND Senate Transportation Chairman John McGee for their work and leadership on this issue.

Chairman Wood has been saying for some time that the General Fund should be contributing to our transportation system. So I’m going to direct the Tax Commission to set up a system to track the sales of all automobiles, tires and auto parts.

Determining the size and stability of that particular revenue stream is a necessary step before we can even consider using those sales tax receipts for our highways and bridges. While I am not advocating a shift in those revenues today, it is important for us to compile the data so that we can make informed decisions down the road.

My overall plan ultimately will raise more than $174 million a year in new revenue for transportation after five years. Now, I know that’s not the $240 million a year that we all have been talking about. But these are difficult times for many Idahoans. And as I said earlier, it is important that we find ways to do our jobs within their means.

I also am convinced that we don’t yet fully understand all that we as a state – as a family – are capable of achieving together.

So along with a lot more efficiency, greater accountability and setting our priorities wisely, six months of listening to the Idahoans who hired us tells me that this conservative, measured and phased-in approach will work.

Now, I know there is never a good time to raise taxes or user fees. I have fought against over-taxation my entire career – here at home and as a member of Congress.

But I also am an old farmer and agri-businessman. I know what it is to struggle with the cost of staying in business – much less planning for the next year’s budget.

And ladies and gentlemen, I can tell you that we are shirking our responsibility and ignoring the facts if we don’t step up to our duty to maintain what taxpayers already have built, to do what’s necessary to sustain and enhance our economy and quality of life.

Answering our transportation challenges – like facing our budget dilemma – will require the vision to see opportunities where some might see only problems.

The time for debate has passed. We have talked this issue to death.

And to paraphrase Teddy Roosevelt, “Rhetoric is a poor substitute for action. … If we are really to be a great (state), we must not merely talk (big) – we must ACT big.”

It will require that same kind of vision and commitment-to-act if we are to tackle our other important and pressing concerns – from jobs and energy to education and health care. But we must never forget that our challenges are not about “us.” They are about the people we serve and the principles that guide our course.

As President Eisenhower once said, our principles must be in furtherance of “a nation whose every citizen has reason for bold hope, where effort is rewarded and prosperity shared, where freedom expands and peace is secure.”

President Eisenhower also said that, “Policies not based on principle retreat to expediency.”
Folks, I will not retreat to expediency!

Continued