Idaho 2008 Legislative Session Recap

$134 million in GARVEE funding not enough to ease state’s transportation concerns

Idaho AGC disappointed with lack of transportation funding and personal property tax resolution.

The Idaho Legislature adjourned April 2 on the 87th day of the 2008 legislative session. At the end, there was irony all around.

At the beginning of the session, many legislators and pundits predicted it would be a short session. It was one of the longest in Idaho history.

At the beginning of the session, GARVEE proponents were gearing up for the annual legislative battle after years of GARVEE being the proverbial and controversial “going home bill.” Instead, the $134 million GARVEE authorization passed relatively easily and early, despite some attempts to derail the program.

At the beginning of the session, virtually everyone agreed the state needed to find solutions to Idaho’s transportation funding crisis. “Well, at least we got GARVEE,” observed a key legislator, disappointed that legislative transportation funding efforts crumbled along with Idaho roads and bridges.

At the beginning of the session, the majority of Idaho legislators seemed supportive of following up on their 2001 promise to remove the personal property tax on all business tools and equipment. At the end of the session, the legislature unanimously approved a significantly watered-down version that limits the personal property tax relief by exempting the first $100,000 in value but still requiring the onerous and complex reporting requirement for every business regardless of the $100,000 threshold.

For the construction industry, the failure to find resolution on long-term transportation funding was a disappointment. Amending the personal property tax repeal under the guise of helping “small business” was disappointing because $100,000 provides little relief to equipment-intensive industries such as construction, and the cumbersome and costly tracking and reporting is still required of every Idaho business regardless of size.

GARVEE UPDATE: The latest round of GARVEE passed the Idaho legislature relatively easily, and Governor Butch Otter signed HB 657 on April 1 authorizing an additional $134 million Though there were efforts by some House members to make this GARVEE’s last year (HB 581), those efforts failed. Based on the Legislature’s action this year, GARVEE is on track. Here are some quick facts:

• Total anticipated program at the end of the process: $998 million (from 5 annual legislative authorizations)
• Legislative authority to date: $597 million (including recently passed third authorization for $134 million in FY09)
• Board approved bond sales to date: $463 million (total of first two authorizations)
• Proceeds from bonds sold to date: $362 million (next sale planned for Fall 2008 and will likely also include the $134 million so that all $597 million in authority would be sold)
• Currently under contract: $168 million (another $200+ million is anticipated by end of 2008)
• Expended through March: $98 million

TRANSPORTATION FUNDING HITS A ROADBLOCK: Last year, Governor Otter started outlining the significant transportation funding problem facing Idaho. Based on a January 2006 report from the “Forum on Transportation Investment,” Idaho faces over a $200 million annual shortfall in maintenance of our transportation infrastructure.

The Forum worked for almost two years and included 57 stakeholders representing public agencies, transportation service providers, public transportation providers, private sector companies and organizations representing a broad spectrum of the business community, and elected officials.

Despite the well-documented needs for transportation funding, there was no consensus in the legislature this year to address the issue. The governor and the Idaho Transportation Coalition initially waited for legislators to introduce a package. When that was not forthcoming, the governor proposed some bills to “begin the conversation” recognizing his bills were starting points to be amended. When citizens and legislators alike criticized his proposals, the governor withdrew them suggesting that legislators should develop a package of their own. The result was a confusing, politically-charged process with little clear leadership and subgroups of legislators launching inadequate and politically unfeasible alternatives. Toward the end of the session, one bill emerged that the governor’s office suggested was “a good start;” however, HB 689 ultimately was pulled amidst the political infighting and election-year politicking. In the end, an audit of the Idaho Transportation Department will go down as the sole new initiative of the 2008 Legislature to address Idaho’s crumbling roads and bridges.

The Governor has committed to putting together a group soon to begin work on a transportation bill that can be “shopped” throughout the state well in advance of the 2009 session. The AGC will be part of those discussions.

PERSONAL PROPERTY TAX “COMPROMISE” A DISAPPOINTMENT: Idaho used to tax all personal property. Even pots, pans, and furniture of private citizens were subjected to the tax. Over the course of the past 100 years, Idaho’s legislature has systematically and slowly eliminated this tax on all sorts of personal property recognizing it is unfair and complex to comply. In 2001, the legislature eliminated the tax on certain agricultural personal property and promised the business community at the same time that the legislature would ultimately repeal of the last vestige of the tax by finally removing it from all business tools and equipment.

For the past two years, the AGC has been part of a broad-based business coalition whose goal is to secure a repeal of the personal property tax in a reasoned and fiscally-responsible phase out. The original version of HB 599 would have phased out the personal property tax over several years contingent on state revenues meeting certain key benchmarks. County governments, which are the recipients of personal property tax revenue, would have received reimbursement from the state at a set amount forever regardless of whether or not personal property tax values increased or declined -- as they have been for years. As HB 599 ultimately emerged through this convoluted legislative process amidst angst about the state budget and reelection bids, the old adage about “those who enjoy sausage and the law should never watch either being made” was appropriate. This year, HB 599:

Passed the House of Representatives and was sent to the full Senate with a “do pass” recommendation by a key Senate tax committee;

Senate Republicans subsequently emerged from a closed-door caucus having rejected further concessions from the business coalition. Instead, they recommended adopting a version of the House Democrats amendments to HB 599. The Senate amended the bill and passed it unanimously over the objections of the business coalition;

The House of Representatives rejected the Senate amendments, but a conference committee of House and Senate further amended the bill which both the House and Senate then unanimously approved.

A conference committee is highly unusual in Idaho, and the compromise that came forth from that group includes the following provisions:

• The state’s budget must meet certain benchmarks before any personal property tax relief and payments to counties is made;
• The first $100,000 worth of personal property is exempt from taxation -- pending state revenue “triggers;”
• A company with operations in multiple counties is able to take one $100,000 exemption in each of the counties;
• Companies regardless of size and the $100,000 value are still required to track and report their personal property tax in order to assure compliance.

Ultimately, the business coalition’s united opposition to the final amended version of HB 599 was futile as even legislative supporters of the business position felt compelled to support at least some business tax relief. In the end, the writing was on the wall, and HB 599 as amended multiple times passed both the House and Senate unanimously with little comment.

Leaders of the business coalition plan to continue working with legislators – and candidates – on fulfilling the oft-delayed legislative promise – made again this year even by those legislators instrumental in defeating the original bill – of complete repeal.

GOVERNOR SIGNS AGC BILL ON ENERGY SAVINGS PERFORMANCE CONTRACTS: On April 1, Governor Butch Otter signed into law HB 556 which was the AGC-sponsored legislation designed to clarify the intent of energy savings performance contracts. Current Idaho law outlines procedures for “Energy Savings Performance Contracts” which means a contract between a public entity and a qualified provider or a qualified energy service company for “evaluation, recommendation and implementation of one or more cost-savings measures” aimed at energy cost savings. Recently, some local public entities in Idaho have interpreted the law to allow for the complete construction of new facilities rather than retrofitting existing facilities which was the original legislative intent.

NAWIC Hosts CAD Competition

The Utah chapter of NAWIC (National Association of Women in Construction) held the 2008 High School CAD/Hand Drafting awards at the Mountainlands Area Plan Room April 9. The chapter also hosted the Regional Competition Awards covering five Western States. The competition is open to all High School Students. All Utah High Schools were invited to participate. The winners and participants, received certificates, prizes and cash for their efforts.

The project this year was a dental office, which the students designed through the use of CAD programs to came up with their own set of plans for judging.

Local area businesses that contributed time and money to the event included Mountainlands Area Plan Room, Steel Encounters, Big-D Construction, Canam Steel, and Wheeling Corrugating. The judges took the time to explain to the new up and coming drafters what they could do to make their projects better and more user friendly.

Local winners:

First (tie): Leighton Weeks, Hunter High School; Joshua Burns, Layton High School.

Second: Jordan Okabe, Layton High.

Third: Clark Tezail, Layton High School.

Weeks also placed second in CAD drafting in the regional competition.

PCI Invests in Seismic Research

The Chicago-based Precast/Prestressed Concrete Institute (PCI) is in the final year of a five-year, $2 million-plus research program to improve industry standards for the design and construction of diaphragms used with precast, prestressed concrete components. As part of that research, researchers simulated eight levels of seismic forces on a field model using the largest outdoor “shake table” in the world during April and May.

The high-profile research program was carried out by a consortium of three universities. It was led by Dr. Robert B. Fleischman, associate professor in the Department of Civil Engineering & Engineering Mechanics at the University of Arizona in Tucson. Researchers at the University of Arizona have been conducting comprehensive analytical research on the program, while full-scale static tests of reinforcing details and precast concrete connections have been conducted at Lehigh University in Bethlehem, Pa., under the direction of Dr. Clay Naito. The shake-table testing will take place at the NEES/Englekirk Structural Engineering Research Center in San Diego, Calif., under the direction of Dr. Jose Restrepo from the University of California at San Diego.

The primary objective of the research was to better understand the behavior of precast concrete diaphragms, which have grown in importance since the 1994 Northridge earthquake in California, explains Paul Johal, director of research and development for PCI. The massive temblor, measuring 6.8 on the Richter scale, caused significant damage to several precast concrete parking structures. “The proper design criteria for connections between the floor diaphragms and the gravity-load-resisting elements are critical, but no large-scale experimental program has been conducted to develop rational design methodology,” Johal explains.

The program was funded with grants from the National Science Foundation (NSF), the Network for Earthquake Engineering Simulation (NEES), and The Charles Pankow Foundation (CPF), with substantial industry support from PCI.

Team Turtle Raises $12K for MS

‘Team Turtle’ – a group of individual from the A/E/C industry – raised nearly $12,000 during the National MS Society Utah State Chapter’s 19th Annual MS Walk April 12 in Salt Lake City. Team Turtle, which includes designers, architects, engineers and contractors in Utah, has participated in the event for the past eight years. For more information about Team Turtle or the National MS Society, visit www.nationalMSsociety.org.