Rep. Nate's Three Issues of the Week:

The Chairman’s Drawer: A Morgue for Bills

One of the questions I get often, but have a difficult time answering, is how a bill gets killed without ever being put up for a vote.  I have a hard time answering because there is no “rule” about bills dying this way—it’s just “the way things have always been done”—very frustrating. 

Here’s what happens.  A typical bill has two steps before it gets to the House floor for a vote.  The first is a “print hearing,” and the second is a full hearing where the public may comment prior to the committee vote.  Before either of these steps, the committee Chairman sometimes refuses the print hearing or chooses to never schedule a full hearing.  In both cases, the Chairman keeps the bill “in the drawer”—effectively killing it without a vote. 

This is very confusing for constituents and voters (and me).  How do I explain to a concerned citizen what has happened?  The bill is dead, but there is no recorded vote—in fact, sometimes no vote at all—of why and how the bill was rejected.  This is not how a representative republic is supposed to work.  In fact, killing bills this way disenfranchises constituents because their representatives cannot get their issues up for a vote.  There is only one person who has the Constitutional authority to veto a bill, and it’s not the committee Chairman.

The system is broken and a few representatives like myself are exploring ways to either change the traditions or to fix the rules so the traditions cannot persist.  Chairmen are supposed to be servants of the committee.  They are supposed to run meetings, keep order, ensure proper conduct and motions, and keep accurate records.  They are not supposed to have "veto power" by putting bills in their drawers.  I am committed to making sure my constituents' issues get full consideration in the Capitol—despite what one particular committee Chair might think about it.

Internet Sales Tax: “Nexus”

The Revenue and Taxation Committee considered bill H581 which would change the definition of what it means to be an “Idaho Retailer” and what it means to “Engage in Business in Idaho.”  The bill says any “nexus,” or connection to Idaho by an out-of-state business, makes that business—by definition—an in-state business.  A nexus is typically a physical presence (like a building); but the new law would include marketing, advertising, computer cookies, etc., as creating a “nexus,” and thereby establishing tax collecting responsibility by that business. 

By broadening the definition, most online purchases by Idahoans would be subject to state sales taxes collected by the online firm and sent to the Idaho Tax Commission.  It is a confusing standard to determine “nexus.”  And, it means more sales taxes will be assessed on Idahoans, making their “use tax” calculations even more difficult to determine.  It will also be difficult for businesses who would then have to collect the taxes—no matter how small—and remit them to Idaho. 

The bill intends to “level the playing field” between untaxed goods from out-of-state businesses and taxed goods from in-state brick and mortar businesses who must also pay overhead costs.  Here’s a question: Why does leveling the playing field always mean more taxes and/or more regulation?  A better way to level the playing field would be to reduce/remove in-state taxes or regulations.  This internet tax bill is an expensive, flawed, and clunky way to “help” Idaho business.

There is a Constitution question about the bill as well.  It is illegal for states to tax goods coming into the state from other states (imports, if you will).  Article I, Section 10, clause 2 of the U.S. Constitution says, “No State shall…lay any Imposts or Duties on Imports or Exports…”  The framers and the U.S. Supreme Court clearly saw this as pertaining to goods purchased across state lines as well as foreign borders.  For precisely this reason, Idaho employs a “use tax” on Idahoans who purchase goods in other states and then “use” the goods in Idaho.  It is a clever, albeit conniving way around the Article I Constitutional prohibition.  House bill H581, removes the pretense and makes sales of out-of-state goods subject to the Idaho sales tax.  This is clearly an unconstitutional tax. 

The bill was sent to General Orders by the Committee, where the bill may be amended to clear up some details and, hopefully, address the bill’s problems concerning Constitution prohibitions against such a tax.  I doubt the bill will be improved though.

Appropriate Appropriations

Allocating how Idahoans’ tax dollars are spent is a serious responsibility.  The legislature has a duty to budget and spend the more than $7 billion (state and federal) in a fiscally responsible manner.  The Idaho Constitution requires the legislature to balance the budget—and it does.  But that doesn’t always equate to conservative budgeting/spending. 

This past year, Idaho brought in more tax revenue than projected—about $125 million more.  In a higher-than-projected revenue year like 2015-2016, it might seem like it’s easy to meet Idaho’s needs while keeping government in check.  The truth is just the opposite, however.  Rather than spending only what was needed and returning the overage to the taxpayer, many of the appropriations bills coming through the Capitol chambers have extra spending items included.  The budgeting process so far is leaving $0 for tax reductions or returns. 

When I ran for office, I promised to make sure laws were—among other things—economically feasible.  So, even though more money “is there,” I must reject many of the appropriations with extra spending increases.  Here’s my concern.  Yes, we’ve had some prosperous years, but that doesn’t mean next year will be as prosperous.  As one legislator put it: “The bad years aren’t what put your farm out of business, it’s the good years.  Those are when you over-commit to spending you can’t sustain in the next downturn.” 

I am extra-cautious about over-committing to spending increases.  When in doubt save some money for a rainy day (we do have a “stabilization fund” for this), and return the overage to the taxpayers.  So, when you see a “no” vote on an appropriation, it doesn’t necessarily mean I don’t see a need for spending money on the Attorney General’s office (for example), but I want to make sure we don’t over-commit and we keep some money for the big items yet to budget for (like education). 

*Note:  Education is the largest component of General Fund spending (about 65%), but it is usually one of the last items to be appropriated.  This seems backwards.  When I budget for myself, I put my big obligations first, and then get to the smaller “necessary vs. nice” decisions later.

**Another Note:  Idaho’s Constitution requires a balanced state budget.  It seems fishy to me how the Idaho Legislature dutifully balances the budget but only by using a grand amount of federal dollars (35% of the state budget) —much of which (40%) are borrowed money.  

Rep Ronald Nate

District 34

Committees:

• Revenue and Taxation
• Judiciary, Rules, and Administration
• Environment, Energy, and Technology