Treasure Valley Partnership
Meeting Minutes
December 18, 2009

Tammy de Weerd welcomed everyone to Meridian. She introduced Wayne Hammon the Budget Director for the State of Idaho.

The State General Fund comes from Sales Tax, Income Tax, misc. Product Tax and Corporate Tax. The State started doing annual budgets in 1971. Since then, we have never had two years of declining revenues, back-to-back. In State fiscal year, 2009 revenue dropped 15.3% and the revenue in fiscal year 2010 is expected to drop again by 3.6%.

The corporate income tax is flat. Micron, for example has not paid income tax for several years. The people that are paying the corporate income tax are small to medium sized businesses that don’t have enough credits to offset it. These companies seem to be plugging along. So to are the miscellaneous taxes. There are a variety of little things. For example, the State takes a small portion of cigarette taxes.

The two biggest payers to the general fund are income and sales taxes. We saw a build up of income taxes up until the recession hit. Micron and other layoffs had an effect on that. So, every month has been lower than the previous months’. About six months ago, we saw this level off. The last two months, the withholding element has been increasing, which is a great sign.

Now, there are two contradictory items that play in this. The first is the unemployment rate. It has been increasing and we expect it to increase for the next four months. The jobs number, however, has been increasing the last three months. While fewer people are working, the people that are working are working more. The jobs number is derived from a 40-hour workweek. So, we have few fewer people that are working, but those that are working are working more than they have a month ago. For example, part-timers are now working more hours.

For Fiscal year 2011, we are actually projecting an increase in the jobs numbers. This growth rate is not large, but it is a positive number. Not all the legislators agree with this however.

The sales tax number remains negative. People overall are being conservative. What does this tell us? It tells us that even though the last couple of month’s paychecks have went up; people have more debt to service. Or it tells us that people are being conservative and holding on to their money because of the uncertainty of the future.

While there has been some good economic numbers the last couple of months, there still is a big drag on the sales tax figures and is expected to remain until it turns around.

His office’s projections can be off. In 2009, their first projection anticipated having over $3 billion in the general fund and ended up with 2.4. So there was a $600 million swing in the projection.

He stated that when they closed the books on 2009, the ended up with only around $12,000 in the general fund which is cutting things quite close. As they trued up the year, they were able to bring forward about $28 million in unspent money. There was about another $12 million in cutout encumbrances. The legislature projected starting with $50 million. So they had to pull out about $10 million from reserve funds to start the fiscal year.

For cash flow purposes, the State has been fine. It is due to the size of the money coming in and going out.

Public Schools, Health and Welfare and higher ed. account for around 82% of the general fund budget. So when we get to the point of reduced revenue, in order to keep these whole, everyone else has to take a cut. We are to a point now; any reduction in revenue will mean these three will have to take a cut.

Wayne stated that their biggest challenge for this next fiscal year is Medicaid. Prior to the Stimulus Bill, the State had about a 70-30 split on the cost of Medicaid. The Stimulus Bill changed that to a percentage of roughly 80-20. This freed up $150 million that they moved out of H & W into other agencies.

That new rate change expires on January 1 of 2 011. So halfway into next fiscal year he has to go back to not only the old rate but to a rate that is less advantageous to the State. Since the Stimulus Bill was implemented, that formula has continued to be manipulated.

Tammy asked if there were any bills that were being introduced? Wayne mentioned that there is a bill before congress to keep the high federal rate. This has actually passed the House and is included in the Obama Health Care Plan.

If this new Bill does not pass and we don’t get the higher rate, the State will have to come up with $72 million half way through next fiscal year. The state really does not have these kinds of resources. Wayne said there might be a way of taking a chunk of funds from the millennium fund to give Medicaid a reprieve till fiscal year 2012. But their may end up being a need to ask the appropriate commission for a reduction in Medicaid services.

Many of these optional Medicaid services pay for preventative costs to keep people out of the hospital. If you do not pay these costs, then other costs like indigent care goes up.

The State is not required to provide psychiatric treatment. What happens if we do not pay for that and a person does not get psychiatric treatment? This becomes a public safety issue.

David stated that it costs Canyon County over one million dollars for mental holds. He could not imagine this figure rising, but it would if that were to happen.

Fred added that there are numerous examples of expenditures of local property taxes that are designed to keep people out of the State system. Specialty Courts are a prime example. The SAUSA Program is also a prime example of programs funded at the local level to keep people out of the State system. This is helping the State. The problem is, how are these specialty programs going to be funded?

Tammy mentioned that this becomes the challenge we have as local elected officials. When we are communicating with our local legislators we need to make them aware of cutting service expenditures doesn’t cut the need. It just shifts the financial burden to local government.

Fred asked, what Wayne’s projection on how much the sales tax revenues will drop? He added that it would be somewhere in the neighborhood 12%. Wayne said he figured it would be around a 12 % reduction from the high of a couple of years ago. He added that in the next fiscal year they figured that they will be back in the positive and the trend should reverse.

Outgoing Member

Tammy stated that the Partnership wanted to recognize Margie Watson for her fine service to the Partnership. She has proven to be a leader and has added a unique dimension to the group and thanked Margie for her service.

Margie said that she has learned from each and every one of the members. She thanked everyone for what they do. She stated she couldn’t say enough about the Partnership and the good work that results from the collaboration that takes place among the members. She wanted very much for the Partnership to continue on.

Thank you!

SAUSA Project

Bill pointed to the packet included in the meeting handouts. This packet is to be presented to the Criminal Justice Commission. He stated that we would have 15 minutes in front of the commission on Friday the 18th. David asked who was going to the Criminal Justice Commission to present the SAUSA Project and what Bill would like for the members to say?

Bill felt that we should highlight the performance of the project and provide some numbers such as the number prosecuted and estimated cost savings to the State. We should ask that the State Department of Corrections step up and volunteer to take over the budget item involved with the SAUSA Project from the ISP. Two we ask that the Criminal Justice Commission recommend continuing funding and that there also is an increase in the State’s share of the Project.

John Evans added that Director Reinke recognizes the value of the program and is suggesting this recommendation from the Commission. He indicated that he would attempt to be at the meeting.

John Bechtel asked if we were going to be successful at all on our request. John Evans felt that it all depends on how much the commission gets a buy in on the Directors recommendation. Brad Holton also stated he will attempt to be there.

Bill stated that the enclosed packet should give the Criminal Justice Commission all the facts they should need to support the program. He added that an additional statistic that has surfaced is that violent gang crime has been dramatically reduced. Just in Caldwell alone the number of drive-by shootings dropped from 78 in 2006 to 4 in 2009.

Eagle City Council Meeting

Bill stated that as a result of the meeting members of the Partnership had with them on the 24th, he has prepared a letter to the council. Their main concerns stemmed around figures associated with the TVP budget and how that is split out from the SAUSA Project costs.

John stated that Tom, Margie, Brad and he were there. And most of the objections the Eagle City Council had basically came about as a result of a letter Paul Woods wrote last year with respect to getting local official representation involved in the Water Summit that was held.

David suggested that the letter be adjusted to say we would like the City of Eagle to reconsider membership in the Partnership. And to point out the value of a regional coalition of elected officials that participate in regional problem solving activities. We should also point out the importance of the City of Eagles participation in the process.

John Bechtel added that he and Brad were talking this morning and that both of them have told their City Councils, that of all the organizations they belong to, they believe the Partnership has been the most beneficial of any of them. It is too bad that the Eagle City Council does not see the value.

Brad added the need to communicate to the City Council that we are happy to give you this information, but it does not change the fact of what dues are and you cannot just choose to fund the things that you want without the rest. Without the Partnership, the SAUSA Project would not be a reality.

Open Officer Position

Bill stated, we need to replace Margie as the Secretary/Treasure of the Partnership. Tammy asked if we can elect anyone. Bill stated that he understood that there was an unwritten practice of rotating the Officers between Ada and Canyon Counties.

Tammy asked who wanted to be Secretary/Treasurer. John Bechtel made a motion that David Ferdinand be the new Partnership Secretary/Treasurer. John Evans seconded. Motion Carried.

Legislative Update

John Evans felt that one of the big things occurring during legislature was going to be a rewrite on the urban renewal law. Tom added that there are some changes that have been brought up and most of them were innocuous.

Tom indicated that there are some issues coming up with regards to water rights. Also, NPDES Primacy will be on the table. The AIC is proposing a joint resolution from the Legislature to continue the study with enactment on NPDES Primacy in the 2011 legislative Session.

Meeting Adjourned