Meeting Minutes
November 30, 2020

Attendees

Staff and Guests

Welcome & Introductions

Debbie welcomed everyone to the November Partnership meeting.

Director’s Report

Brad moved to approve the minutes and financial statement. Tom seconded; motion approved.

After vetting the draft 2021 Partnership meeting calendar there appears to be conflicts for the year. Normally, the only conflicts with our last Monday of the Month schedule are the Boise Chamber Leadership Conference and Memorial Day.

The last several years we have attempted to hold our annual planning meeting in March. Because of ongoing Covid concerns, he proposed we move the annual meeting to September. He has been talking with Mayor Sykes about holding the annual planning meeting in Mountain Home along with a tour of the Air Force Base.

Brad moved to approve the 2021 TVP meeting dates, Trevor seconded, motion carried.

Cat Creek Energy Water Right Permit

Brad asked if anyone had read the application Bill had sent out. This application has subtle implication that Idaho Rules are not prepared for, and it will have implications for municipalities that are downstream. Brads concern is, if this project were such a great thing for the Treasure Valley and Idaho, you would think they would have been proactive about the project, and we would have all known about it before they submitted the application.

If you look at water in Idaho History, there have been a lot of groups that have come in and made proposals like this. Most of them go by the wayside and for whatever reason the project does not come to fruition. However, the group of people that are running this organization are knowledgeable and capable.

This Cat Creek Energy Project has implication to our water rights and the use of those water rights. Brad asked that we get an opinion from our legal councils. He wanted to have an opinion from legal counsel for the meeting today. However, this is a complex issue, and they were not ready to issue an opinion. As soon as he gets this, he will be in contact with TVP Members and will attempt to have something by the January meeting.

Transparency

Debbie is supportive this idea being generated through the interim committee, but according to her financial staff, this will create a lot of extra work. Like all of us, their finance accounting is completed according to standards. To do anything beyond that, there is going to be an increase in time and cost to the city. In addition, it will cost the State an additional $1.7 million to develop and maintain the transparency tool. She feels the processes we have in place are very transparent and does not agree necessarily that we need to go through this expense.

There was agreement among members the processes we go through now are transparent.

Tom mentioned this was discussed at a recent Assoc. of Counties meeting. On a County level, this transparency project would be a tremendous amount of work. It would probably require software updates and there is the suggestion the software would come out of the State. To be honest we have not had much luck with any software proposals coming out of the State. ITD software is a good example.

He wants to know if the State will be paying for all these software updates to achieve their transparency goal. The answer obviously is they will not. So, this will tremendously impact budgets of Counties and Cities.

Discussion with Legislators

Garret Nancolas

• Garret started the conversation, when a bill or idea is presented, there is a financial impact statement, that accompanies the bill. This impact statement does not include the financial impacts on local governments and should be a topic of conversation as bills move forward. Senator Burgoyne responded that the financial impact statement is supposed to address impacts on local governments but a lot of times, this is not considered.
• Secondly, in Caldwell they have been good at identifying projects and having long-range plans in place and saving money, so they don’t have to bond. The cost of bonding is extremely high. Whether it is a sewer project or a street project or any other kind of project, they identify the cost and start setting money aside to pay cash for the project.
• It costs the taxpayer more in the long run to bond for something, than to have sound fiscal policies in place to take care of infrastructure needs. He asked the legislators to keep these things in mind as they do things.

Kelley Packer – Association of Idaho Cities

• Property taxes are too high for all our residents. Sometimes we forget what makes up those property taxes. 1/3 of them are going for school bonds and we are ignoring the fact, from a State level, we are underfunding our schools.
• There are a bunch of underfunded mandates cities and counties have to pick up through property taxes. One of these mandates is transportation, where we have streets that need regular maintenance that we are addressing on an ongoing basis. The money we receive for roads is not near enough in many of our communities.
• There is a perception that Cities and Counties have all kinds of money. For example, enterprise funds cannot be used for anything other than what it pays for. You cannot use your utility fees to meet other needs. She believes this is not understood.
• Atomic City voted to disband so we now have 199 cities in the State of Idaho. Of these 157 have a population base of 1,000 people or less. In Idaho, only 8 cities have a population of 50,000 or more. The small cities have the same needs as the bigger cities when it comes to streets, emergency services, sanitation, water, sewer, etc. Sometimes when we are looking for solutions, one size does not fit all. This is why legislative solutions can sometimes be problematic.
• Three things that came out of the last interim committee meeting, transparency, budget caps and fund balances. With regard to transparency, initially she was gung-ho about it. She is not for it because of the $1.7 million costs and it would be problematic to have cities and counties pay for software updates without the funding to pay for it.
  
  One of the problems that happen in bigger cities is, people hear of expenses and conclude wasteful spending without asking additional questions. As an example, she recently had some questions about some publicity that the City of Boise spent $1 million on art. After asking the question, she found out the total was $65,000. All the money came from private donations and no taxpayer dollars were spent. This is the kind of thing that creates firestorms for us and is part of the impetus behind transparency.
• With regard to the Budget Cap, if we have the right mechanisms in place, we might be able to get to the 5%. If we are going to put suspenders on our most populated cities thinking budget growth is out of hand. We are going to cripple the rest of our cities.
• With regard to restricting fund balances local governments develop to take care of long-term capital improvement projects, this is concerning to her. The State has a rainy-day fund and saves for big expenses. But local governments can’t do the same or save for capital improvements?

Senator Grant Burgoyne

• The legislature tries to think that property taxes are a local tax, and the State has nothing to do with the property taxes people pay. The legislature likes to pretend that local budgets are a local issue and local officials have complete control over these budgets. The local budgets are subject to many constraints and there are many processes that are put in place by State law. The legislature has responsibility over what happens on a local level by virtue of the fact they control the processes by which these things occur.
• The power of incumbency among the legislature is much more prevalent than what he has seen in local government. Local incumbents do not get reelected much more frequently that what we see with the legislature. Many of the legislators around the treasure valley have no real contests for reelection.
• The legislature cant seem to talk about transparency or uniformity when it comes to data without casting aspersions on local government. We have data problems and difficulties throughout government where there is sufficient uniformity and you cant compare apples to apples.
• The point has been made that 1/3 of our property taxes are going to our schools. This all goes back to the fact that in 2006 M&O was removed from the schools with the promise that other funds would make up for it. This didn’t happen. We need to get serious about replacing this money and we need to get serious about State funding for our schools.
• He has crafted several pieces of legislation and will send these to Bill to get input from the TVP members. One of the bills he has crafted has to do with State reimbursement to county jails. The reimbursement rate for holding a State prisoner is not sufficient. One idea would be that Counties would be permitted to add a fee if the costs of housing is above the reimbursement rate. There are some counties that have less jail costs and the current reimbursement is more than their daily costs. However, other counties like Ada and Canyon, have a higher daily cost and they would get to add a fee to cover actual costs. This is one idea. Another idea is that the State should be paying for infrastructure costs associated with housing State prisoners. This would provide an incentive for the State to not lean on county jails for housing.
• The legislature has a hard time recognizing things cost money. City Mayors, County Commissioners and State legislators have to be good at making choices and prioritizing. The legislature has a hard time prioritizing things, so what we end up doing is we fund a lot of things very badly. Very few items are funded appropriately.
• We are always passing the buck down to the local level. If we want this to change and we want true meaningful reform, we are going to have to do things together. We are going to have to hang together instead of hanging separately as cities, counties and state. We should not be afraid to say that local government is closer and more responsive to the people and should be trusted. Until we get to this realization, he doesn’t think we will get any meaningful school finance reform, property tax reform or solve any other issue.

Collective Bargaining

• Representative Scott Syme was thankful to be able to hear about the issues from a local perspective. In regard to collective bargaining for police, he asked if we should have a standardized law across the state for this.
  
  Garret said from his perspective, Caldwell does not have a collective labor agreement with their police department, and they don’t want one. He would ask we take the fire department requirements and pare them back to what schoolteachers have and that is to negotiate only wages and benefits. When you throw working conditions and other issues in the mix, it makes those contracts difficult to negotiate, and it does add costs.

Internet Sales Tax

• John asked for thoughts on the internet sales tax capture that is presumably supposed to be used for some form of tax relief. He hasn’t heard anything about this since it began being collected. Certainly, the revenue is exceeding what was anticipated at the time the legislation was passed. It looks like there is $100 million plus sitting there. He would be interested in knowing about this fund.
• Senator Burgoyne indicated he has drafted legislation on eliminating the tax relief fund. Right now, the internet sales taxes are going into the fund. There has been some interest and discussion on the part of the Counties about consolidating all the district court functions at the State level. There has also been discussion about moving the public defense function to the State level. He proposes we use some of these funds to help with the transition of those programs to the State level. And from this point forward, all monies coming in from internet sales be distributed in accordance with the sales tax distribution formula to local governments.

Urban Renewal

• John likes to refer to the City of Caldwell as an example how urban renewal has transformed a small, urbanized area and brough life back to the city. We always seem to get blindsided with urban renewal legislation in the latter part of the session and have no time to react.
• Senator Burgoyne said he has heard some concerns about what the Local Government & Taxation committee will be for the next session. He has heard there is some discussion about wanting to reform urban renewal. Regardless, we know the legislature goes through spasms when it comes to urban renewal. It typically arises whenever a city does things that are unpopular with folks. We have seen it with the Cities of Coeur d’Alene and Boise. Because of this, Urban Renewal is a potential and serious issue every legislative session.

Property Taxes

• Debbie asked if there were any discussion regarding limiting increases to assessed values. Senator Burgoyne has heard there has been some discussion of putting a cap on the inflation in assessed values. It deserves to be discussed.
• Tom said we faced a problem in 2008 when housing values plummeted. At the same time, business values did not drop. As a consequence, there was a tax shift from residential to commercial/industrial. Today we find ourselves in the opposite situation. While commercial values are going up, they are being outpaced by the rapid rise in residential values. Therefore, there is a property tax shift to residential. He doesn’t know if there is a fix for this.
• Senator Burgoyne said at the macro level it is true these shifts between residential and business occur. On a micro level, if your jurisdiction took the Covid reimbursements, some residences would see a tax break and some would not. This is all due to the vagaries of this crazy property tax system we have.
  
  The devaluation of the homeowner’s exemption that occurred a number of years ago in the legislature exasperated the problem of high inflation in residential property values.

Broadband Initiatives

• Kelley described the partnership they have established with a few federal lobbyists from the Hailey area that are interested in improving broadband across the State. The coalition is called Imagine Idaho.
  
  This group has gotten a lot of support from the Idaho Hospital Association, various cities and counties and other organizations.
  
  In providing for fiber optic infrastructure, vendors will only go, where profitability pencil’s out. Though a lot of great investments have been made by vendors in our State and there are areas that are well served, there are many areas that are struggling with broadband. Imagine Idaho’s interest is to focus on infrastructure needs and getting additional federal financing to help us.
• In the past year or so we have gotten less than 2% of the federal dollars that were available for broadband infrastructure. Our share has been lower, partly because we haven’t gone after it and partly because of the way our policy is structured in Idaho Statute. They are going to bring a statutory provisional change that would allow cities and counties to provide the infrastructure. They want to make sure cities and counties can lay the fiber foot print, or highway, and anybody can drive on it.
• There was a question why the Hospital association was supporting this effort, they all have access to fiber. The answer is, their patients do not, and the increase need for virtual appointments and follow up is causing a disparity of the medical service that hospitals and health care providers can provide.
• There are statutory restrictions in broadband for cities and counties other than money restrictions. They are restricted from getting into the business so to speak. They have to go to voters, hold hearings and quite often are not able to get over the hurdle. Their proposal is to allow cities and counties to provide the infrastructure and separate the service side. With the federal dollars, these smaller cities can put in the infrastructure for their residents. Most vendors would not even pursue putting in fiber in these smaller cities because it would not pencil out.
• Representative Syme said this sounds like a rural issue and asked how this impacts us locally. Kelley said this is still an issue locally where there is fiber running down the road and residences are not getting access to it.
• Senator Burgoyne said when they started putting in telephones, the value of the residential phone went up when everybody got access. Today, yes, you as a residence can pay to have fiber service to your house, but if you are trying to do a zoom call with someone that doesn’t have fiber, then that makes your investment diminished. The way to enhance the value of this technology is to get everyone online. It is in the interest of everyone if we have a Statewide system where everyone has access to fiber.
• Brad said the Treasure Valley Partnership does have an interim committee that is studying the fiber issue. We are looking at how counties and cities would implement this through planning and zoning and how a utility can be set up so fiber can be distributed to residences and businesses. It will make the difference by having Idaho in the mix of jobs and life, or not. We have to admit to ourselves that we have a gigantic problem in we have all these small population cities widely spaced. Providers are not going to provide the infrastructure for those cities because it wouldn’t pencil out.
  
  We do have a model in the State of Idaho with the City of Ammon Idaho. They are many years ahead of us with regard to infrastructure, city code and development requirements in planning and zoning. We will be collecting this information and bring to the Partnership.
• Jason said the City of Ammon shows how it can work when you have competition. Four years ago when they started, residents were being charged $149/month for a 1 gig up and 1 gig down connection. Now it is down to $49 per month because of the competition.

Debbie thank our guests for joining us today. Meeting adjourned.