Businesses Give Andrus's Budget a Boost

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A vote of confidence from Idaho's business community appears to be winning the Democratic governor, Cecil D. Andrus, the support he needs in the Republican-controlled legislature to ensure a major funding increase for public schools.

Last week, the Republican chairman of the Senate education committee said he had the backing of enough members of his party to boost precollegiate-education spending to at least $358 million, an increase of $15 million over this year's level and just $4 million less than the Governor has sought.

And in the House, a petition is circulating among Republicans that asks for similar levels of support.

Successful Lobbying

This new flexibility on the part of some Republicans, say observers, reflects the success of the Governor's lobbying efforts, and particularly his appeals to key business leaders.

In speeches across the state in recent weeks, Mr. Andrus has argued that an underfunded education budget would stymie the state's efforts to encourage economic growth and force localities to raise property taxes.

Republican legislative leaders, however, are continuing to press for a more modest increase, in the range of about $8 million.

Those lawmakers, with an eye on this year's election, are reluctant to increase taxes, say observers. They maintain that the electorate, which financed a 9.2 percent increase in state school aid this fiscal year through an additional $60 million in new taxes, wants to hold the line on additional spending.

If the spending increase is not approved, said Alice Koskela, a special assistant to the Governor, "we'd basically be in a holding pattern."

"If we don't have improvements in education, we won't have economic development," she said.

According to the Governor's budget proposal, the new funds would be used to finance an 8 percent salary increase for teachers and a $300,000 dropout-prevention program.

In question in the current funding discussions is the fate of the state's 3 percent investment-tax credit for businesses. The Governor argues that repealing the investment credit could net the state an additional $15 million and would help close the gap between his proposed $703-million overall spending plan and his projection of $673 million in state revenues.

Business Community's Support

The Republican leadership, in contrast, projects $680 million in revenues and wants to hold total state spending at that level.

Some of the strongest support for the repeal of the investment credit, however, has come from the state's business community. Over the past several weeks, several of the state's largest corporations and local chambers of commerce have said they would back such a measure.

"If you believe in economic development, there is a correlation between investment and education," said John LoBuono, executive vice president of the Moscow Chamber of Commerce and vice president of the Idaho Association of Chambers of Commerce.

"Personally, I think it's smarter to repeal a tax that has been repealed by the federal code than raise taxes," he said.

"We know it's not popular, but it's practical," he said. "You've got to make investments in your future."

Mr. LoBuono and other business leaders argue that Idaho must raise its per capita spending on education. Unless the state is able to rise above its current 49th place in the nation in that category, they say, it will be difficult for the state to attract and retain businesses.

Earlier this year, they note, one of the state's largest firms, Micron Technology, said it was going to move its headquarters out of Idaho because of concerns about the quality of the education system.

"Sooner or later, the quality comes down as the spending comes down," said Mr. LoBuono.

Tax Hikes Likely

In the legislature, however, many Republicans are less sanguine about the chances of the repeal being approved. And even those who are willing to back the move say that it will not raise as much money as the Governor hopes.

They say the repeal would be more likely to pass if it were phased in over several years. But if that approach is adopted, they say, the state will net only $3 million during the next fiscal year.

As a result, some Republicans are reluctantly discussing the possibility of finding new sources of tax revenue.

"If I were a betting person, I'd say the votes are there to force a moderate rise in taxes," said State Representative Kathleen Gurnsey, chairman of the House appropriations committee. "The handwriting is on the wall."

Vol. 07, Issue 24

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