The 1^st Regular Session of the 62^nd Idaho Legislature convened on Monday, January 7 and adjourned on Thursday, April 4. The legislature heard 777 proposed pieces of legislation (fewest in over 40 years) with 354 passing both houses and becoming law over a total of 88 days. It was our pleasure to represent a number of clients on issues before the Idaho Legislature. During the 2013 Session, AMG lobbyists attended all meetings of the Ag Lobbyist group (each Tuesday) and represented clients at Food Producers of Idaho (Wednesday) meetings each week. Each Wednesday during the session, Food Producers of Idaho hosted 3 to 4 of the 32 newly elected legislators for lunch. After the past election in which redistricting contributed to a record turnover in legislative seats (41 of the 105), these lunches gave us the opportunity to further interact with freshmen legislators and continue to develop relationships on behalf of Idaho agriculture. We focused on 32 of the 41 “new legislators” because 9 had moved from the House to the Senate and relationships had already been established. Other key areas of involvement included Rick Waitley chairing the weekly meeting of Ag Lobbyists and representing AMG clients in the 129,000# Truck Coalition. Roger Batt chaired Food Producers of Idaho, serving his second year as president and Benjamin Kelly participated in Legislative and Environmental Committee meetings of the Idaho Association of Commerce and Industry (IACI) representing Food Producers of Idaho and Idaho Cooperative Council, Inc.

 

The groups we lobbied for during the 2013 Session included:

Rick Waitley and Benjamin Kelly:

 

Roger Batt:

 

2013 ECONOMIC AG OUTLOOK:  Economists Garth Taylor and Paul Patterson from the University of Idaho, presented the annual Idaho Agricultural Outlook before Senate and House Ag Committees at the beginning of the session. Taylor and Patterson provided a recap of 2012, analysis of the current condition
of Idaho agriculture and an outlook for 2013. Idaho agriculture posted record high cash receipts of $7.7 billion in 2012, up from $7.4 billion in 2011. Overall, crop receipts were up 5%, with potatoes, barley, wheat, and dry beans showing enough gains to offset losses in hay, onions, and sugar beets. On the livestock side, an 8% increase was attributable to cattle and calves while milk receipts were unchanged from 2011. Although the specifics differ from one commodity to another, a common driving force is increased per-acre or per-head production. Idaho ag has become dramatically more efficient over the course of the last several decades. Recent banner years have positioned Idaho agriculture competitively in relation to other states as well as within the boundaries of the state. Idaho's growth in farm receipts has boosted the state's standing to 3^rd in the West, behind only California and Washington. We surpassed Colorado in 2012 and are gaining ground on Washington for the 2^nd spot.

 

Within the state, agriculture continues to be a crucial part of the state's economy.  Farming is a growing portion of Idaho's Gross State Product (GSP). Additionally, when taken together with agribusiness, farming provides a critical stabilizing effect on the economy. Aside from the profitability of farming operations, the activity of producing crops and animals year-in and year-out generates economic activity that sustains communities throughout Idaho. Nationwide, ag trends demonstrated by the economists include record-high net farm income, increasing net farm income volatility and declining government payments. Farms across the country are in good financial condition, showing lower levels of debt than in decades past. In spite of concern about rising farm input costs and market volatility, Idaho agriculture in general has had a great year and is in a healthy position. Looking forward to 2013, Taylor and Patterson predict Idaho crop cash receipts down 5-8%, livestock cash receipts up 2-3%, expenses up 2-4% and net farm income down 10-15%.

 

AG ALLSTAR AWARDS:  Industry leaders from around Idaho gathered on the second week of the session to recognize 64 legislators who had a voting record in favor of Food Producers policies in the 2012 Legislative Session related to agriculture, natural resources, water, transportation and taxes. The voting membership met at the close of the 2013 Session and discussed the legislators who qualified to be Ag All Stars for 2013. Those to be honored next year will include 54 legislators who stood out based on their voting record and overall advocacy for agriculture. The 10 percent drop in those receiving the award can primarily be attributed to the large number of turnover from redistricting (32 newly elected to office) and a few contentious issues supported by agriculture that can be voted on as moral issues rather than agricultural issues. Those issues included legislation considering new avenues for horse racing that included gambling concerns as well as the continuation of a few legislators who are unable to vote in favor of any proposals having to do with the Idaho’s beer and wine industries because of their views on alcohol consumption. Here is how the 2013 All Stars compare since the award first commenced:

 

Year                       Senate                    House                    TOTAL

1999                          25                            42                           67

2000                          16                            51                           67

2001                          21                            45                           53

2002                          21                            32                           66

2003                          27                            40                           67

2004                          13                            33                           46

2005                          13                            34                           47

2006                          27                            64                           91

2007                          26                            62                           88

2008                          32                            33                           65

2009                          32                            55                           87

2010                          27                            48                           75

2011                          22                            40                           62

2012                          23                            41                           64

2013                          14                            40                           54

 

STATE HEALTHCARE EXCHANGE:  Idaho Governor Butch Otter had to face a major leadership test concerning the most important issue this session. His task was to convince many from his own party (80 percent of the legislature) that it was in the state’s best interest to run its own health insurance exchange, when many wanted no part of “Obamacare.” A huge coalition of industry and trade groups did support the exchange even though Idaho has some of the lowest health insurance rates in the country. Their justification was if the state is forced into a federally-run exchange in which Idaho is pooled with other states, Idahoans could pay much more for the same coverage. Otter convened a coalition working group that studied the issue for months before the session and they overwhelmingly recommended that Idaho operate its own health insurance exchange.

 

As the legislature took up the issue, the first piece of legislation that would have created the exchange had trouble after passing the Senate with a two-thirds majority and a six-hour debate on the Senate floor. It was held in the House for a new bill which was identical to the first but added legislative oversight not included by the Senate. In an unprecedented move, 16 House Freshmen said that they would support the measure only if legislative oversight was included on a 19-member panel proposed to administer the new program.
A new piece of legislation was then drafted in the House, debated for a little over five hours on the House floor, and passed with approximately two-thirds voting in favor. The measure made its way back through the Senate with another five-hour debate and passed on a 23-12 vote. The bill was signed into law by Governor Otter a few weeks before the session’s end.

 

According to the Kaiser Family Foundation, Idaho is one of 18 states that have committed to building a state-based exchange and must be up and running by January 2014. It will be managed by Amy Dowd, operating as the Executive Director, and a 19-member board including four legislators. The estimated initial cost of creating the exchange has been projected to be $20-$30 million, paid for by federal grants. The governor’s office estimates the annual cost to maintain the market-place will be $10 million and will be paid for by fees on users. It’s unclear exactly how many Idahoans might use the health exchange, but the governor’s office says 278,800 Idahoans don’t have health insurance, which is a little under 20% of the population. Seven states are planning a state-federal partnership exchange and 26 states will default to a federally-run exchange.

 

AG RESEARCH:  The U of I CALS budget for research and extension made its annual path through the Joint Finance and Appropriation Committee but was presented by a new face in Interim Dean Dr. John Foltz. Dr. Foltz took over the reins at the end of December and will remain at the helm while a national search is conducted for a permanent dean. The governor had placed in his proposed budget $1 million to be returned to the U of I R and E budget to help restore funds removed several years ago during the fiscal crisis. Many of the budgets that passed through the committee were set to less or equal to the governor’s recommendations but, with extra pressure from industry, a significant step was taken in making research and extension whole. The funds will cover a number of costs including heating and cooling of greenhouses, irrigation water, and purchasing fuel, fertilizer and seed cost at the state’s 12 research and extension centers. This will be a 3.5 percent increase from the current year, but still will be far below the research and extension 2009 funding level. The General Fund budget for 2014 was set at $24.4 million and was $28.3 million in 2009. Research and extension currently has 70 fewer employees than it had in 2009 and will need to continue to work closely with industry until full funding can be restored. A surprise, however, came in an additional appropriation in the amount of $162,000 for the U of I Rangeland Center. The center has an outstanding faculty and will be housed in the College of Natural Resources. The center is recognized as one of the top rangeland research facilities in the Northwest.

 

INITIATIVES & REFERENDUMS:  The Idaho Farm Bureau led the charge to change the requirements for placing initiatives on ballots in Idaho. The change was proposed offered a better opportunity for rural Idaho to participate in the ballot initiative process as well as protect production agriculture from proposals impairing industry that those in urban communities may not understand. The Farm Bureau originally purposed that the requirement be signatures of 6% of the registered voters in 22 of the 35 legislative districts. In an attempt to work with detractors of the proposal, a revamped bill (S1108) surfaced changing the requirement to include signatures of 6% of the registered voters in 18 of the 35 legislative districts. Food Producers, agriculture and rural communities were in full support of the bill which passed both houses with very good support. This act will go into effect on July 1 and will replace the current practice of simply requiring signatures of 6% of the entire population with no regard to districts or location.

 

AGRITOURISM / FOOD PRODUCERS INTERN:  Jim Lowe from Kuna, has a wife and three children, owns and operates The Farmstead Corn Maze & Pumpkin Festival in Meridian, and farms row crops in both the Meridian and Kuna area. He also served as the Food Producers Intern for the 2013 session. Other than the fact that he has already graduated from college, has a family and a career, Jim also came into the lobbying arena with another unique quality not generally associated with an intern; legislation that he initiated and wanted to learn how to foster through the legislature to become law. With guidance from Representative Darrell Bolz and Rick Waitley, Jim brought House Bill 113 before the legislature addressing the growing industry of agritourism. The Agitourism Promation Act addressed three functions important to his business: it defined agritourism, limited liability for agritourism providers, and clarified that agritourism activities do not change the property tax status of farms and ranches. Agritourism refers to a variety of experiences that farms and ranches offer to the public: farm tours, educational programs, dude ranch and working ranch experiences, U-Pick farms, corn mazes, farm-based bed and breakfasts, etc. This rapidly growing industry has been seen as an opportunity for agriculture to tell its story to an increasingly urban population, diversify operations and operate in niche markets. The measure, which was signed into law, provides an option for agritourism providers to post specific warning signs and be protected from lawsuits over risks inherent in visiting a farm. There is currently no protection in the case of negligence or disregard for safety, but this measure should reduce or eliminate frivolous nuisance lawsuits.

 

129,000# TRUCK LIMITS:  The ten-year pilot study came to an end in 2012 and included 35 specific routes identified to allow heavier trucks to transport commodities and goods. Many of Idaho’s neighboring states already allow the heavier 129,000# trucks and the study revealed that the heavier trucks have little impact on roads and bridges because of the increase of axels altering displacement. The added benefit of safety with the reduction of the number of trucks on the road also became a selling point for the proposal. Idaho had maintained a 105,000# truck weight limit except on these designated pilot routes over the last decade. The study results were very favorable and legislation was proposed and written into law by the Heavy Truck Coalition to establish the routes permanently in the state. The obvious benefit of hauling more product in less loads was followed by the hope of increasing national exposure for support of Idaho’s truck weight increase. The routes are only in the southern part of the state, but would allow the northern portion of Idaho to also allow heavier trucks if a proposal was presented and passed by the legislature.

 

That being said, another bill was introduced concerning 129,000# trucks that will include the entire state and open the door to additional routes for the heavy loads. Specifically, it will authorize additional routes to be designated for 129,000# trucks by the Idaho Transportation Department (ITD) as long as they meet engineering and construction standards to handle the trucks. This would affect routes outside of the pilot project area, including northern Idaho. Because these measures were so closely related, Chairman Bert Brackett, Senate Transportation Committee, heard testimony on both bills together. A standing-room-only crowd delivered hours of testimony. Debate and testimony was vigorous, often framing the issue in terms
of northern and southern Idaho. Concerns included the safety implications of operating heavier trucks in northern Idaho terrain, impact on small truckers, jurisdictional issues between ITD and local highway districts and the burden and expense of determining which roads are suitable for the heavier loads. Both measures passed the legislature and were signed into law.

 

FARM TRUCK WEIGHTS:  Another important transportation issue in 2013 was a bill brought by Senator Jim Guthrie that will provide some flexibility on truck weight limits for farmers. Farmers loading commodities out of the field generally use their best guess estimates based on volume or air scales to comply with gross and axle load weight limits. The inexact nature of these systems, variability of commodity pounds per bushel and potential shifting of bulk loads put farmers at risk of weight limit infractions, even when operating in good faith. There was very little opposition to the measure and the new law will allow trucks hauling agricultural products to operate up to 2,000 lbs. in excess of any axle, bridge or gross vehicle weight limit. The allowance will not apply to federally-funded interstate highways, posted bridge weights or other seasonal or temporary weight limit postings.

 

HONEY RULES:  The Idaho Honey Industry worked through the summer to generate rules resulting from the Honey Industry Act passed by the 2012 Legislature. The rules defined quality standards for honey in order to prevent the sale of adulterated, diluted, or corn syrup-based product disguised as pure honey. The rules were ratified by both houses.

 

ENERGY ISSUES:  We continue to see increased significance placed on rising energy costs in the state. The importance of these increased input costs for all water and power users has kept agriculture busy in tracking and participating in rate-payer issues. Last year, H544 was introduced in the legislature seeking public disclosure of known rate impacts from projected utility capital construction and expansion plans. Through negotiations, concessions were made and agreements were reached with a number of utilities to disclose, to the best of their ability, a ten-year projection for both the single rate payer and industry. This year, support letters from industry and large member organizations were submitted to Senate State Affairs Chairman McKenzie and House State Affairs Chairman Loertscher requesting committee hearings on this topic as well as allowing utilities to discuss what has been disclosed, what has not, and why. The largest single rate payers in the state (farmers) will benefit from additional disclosure. Earlier in the session we provided a Gallup poll measuring Americans’ financial concerns based on importance. Below are the responses when asked whether a series of “situation[s]” are hurting their families’ finances. Here’s the rank order, according to how many people said these things were indeed hurting them:

 

 

WINE CONTAINER SIZES:  New Idaho Code will change the maximum wine container size a distributor or importer can buy, sell or receive from one gallon to 15 gallons. Wineries in Idaho are considered distributors and are required to hold distribution and import licenses. This means the previous statute precludes any winery from buying, selling or receiving any wine container that is greater than one gallon. Current Industry practices in many states allow larger container sizes than one gallon containers to be sold, received or purchased. The one gallon provision was out-of-date language drafted in 1971, when the Wine Act was first passed by the Idaho Legislature. This was a time in Idaho history when there were no wineries in existence. A number of restaurants, individuals and other business owners have requested that the industry allow larger container sizes so that these businesses can have more quantities of wine to sell to customers or to use at weddings and other special events. Before this measure passed, Idaho was the second most restrictive state in the West on wine container sizes.

 

BENEFICIAL USE:  A new mandate will require the Dept. of Environmental Quality (DEQ) to consult with Watershed Advisory Groups and Basin Advisory Groups (stakeholders) before designating, revising or assessing Beneficial Uses of an Idaho water body. Beneficial use is determined by the DEQ (the use of a water body such as recreation, or habitat for fish). Once the beneficial use has been set, DEQ then assesses if that water body is “impaired” (meaning does the current body of water have pollutants that impact fish, recreation, etc). Once the water body is designated as “impaired”, a process starts called the Total Maximum Daily Load Process (TMDL), that sets water quality criteria (temperature or sediment) for that particular water body. At times, DEQ will misdiagnose or improperly designate a water body for a certain beneficial use. That causes the TMDL process to be flawed and the water quality criteria to be non-attainable for water users. The mandate will more accurately ensure that DEQ will consult with stakeholders before designating the water body’s beneficial use. This will provide a screening process concerning conflicts that may arise throughout the TMDL process and will allow conflicts to be alleviated before TMDL is implemented.

 

SCRAP DEALERS:  As metals and other natural resources have increased in price, farmers have seen an increase in thefts of farm equipment and irrigation systems. Strong metal prices, quick cash sales and fast processing that destroy the evidence have combined to make metal theft an increasing problem in Idaho. These concerns have been realized by construction, utility and other industries as well. Legislation was created aimed to reduce this scrap metal theft. Under the law, scrap metal dealers will now be required to photograph individuals and vehicles with the metal they sell for recycling. This will go hand-in-hand with the current requirement that they document the name and identity of individuals selling scrap. It will exempt beverage containers from the same requirement and will not apply to someone who establishes a commercial account. In addition to the documentation requirements, there is a felony provision for someone who steals metal from an electrical substation and interrupts delivery. It also protects metal owners from being liable for a dangerous situation caused by metal theft.

 

PERSONAL PROPERTY TAX:  One of the focal points of this legislative session, second only to the state healthcare exchange, has been a heavy push to repeal the Personal Property Tax for business. This is arguably the most disliked and unevenly applied tax, collecting tax each year on everything from hand tools to manufacturing equipment. This tax was repealed for agriculture over 10 years ago, though it still applies to many ag-related businesses. Idaho has discussed the elimination of personal property tax since the early 1980’s and a number of attempts have been made toward removal of this tax burden on Idaho businesses, but there has been little agreement and compromise through the years. This year, the Idaho Association of Commerce and Industry (IACI) announced shortly after the November elections that they would be pushing this issue for the 2013 Legislative Session. During the session, IACI made a number of proposals with the most accepted being a phase-out of the tax over seven years to lessen the impact on local taxing districts (counties, schools, etc). The backfill of funds from the phase-out would have come from the state general fund over this time period.

 

The Idaho Association of Counties, Association of Idaho Cities and the Idaho School Boards Association replied with a bill of their own which has been signed into law by the Governor. Under the new law, stand-alone items of less than $3,000 value are exempt from personal property tax and businesses will be able
to deduct the first $100,000 worth of personal property in calculating the tax owed. Money lost by local governments (estimated at $20 million per year) will be replaced by state general funds. H315 was brought by these entities and declared a compromise even though the business and agriculture community were not at the table. The only resolved compromise was between the local municipalities, who have no real interest in repealing the personal property tax, and the legislature, who were unwilling to meet the issue with full force after dealing with Idaho’s healthcare exchange. As we watched this battle play out, agriculture stayed out of the throws of the issue until the final few weeks of the session, supporting the seven-year phase-out. The rationale being that a phase-out would help agribusiness while the local municipalities would be made whole by state general funds, in turn, taking the burden off land owners and property taxes to fill local municipality coffers. This issue, as well as Medicaid expansion, look to be the two major issues going into the 2014 session.

 

2013 SESSION:  The Idaho Legislative body is often referred to as a citizen’s legislature. With lawmakers making less than $17,000 each year for their service, many of them have other occupations that provide their income throughout the year. The 32 new legislators brought a new dimension to the occupations of legislators. A whole new category had to be added – Real Estate with seven of the 32 having an occupation related to that career. Here is the makeup, to the best of our knowledge, and information provided related to the 2013 legislature.

Accounting - 1

Agribusiness - 3

Attorney - 9

Business - 23

Consultant - 3

Education - 6

Engineer - 1

Farmer/Rancher - 20

Insurance - 5

Medical - 4

Public Relations - 1

Retired – 14

Real Estate – 7

Self Employed – 4

Homemaker - 2

Unknown – 2