ASSOCIATION MANAGEMENT GROUP 55 SW 5th Avenue, Suite 100 Meridian, ID fax:

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1 ASSOCIATION MANAGEMENT GROUP 55 SW 5th Avenue, Suite 100 Meridian, ID fax: Legislative Summary The 1 st Regular Session of the 64 th Idaho Legislature convened on January 9 and adjourned on March 29.The legislature had met for a total of 80 days. During that time there were 785 pieces of legislation introduced with both houses passing 347 bills. During the 2017 Session, AMG lobbyists attended all meetings of the Ag Lobbyist group (each Tuesday) and represented clients at Food Producers of Idaho meetings (each Wednesday). Food Producers of Idaho hosted freshman legislators for lunch each Wednesday. These lunches provided an opportunity to get to know the new legislator and for the legislator to gain a better understanding of Idaho agriculture and the groups involved in our industry. Benjamin Kelly participated in the Idaho Association of Commerce and Industry (IACI) weekly legislative meetings representing Food Producers of Idaho and Idaho Cooperative Council. During the 2017 session Mitch Coats, a student at the University of Idaho, served as an intern for Food Producers of Idaho, and Argia Phillips, a graduate of NNU, worked alongside Roger Batt during the session. The groups AMG lobbied for during the 2017 Session included: Rick Waitley/Benjamin Kelly: Food Producers of Idaho Idaho Alfalfa & Clover Seed Growers Assn. Idaho Cooperative Council, Inc. Idaho Hay and Forage Association Idaho Honey Industry Association Idaho Onion Growers Association Idaho Weed Control Association Nezperce Prairie Grass Growers Assn. Northwest Farm Credit Services Roger Batt/Argia Phillips: Idaho Eastern Oregon Seed Association Idaho Grape Growers & Wine Producers Comm. Idaho Heartland Coalition Idaho Mint Growers Association Idaho Seed Pesticide Council Nampa & Meridian Irrigation District Pacific Seed Association Sawtooth Law Offices Treasure Valley Water Users Assn. Western Equipment Dealers Assn Key 2017 Legislative Action: Transportation, public education and tax relief were among the primary issues. These three issues dominated the session, with the tax relief and transportation issues taking up much of the deliberative time during the latter part of the session. Consistent with the recent past, the Legislature aggressively moved to increase financial support of public schools. The Legislature approved a FY 2018 General Fund increase of 6.3% for K-12. This included an additional $61.9 million to implement the third year of the career ladder compensation system. Idaho s community colleges also received a significant General Fund appropriation increase, approximately 6.7%, while Idaho s 4-year colleges and universities saw their General Fund appropriation increase approximately 2.7%. This marked the third consecutive legislative session that the Legislature has strengthened funding for Idaho public education. In terms of transportation, the Legislature moved to address long-term projects as well as the damage to transportation infrastructure caused by the harsh winter of 2016/2017. Legislative efforts included the authorization of up to $300 million in bonds (GARVEE bonds) to finance projects in critical transportation corridors. In addition, the Legislature provided approximately $15.2 million in sales tax revenue for a new Transportation Expansion and Congestion Mitigation Program to address state and local transportation projects. Finally, the Legislature authorized the continuation of the transportation Strategic Initiatives Program, 1

2 which provides funding for projects across the state. (The Strategic Initiatives Program, set to end in May 2017, has been extended for two additional years.) Regarding tax relief, the Legislature worked to repeal the sales tax on groceries. In addition, the grocery tax credit would have been repealed in that same piece of legislation while also holding harmless local units of government by an adjustment to revenue-sharing provisions in sales tax distributions. In short, the net effect of the sales tax repeal/grocery tax credit repeal would have afforded taxpayers a reduction of approximately $79.3 million in taxes on groceries. Governor Otter chose to veto the legislation. Among other noteworthy actions, the Legislature passed a bill that revises the duties of the Oil and Gas Commission and the duties of the Department of Lands as they relate to oil and gas. The bill strengthens public transparency of the industry by adding new reporting requirements and revises rights and remedies of royalty owners. In terms of statewide budget matters, revenue projections for FY 2018 represent the seventh consecutive year of economic growth in the state. This trend was illustrated in the economic forecasts by the Economic Outlook and Revenue Assessment Committee, which estimated revenue growth of 4.6% for FY 2018 over a 5.4% growth estimate for FY 2017 (this was consistent with the Governor s forecast). As noted above, based on the strengthening economy, the Legislature was able to address tax relief, transportation infrastructure needs, public education and additional funding needs in a number of state agencies. The Legislature also funded the recommendations of the Joint Change in Employee Compensation Committee, which included a 3.0% merit increase for state employees AG ALLSTAR AWARDS: Industry leaders from around Idaho gathered Wednesday, January 11, to recognize 90 legislators who had a voting record in favor of the 2016 Food Producer policies related to agriculture, natural resources, water, transportation, and taxes. Those recognized with this honor include: REPRESENTATIVES: Neil Anderson Robert Anderst Ken Andrus Linden Bateman Scott Bedke Maxine Bell Merrill Beyeler Judy Boyle Van Burtenshaw Greg Chaney Don Cheatham Sue Chew Lance Clow Gary Collins Thomas Dayley Reed DeMordaunt Mat Erpelding John Gannon Terry Gestrin Marcus Gibbs Stephen Hartgen Brandon Hixon James Holtzclaw Wendy Horman Paulette Jordan Clark Kauffman Ryan Kerby Phylis King Hy Kloc Thomas Loertscher Lynn Luker Luke Malek John McCrostie Pat McDonald Shannon McMillan Ron Mendive Steven Miller Jason Monks Mike Moyle Mark Nye Kelley Packer Joe Palmer Donna Pence Christy Perry Dell Raybould Eric Redman Paul Romrell Ilana Rubel Dan Rudolph John Rusche Paul Shepherd Elaine Smith Jeff Thompson Caroline Troy Janet Trujillo John Vander Woude Julie VanOrden Rich Wills Fred Wood Rick Youngblood SENATORS: Kelly Anthon Steven Bair Clifford Bayer Bert Brackett Cherie Buckner-Webb Bart Davis Lori Den Hartog Jim Guthrie Mark Harris Lee Heider Brent Hill Dan Johnson Roy Lacey Todd Lakey Abby Lee Patti Anne Lodge Fred Martin Curt McKenzie Dean Mortimer Sheryl Nuxoll Jim Patrick Jim Rice Dan Schmidt Jeff Siddoway Mary Souza Michelle Stennett Steven Thayn Steve Vick Janie Ward-Engelking Chuck Winder 2

3 TRANSPORTATION FUNDING: A number of proposals had been developed through the session and in the waning moment s one last effort was made to provide funding for Idaho s roads. S1206 was introduced and fast-tracked through the Senate on the final Monday of the session so there could be a vote on the Senate floor that same morning. The legislation permits a $320 million investment, of which $300 million will be in GARVEE bonds. It also extends Idaho s surplus eliminator for two more years, through which any unanticipated state surplus at the end of the year would be split between roads and the state s rainy-day savings account. The surplus eliminator has proven to be a good funnel for extra revenue, has helped the state quickly pay for federal transportation bonding, and has kept lawmakers hands off extra revenue for pet projects. The surplus eliminator will vary from year to year, but in previous years it has been anywhere from $21.9 million to $108.3 million. S1206 also diverts 1% of Idaho s sales tax proceeds into road work. That 1% is projected to be $15 million next year. Idaho has refrained from using state general funds, which comes from sales and income taxes for roads. Instead, lawmakers have relied on gas taxes, vehicle registration fees, and federal funds to pay for roads, reserving the general fund for education, prisons, and health and welfare. The bill passed on a vote in the Senate but lost support from some of the Senate s top advocates of road upgrades for how it affects general fund budgeting. Among those in opposition was co-chairman of JFAC, Shawn Keough, whose general philosophy on road funding and the general fund has been closely in step with the Governor s. After the Senate vote, the bill was sent to the House, which quickly assembled a Transportation Committee hearing, and passed the committee on an 11-6 vote. Directly after the hearing, the Republicans held a caucus to gauge the temperature of the vote for and against the bill. The caucus is for legislators only and is a closed meeting with the members not divulging what is talked about while convened. The bill was then transferred to the House floor, and by the time evening had come around, had been voted on in favor. Once it was finalized in the House process, S1206 was transmitted to the Governor s office after the session concluded. After the legislature has officially adjourned for the session but sends a bill to the executive s office, the Governor has 10 calendar days (not including Sunday) to either sign, veto, or let the bill take effect without his signature. At play in all this was the possibility of the Governor vetoing the bill, but with the Legislature having no recourse or override powers unless they decided to reconvene in a special session. There was much speculation that this could happen because of the Governor s past declarations that he did not want to use general fund dollars. The proponents of allocating more resources to roads were nervous that there would be little done this session and Canyon County legislators had the most at stake politically due to the major damage on I-84 over the winter. They had also made very public declarations that something had to be done. In the end, Governor Otter allowed the bill to become law without his signature which reinforced his displeasure with the small portion of funding from the general fund. NEW LEGISLATORS: A total of 17 new legislators were elected in November Benjamin met many of these individuals on the North Idaho Legislative Tour held immediately following the elections in mid- November. The new legislators came from throughout the state. Some were elected to replace retiring legislators and others successfully defeated incumbents. The list of new legislators in 2017 is as follows: Senator Jeff Agenbroad Nampa Senator Carl Crabtree Nampa Senator Dan Foreman Moscow Rep. Paul Amador Coeur d Alene Rep. Randy Armstrong Inkom Rep. Megan Blanksma Hammett Rep. Gayann DeMordaunt Eagle Rep. Priscilla Giddings White Bird Rep. Karey Hanks St. Anthony Rep. Mike Kingsley - Lewiston Rep. Dustin Manwaring - Pocatello Rep. Dorothy Moon - Stanley Rep. Thyra Stevenson - Lewiston Rep. Scott Syme Caldwell Rep. Sally Toone - Gooding Rep. Christy Zito Hammett Rep. Bryan Zollinger Idaho Falls 3

4 80 LEGISLATIVE DAYS: The Legislative Sessions tend to run longer in non-election years. Leadership had aimed for March 24 th as the going-home date this year, but even with 80 days, we were nowhere near as long as 2003's record-setting stint, which was 118 days. The 2009 session came close with 117 days. Below is a comparison over the last 23 years: 2017: : : : : : : : : : : : : : : : : : : : : : : 68 PROGRESS REPORT: It seemed like things moved very slowly for the 2017 session, but a check on legislation progress indicated we were not too far off track from previous years: 4

5 STOCK WATER RIGHTS: S1111 addressed stock water rights for ranchers operating on federal lands. This legislation was brought forward by the Idaho Cattle Association in order to codify the current practice of the Idaho Department of Water Resources since the Joyce Livestock Company v. United States of America decision in In this case, the court held that agencies of the federal government cannot hold stock water rights unless they put the water to beneficial use by watering livestock owned by the agency. The legislation repealed and added to existing laws to prohibit the acquisition of certain stock water rights. It also provided that certain permittees will not be considered agents of the federal government while operating on federal lands. Lastly, it limited the use of certain stock water rights, and provides for the effect of an illegal change of ownership or transfer. Before the Joyce case, the federal government could restrict or deny access to stock water rights on government lands even though the rancher had permits/lease agreements. By doing so, the government had a backdoor ability to then deny access to grazing on federal lands via water rights issues. HELLS CANYON PROJECT: Idaho Power Company is in the process of relicensing with the Federal Energy Regulatory Commission for its Hells Canyon Project. In 1947, Idaho Power applied for a license to develop the three-project Hells Canyon Complex on the Snake River. After a bitter political contest with public power advocates who wanted to build one high dam in the canyon, the Federal Power Commission issued Idaho Power a license in 1955, to build the Brownlee, Oxbow, and Hells Canyon power plants. The Hells Canyon Project was the last of the three projects to be constructed, and with two of its three units, it began generating electricity in The state of Oregon has attempted to require Idaho Power to implement fish passage and reintroduction of migrating fish above the Hells Canyon Project into Idaho waters. There has been both legislation and a House Joint Memorial to address this issue that could have implications to rate payers and water users in Idaho. The memorial, HJM 2, provides that the Idaho Legislature opposes the introduction or reintroduction efforts of fish and directs the Governor and the Attorney General to take all the necessary measures to oppose and prevent Oregon's unilateral introduction efforts. Governor Otter has already advised the Governor of Oregon that Idaho opposes Oregon's efforts to impose reintroduction into Idaho waters because of the significant biological, regulatory, social, and economic impacts. Oregon has responded and insisted on its passage and reintroduction measures. The most fundamental issue involves the introduction of aquatic species into Idaho waters without the consent of Idaho and violates Idaho law, policy, and the sovereignty of the state. The two companion pieces of legislation to the memorial help to codify by law what the intent of the memorial proposes. H169 will require that no action be taken by any federal agency, state, state agency - including the United States Fish and Wildlife Service - or any entity acting on behalf of a federal agency, to introduce or to reintroduce any species into the state of Idaho without first securing the approval of the Idaho Legislature. H171 is more specific to the Hells Canyon Hydroelectric Project and will make it consistent with Idaho policy that fishways are not required to be constructed on the project. RESEARCH & EDUCATION: S 1152 This is the FY 2018 appropriation of $564,958,700 to the State Board of Education and the Board of Regents of the University of Idaho for college and universities and the Office of the State Board of Education for FY This appropriation includes the following amounts for each institution: Boise State University - $194,753,300, an increase of 3.5% from the General Fund; Idaho State University - $151,697,700, an increase of 3% from the General Fund; University of Idaho - $177,985,500, an increase of 2% from the General Fund; and Lewis-Clark State College - $35,456,400, an increase of 1.4% from the General Fund. S 1186 Makes available $31,287,300 to the Agricultural Research and Cooperative Extension Service for FY 2018, and an increase of 2.4% over last year, and includes an ongoing increase of $500,000 to support continuing improvements for buildings and equipment at ARES sites throughout the state. S 1194 This bill allots $71,425,700 to the Permanent Building Fund, including funding for the following items: Statewide Building Alterations and Repairs: $13,911,100; Asbestos Abatement: $200,000; Statewide American Disability Act Compliance: $800,000; and Capitol Mall Maintenance: $1,216,500. Additionally, this appropriation includes $55,298,100 for eight capital construction projects. Of that amount, 12 5

6 $45,296,200 was generated by a cash transfer from the General Fund to the dedicated Permanent Building Fund in the following amounts: $5,000,000 for the Idaho State University Gale Life Sciences Building remodel; $10,296,000 for a psychiatric hospital transformation; $10,000,000 for the Boise State University Center for Materials Science; $10,000,000 for the Lewis-Clark State College Career Technical Education Building; and $10,000,000 for the University of Idaho Center for Agriculture, Food, and the Environment. INVASIVE SPECIES COORDINATOR: A great deal of discussion was held on a bill (H274a) that had been renovated three times with three separate bill numbers. The bill passed both Houses and was sent to the Governor where it became one of the higher profile pieces of legislation that the Governor vetoed after the legislature left town. The legislation would have amended the Idaho Invasive Species Act by establishing a position in the Governor s office, an Administrator of Invasive Species Policy, and placed the Idaho Invasive Species Council in Idaho Code. H274 set up the duties of the administrator and the Department of Agriculture, and laid out the coordination efforts between state agencies. H274 would have established in Idaho Code the Idaho Invasive Species Council. The council would be chaired by the administrator of invasive species policy and would have coordinated joint efforts between local, tribal, state, and federal governments, as well as nonprofit and private entities. The purpose of the Idaho Invasive Species Council is to foster coordinated approaches that support local initiatives for the prevention and control of invasive species. Wrapped up in all this discussion had been a letter jointly circulated by the Governor and the Director of Agriculture to weed superintendents and other parties (not including legislators). The letter addressed serious concerns about the content of H274a and how it had the potential to cause complication in the way business is being done to fight invasive species (including terrestrial weeds) in Idaho. Everyone was well aware that since the legislation places the position in the Governor s office, that the Governor would have had a lot to say about the position. The oversight of invasive species in Idaho has been under the direction of the ISDA for several years. Annual reports are given to the Legislature and other groups who have inquired about the success of the program (specifically the boat check stations). The summer interim working committee seemed to be divided between their opinions as to whether or not ISDA was accomplishing the task. This resulted in Invasive Species being one of the main topics of the 2017 session, culminating in the creation of H274a. We will see if the same proposal resurfaces in the 2018 session. BOAT WASH STATIONS: Outside of the push and pull between the legislature and the Governor on H274a, there was positive, industry supported proposals that were passed by the 2017 Legislature and included: S Supplemental funding for the Department of Agriculture in the amount of $1,010,000 allocated for the rest of this year (FY 17). The Joint Finance and Appropriations Committee approved an emergency appropriation (S1112) of $1,010,000 to expand Idaho s boat inspection stations. The urgency of the approval specifically relates to the news of Montana finding invasive mussels in bodies of water last fall. The appropriation will add three new boat inspection stations this season that will operate from dawn to dusk and add three employees in the current 2017 budget year ending on June 30. The stations will be located on state Highway 3 near Rose Lake, U.S. Highway 12 near Lolo Pass or Lenore, and on I-15 near Spencer or Roberts. All are aimed at intercepting boats coming from Montana to prevent the spread into Idaho. H308 - Funding for the Department of Agriculture including $3.14 Million State Funds and $1 Million in Federal Funds allocated for FY 18. The legislature approved (H308) a $3.14 million increase in the program, all in state general funds - plus added $171,300 in funding to the Idaho State Police budget for another patrol position for the fiscal year The ISDA budget covers taking one existing boat inspection station, at Cotterell near Albion on I-84, to 24/7 operations next year; the additional ISP officer would be assigned there. All other watercraft inspection stations statewide would be open from dawn to dusk, plus the department would be encouraged to make use of roving stations, including for holiday periods when more boats are moving on the roads. And three new stations approved in the current year s budget would continue. The budget also covers five hours a day of law enforcement patrols for the rest of the stations, to cover the newly expanded hours. In total, four new positions are being added at the Department of Agriculture for the inspection program, in addition to the one at ISP. 6

7 H211 - Will increasing the Invasive Species Sticker fee for non-idaho residents from $22 to $30. Currently outof-state invasive species tags generate $218,000 per year. The gross collections will be 20% to 25% more than the net distribution because of vendor fees and Parks and Recreation overhead. The total expected revenue from this fee increase is estimated to be approximately $70,00 - $80,000 BOAT INSPECTION: newest map FIELD BURNING: Passed in 2008, Idaho law requires the Department of Environmental Quality (DEQ) to assess air quality conditions before approving the open burning of crop residue. DEQ must determine that air quality levels are not exceeding 75% of any National Ambient Air Quality Standard (NAAQS) and are not projected to exceed such levels over the next 24 hours prior to approving a crop residue burn. The program is difficult to manage because 75% of the current NAAQS for ozone is close to background ozone concentrations 7

8 in rural Idaho. There are days when ozone concentrations are high enough to limit crop residue burns on what would otherwise be "good" burn days when burning is not predicted to cause or contribute to a violation of any NAAQS. In late 2015, EPA reduced the NAAQS for ozone which has made it even more difficult to identify burn days that meet all requirements. To address these limitations, DEQ is proposed (S1009) an increase to the ozone evaluation threshold from 75% to 90%. To account for the time needed to obtain EPA approval for this change, it will be implemented in two stages. For the 2017 burn season, the ozone threshold will remain at the current level or 75% of the 2008 ozone standard. On February 28, 2018, which is the expected date of EPA approval of Idaho's state implementation plan which identifies the change, the 90% threshold of the 2015 ozone standard will become effective. The new threshold will continue to be protective of Idaho's air quality but will also preserve the ability of growers to burn crop residue on good burn days when using smoke management best practices. Agriculture: Other key agriculture legislation passed this session: S 1063 Provides that lands belonging to the state, to which an irrigation district has apportioned benefits, are subject to the levy and collection of assessments for those benefits. S 1101 Provides that fees for stockwatering right claims, regardless of the number of claims filed, shall only be imposed on the first four claims per claimant and provides that there shall be no other fees or costs imposed on such claims. Natural Resources: Other key natural resource legislation passed this session: H 064 Revises the permitting and hearing processes used for applications filed with the Oil and Gas Conservation Commission and simplifies the integration process. The bill also clarifies time frames and processes for notification, publication, review, and approval. H 230 Revises resident license fees effective December 1, 2017, and authorizes the Fish and Game Commission to implement a price lock discount order, which will provide a fee discount for eligible resident sportsmen who purchase a season license every year for at least five years. H 319 Provides that temporary approvals may be granted for use of water, not intended to become an established water right, for prevention of flood damage, for groundwater recharge, for ground or surface water remediation or for any other use, which shall not exceed a total diverted volume of five acre-feet for the duration of the approval, and also provides that temporary approval shall not be required for reservoir flood control authorized by state or federal law. S 1098 Requires oil and gas producers to file monthly reports with the State Tax Commission. The reports will include the name, description and location of wells and the fields those wells are located in. The report will also include information relating to the oil and gas produced, saved and sold or transported from the premises in Idaho. S 1187 Appropriates $67,899,900 to the Department of Environmental Quality with 29% from the General Fund, 17% from dedicated funds, and 54% from federal funds. FTPs are capped at 382. The budget includes $500,000 ongoing General Fund moneys for a state-funded statewide agricultural best management program. Over the last four years, the DEQ has experienced a decline of over $1 million in federal funding available for grants each year to support agricultural best management practices. NEW LEGISLATORS: Each Wednesday Food Producers of Idaho hosts the newly elected members to the Idaho Legislature. A total of 17 guests were hosted by the organization at lunch throughout the past few months. These lunches allow Food Producer members to have insight into the motivation to run for the legislature, philosophies of the legislator and committees where they serve. Oh yes, and we always ask how they are related to agriculture or have been in the past. Many legislators who have served for a number of years will recall their initial luncheon with Food Producers and say it helped them to acclimate to the session 8

9 and connect with the ag industry. Some of these relationships have grown into significant connections between lawmakers and agriculture leaders over the years. FREEDOM CAUCUS: Two House Republicans in the last week of the 2017 legislature announced that there would a be a special meeting for anyone interested in exploring the creation of a Freedom Caucus similar to the one that has been in Congress for several years. Those leading the cause included Reps. Heather Scott, Blanchard, Ron Nate, Rexburg, Mike Kingsley, Lewiston, and Bryan Zollinger, Idaho Falls. Kingsley and Zollinger have been identified as the co-chairmen of the new caucus. The new caucus will be modeled after the one that US Congressman Raul Labrador has been involved with for several years. The group claims to have 10 founding members; however, a total of 24 House members showed up for the informational meeting. The Idaho Freedom Caucus hopes to continue their development over the summer to be ready for the start of the 2018 legislative session. It is our understanding that you cannot belong to more than one caucus so those Republicans who select to affiliate with the Freedom Caucus would no longer be included in the House Republican Caucus. CLOSING: We hope you have found the communication related to legislative issues complete and valuable to understanding what happened in Boise January through the end of March. Our weekly Capitol Review is designed to inform you each week about issues that impact the agriculture industry and special events and people involved with these issues. If you have specific questions related to legislation discussed in this report or between legislative sessions, please do not hesitate to contact our office. We can be reached at: Office phone: Rick: rick@amgidaho.com Roger: roger@amgidaho.com Benjamin: benjamin@amgidaho.com Feel free to visit our website at to learn more about our services and the clients we serve at Association Management Group. Client _Summary_2017 9