The Idaho Legislature: From The Outside Looking In 

An alternative preview of the 2014 legislature

There are multiple previews of the Idaho Legislature, but nearly all of them fall into one of two categories: the view from the inside and the view from the outside.

Inside previews are usually reserved for pundits, political junkies and the men and women who spend an inordinate amount of time under the rotunda. Their template for a boilerplate legislative preview goes something like this:

Step 1: Gin up the politics. Accentuate the differences of the majority and minority caucuses--if it's an election year, all the better: accentuate the differences within the parties themselves.

Step 2: Ask as many legislators as possible to guesstimate the length of the upcoming session.

Step 3: Compare the current session to the past four or five sessions.

Step 4: Prime the political pump a bit more by buttressing two quotes from two radically different legislators.

Step 5: Mention three or four controversial topics certain to be debated by the fringe elements of the parties (it's always good to include wolves or health care).

But the view from the outside looking in couldn't be more different. Putting politics aside, Idaho economists and employers couldn't care less about partisanship or how long legislative sessions run, just as long as lawmakers craft a sensible budget and fund programs and agencies with sensitivity.

So it was with great substance (but very little media fanfare) that a team of nine Idaho representatives and nine Idaho senators hunkered down for two days Jan. 2-3, in an effort to come up with the number--the revenue projection to be sent to legislative budget writers who, in turn, will decide who gets what.

"We have some homework to do," said Grace Republican Rep. Marc Gibbs, welcoming his fellow members of the Joint Economic Outlook and Revenue Assessment Committee.

To put it mildly, some of the committee members are better at forecasting revenues than others. For instance, in 2012 the EORAC committee predicted that Idaho would collect $2.67 billion in revenues for Fiscal Year 2013. But actual collections were $116.8 million more than what EORAC forecast. In fact, some of the committee members' individual estimates were wildly off the mark. For instance, former Boise Democratic Sen. Nicole LeFavour's forecast was off by a whopping $418 million. Closer to the actual FY2013 collections were Meridian Republican Sen. Russ Fulcher and Boise Republican Sen. Cliff Bayer, who were each $109 million off.

That was then.

Bayer, Fulcher and their EORAC colleagues are now facing blank work sheets for FY's 2014 and 2015. The lawmakers who make up the EORAC committee are already stocked to the gills with some solid data: for two solid days, they listened to a nonstop roster of speakers: economists, bankers, physicians, grocers, auto dealers, lumbermen, dairymen, agricultural scientists and a long list of state agency heads. For 11 hours, the cumulative presentations represented an unprecedented look at Idaho's economy--past, present and future.

The Chief Economist

"We like to take national forecasts and then build our Idaho forecasts from there," said Derek Santos, chief economist for the Idaho Division of Financial Management, flipping through a dizzying series of charts and graphs from IHS Economics/Global Insight. Ultimately, Santos landed on one particular graph that made Idaho lawmakers sit up and take notice.

"This is what we're projecting Idaho housing starts," he said.

Simply put, housing starts are key economic indicators that track the number of residential construction projects. And Santos' projections for the next two years were extremely encouraging.

"We think Idaho housing starts will turn the corner," said Santos. "I know these numbers seem strong, because by 2016 (nearly 15,000 units) we're showing three times the housing starts compared to 2011 (less than 5,000 units). But we really think this is sustainable."

The committee members couldn't take notes fast enough.

The Builder

Santos' projections were music to Michael Arrington's ears. He's a third-generation Idaho builder and president of the Idaho Associated General Contractors.

"Construction employment in Idaho has risen 4.2 percent since this time last year and is estimated to total more than 32,000 jobs," Arrington told the committee, but quickly added that "progress remains fragile."

"Construction jobs don't just appear overnight," he said." It takes the financial commitment of both private and public owners to put our industry to work."

Hayden Republican Rep. Ed Morse pressed Arrington further, wanting some specific insights on what Arrington was experiencing in his own construction firm--Starr Corporation.

"What are you seeing out there?" asked Morse. "I really need your immediate outlook for the next 12 to 18 months."

Arrington shared details concerning his firm's Twin Falls and Pocatello offices.

"We experienced about a 5 percent increase for two years, and then last year, we had a 10 percent increase in business," he said. "We're definitely moving out of a holding pattern."

The EORAC members continued to write feverishly.

Gardner Company: Looking Up

"Notwithstanding the recession, we've done OK, " said Geoffrey Wardle, vice president of development and general counsel for the Gardner Company. "I'm standing here in front of you to paint a picture that things are getting better and there are glimmers of hope."

In short order, Gardner has become--quite literally--the highest profiled developer of commercial buildings in the Treasure Valley. In a matter of days, new tenants will be moving into Gardner's Eighth and Main tower--Idaho's tallest building--in downtown Boise.

"We're not seeing any new speculative development in this market except in the downtown Boise core," said Wardle, "And we're starting to see a return to pre-recession conditions in the commercial market."

But Wardle cautioned lawmakers that Idaho faces a major problem in finding the men and women that they need to help manage their next generation of office buildings.

"The availability of appropriately skilled operations employees for commercial buildings is becoming a significant issue," he said.

Wardle said Gardner recently hired a number of property managers and building engineers, "but to fill those positions, we had to recruit employees from outside of the market."

Wardle's warning about an unskilled workforce was repeated several times by several presenters, not the least of which was the man tasked with keeping Idaho employed.

Unskilled Labor?

Ken Edmunds' message to Idaho legislators was blunt. The director of the Idaho Department of Labor said the Gem State didn't have a job shortage as much as it had a problem with finding qualified applicants.

"Practically every employer I talk to tells me the same thing," Edmunds told members of EORAC. "They say they're not finding the employees they need at any level. I can't think of a single employer who has told me that they're getting the workers they need. "

Edmunds stood alongside Labor Department spokesman Bob Fick, known for his own brand of straight talk and general reluctance to overstate anything.

"Yes, the Idaho recovery has picked up substantially, but we still believe there are some challenges," said Fick, always tacking on a cautionary note to anything that may come across as too rosy.

"We've recovered about 95 percent of the job loss, but the challenge in this recovery continues to be in terms of income," he added.

Fick said the average annual wage in Idaho is currently $36,363, compared to a national average of $49,000.

But the real news in Fick's presentation was his forecast of which Idaho sectors should see the most job opportunities in the coming year. Topping the list was the construction sector, which the Department of Labor is forecasting should add 4,187 new jobs; the leisure and hospitality industry is expected to add 6,033 jobs, followed by waste management services and natural resources. The best news is in the health care industry, which is forecast to add 6,682 jobs by 2015. (see the chart below).

News_JobChart.jpg

"These have been the real bright spots," said Fick in a rare moment of optimism.

But just how lawmakers will translate Fick's numbers, along with the endless amount of data submitted by other presenters is anybody's guess. Quite simply, if you're looking for the real substantive preview of the 2014 Idaho Legislature, seek out EORAC's revenue forecast for the coming year. That should drive the full session.

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