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Idaho falling behind as resources, investments in economy erode

Cuts to education, other areas coincided with economic drop

Idaho is falling behind economically after allowing dramatic erosion in resources that could be invested in our schools, health care, and other building blocks of prosperity, according to a new report from the Idaho Center for Fiscal Policy.

Only one state (Mississippi) has a lower per-capita income than Idaho, according to the report, Six Key Facts About Idaho’s Revenue Shortage and Our Declining Economic Performance. Fifteen years ago, Idaho outperformed 10 other states.

“We should be making the investments that will give our state a strong foundation for a vibrant economy—strong schools, affordable colleges and universities, public health and safety, and reliable systems for transportation,” said the center’s director, Lauren Necochea. “While Idaho has never been a high-income state, our sharp downward trend in economic performance is alarming. We should take steps to build a stronger economic foundation that can get Idaho back on track.”

The report analyzes Idaho’s tax structure and how it hampers the state’s ability to fund education and other services that support a strong economy. Its key findings include:

• Idaho collects less tax revenue than all but two states. Difficult economic times have hurt state finances across the country, but Idaho has also made tax policy changes over the past 15 years that caused revenues to decline dramatically. The changes have left our state with $500 million less each year to invest in schools, public health and safety, and transportation, among other critical public needs.

• Idaho’s tax structure is unbalanced, with the wealthiest Idahoans paying the lowest share of their income in state and local taxes.

• Idaho is investing 16 percent less per K-12 student than in 2008 (after accounting for inflation). Only four states have made deeper cuts. Struggling school districts are increasingly turning to property taxes. The percentage of school districts relying on voter-approved levies has nearly doubled, to 70 percent from 36 percent. This has led to wide disparities in school resources across the state, since some districts are able to raise much more money than others depending on their property wealth.

• Colleges and universities that prepare our workforce are becoming less affordable. Since 2008, Idaho has cut state funding for colleges and universities by 37 percent per student, adjusted for inflation. The costs are increasingly shifted onto students in the form of increased tuition and fees. In 1980, tuition was 7 percent of the cost of a higher education. This year it will make up 47 percent.

Dr. Jasper LiCalzi, professor and chair of the Department of Political Economy at The College of Idaho noted, “Reduced funding for education, both primary and secondary, depresses per capita income, which, along with a regressive system of taxation, reduces tax receipts for the state.  These problems cannot be resolved in isolation but only together.”


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