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funding the future

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by Courtney Dan

While the federal government plays a major role in setting tax policy nationwide, state and local tax allocations can have an arguably greater impact on the daily lives of Americans. According to Idaho Senate President Pro Tempore Brent Hill, one way leaders can respond to the unique needs of their cities and states is through state and local collaborations, such as the Idaho Opportunity Fund.

MAR/APR 2018 | CAPITOL IDEAS

The Idaho Opportunity Fund, a grant program established in 2013, was created to support the expansion of existing businesses and recruit new companies to Idaho. Local governments can apply for grants to improve electric utility systems, broadband, parking lots and more if those needs are directly related to job creation or expansion projects. The local government must be able to provide a match in funds that shows a commitment from the local government to the project.

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“The state chips in for projects with the Idaho Opportunity Fund to help cities build out infrastructure, while cities kick in things like water and electricity with enterprise funds,” Hill said. “All of those unique projects are

funded with the state general fund, or city general funds and enterprise funds.” Hill, who serves on Idaho’s Local Government and Taxation and State Affairs committees, said most cities use state revenues for two purposes: their own general operations and streets and highways. “The state will share revenues from the sales tax and liquor taxes that fund general operations in the city, while gas taxes and registration fees flow to cities for the express purpose of maintaining streets and highways within those jurisdictions,” Hill said. The Urban Institute, a nonprofit research organization, found that state and local governments spent $2.8 trillion on general government in fiscal year 2015—states spending $1.3 trillion and local governments spending $1.5 trillion. Elementary and secondary education took 22 percent of those funds, 21 percent went to public welfare, 10 percent to higher education, 9 percent to health and hospitals, 6 percent police and corrections, and 6 percent highways and roads.

Leaders can respond to the unique needs of their cities and states through state and local collaborations.” » Idaho Sen. Brent Hill

State and Local Spending K-12

State 0.5% Local 40%

Public State 42% Welfare Local 4% Higher Education Health Maintaining Roads Safety Corrections

State 18% Local 3% State 9% Local 10% State 8% Local 4% State 1% Local 6% State 4% Local 2%

Source: The Urban Institute, U.S. Bureau of the Census Survey of the State and Local Government Finance, 2015

Capitol Ideas | March, April 2018  

Funding the Future

Capitol Ideas | March, April 2018  

Funding the Future