By KIMBERLEE KRUESI

Associated Press

BOISE — Idaho Gov. Butch Otter on Monday proposed a 7.4 percent increase to $1.47 billion to fund Idaho schools, making it his highest proposed education hike since 2008, before the economic downturn.

Otter made the proposal in his ninth State of the State address to lawmakers. It signaled the beginning of the 2015 Idaho Legislature, where state lawmakers will spend the next few months in Boise working to balance the state budget and pass legislation.

Otter's overall suggested budget increase is roughly $152 million more than last year's budget — or 5.2 percent — and totals just more than $3.08 billion.

"In Idaho, public schools … are essential to the health of our families, our communities and our economy," Otter said. "They are the key to our prosperity and Idaho's competitiveness in the global marketplace."

That statement encouraged some of North Idaho’s legislators, but others want to know from where the money is coming.

“I was pleased that the governor seemed to have good plans for education funding,” said Sen. Mary Souza, R-Coeur d’Alene, who sits on the education committee. “Enhancement of the education system is a big deal.”

Rep. Ron Mendive, R-Post Falls, said he likes the fact that the governor is proposing to restore funding for the public school system.

“I like what he said about education funding,” Mendive said. “But where is the money going to come from?”

Otter is also requesting nearly $8.9 million to fund the state broadband program that provides internet services in Idaho's public schools through the upcoming 2015-2016 fiscal year.

The funding request came at a time when a district court voided the $60 million broadband contract in November and sent education officials scrambling to determine a next move that does not disrupt the services the broadband program — known as the Idaho Education Network — provides to Idaho students.

Mendive said he is pleased with the governor’s support for the IEN, and that the program could do a lot of good across the state.

Education issues dominated the majority of the 45-minute speech but Otter also pressed lawmakers to find a way to improve the state's aging roads and bridges as well discuss possible Medicaid expansion options.

However, while Otter provided detailed proposals for his education plan, he did not propose any additional funding to pay for the 785 state and local bridges considered structurally deficient in the state. He pointed out that number of bridges will grow to 900 by 2019.

"I am not going to stand here and tell you how to swallow this elephant," Otter said. "That would be contrary to all we have learned about each other and the people we serve in recent years. But we all know it must be done."

Otter said he would not consider transportation legislation that might compete for general fund tax dollars, education or other required public programs or services.

That means lawmakers may consider increasing the gas tax to cover the maintenance costs, said state Sen. Bert Brackett, R-Rogerson, who chairs the Senate Transportation Committee.

"We might test that. I want to think that we have a different attitude from several years ago," Brackett said, referencing the 2009 failed attempt to increase the gas tax by 7 cents.

“Higher taxes on gasoline is going to be really hard for me to swallow,” said Rep. Vito Barbieri, R-Dalton Gardens. “My constituents have been pretty loud and clear that they don’t want any tax increases.”

Barbieri said there has to be an alternative to the gas tax increase.

Souza said she knows that there are infrastructure problems that need to be addressed, but she would favor a user-based financing mechanism.

“Everyone agrees we need more work on our infrastructure,” Mendive said. But, again, where are we going to get the money?”

Rep. Eric Redman, R-Athol, said he understands there will be challenges when it comes to transportation infrastructure and education funding, but he is excited to be a part of it.

“That’s what a citizen legislator does,” he said. “We come down here and decide where the money goes.”

Rep. Don Cheatham, R-Post Falls, said it is pretty clear that education and infrastruture are huge issues for the state, but he wants to take more time to research those before coming to any conclusions.

As far as other possible changes to Idaho's taxes, Otter said he wants to see marginal tax rates for Idaho's individual and corporate income tax drop below 7 percent.

Mendive said he is impressed that the governor wants to reduce taxes  — especially the income tax — but he is not sure what that means to the rest of his budget.

“We are going to have to have some money to pay for this stuff,” he said.

His proposal would reduce the income tax rate for those in the state's highest tax bracket to 6.9 percent from the current rate of 7.4 percent. The reduction would be done gradually over five years.

Otter then urged lawmakers to hold a hearing on expanding Medicaid eligibility in Idaho.

Idaho's Republican-controlled legislature has been hesitant to discuss Medicaid expansion, an option provided under the Affordable Care Act, but has acknowledged over the past years that the state's current indigent care system is broken.

Otter said he agrees with most of the findings his work group submitted in 2014 that proposed allowing adults below 100 percent of the poverty line to qualify for Medicaid coverage. Although, Otter would not detail what he did not support when pressed by reporters after his speech.

“I was encouraged to hear that he seems to be open to alternatives for health care,” Souza said.

The report outlined that adults earning 100 percent to 138 percent of the poverty line may purchase private insurance on Idaho's health insurance marketplace using federal dollars.

House Minority Leader John Rusche of Lewiston said with Otter pushing more education funding, fewer tax cuts and discussing possibly expanding Medicaid eligibility, he felt that the governor was supporting more Democratic goals than Republican ones compared to years past.

“This is very supportive of Democratic principles,” he said. “We welcome this approach.”

Both Mendive and Redman were encouraged that Gov. Otter reaffirmed his commitment to protecting Idaho’s constitution and its definition of a traditional marriage between a man and a woman.

“I like how he ended his speech on traditional marriage,” Redman said. “I am a big supporter of that.”

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Press reporter Jeff Selle contributed to this report.