Earlier this week on a 66-3 vote, the Idaho House approved House Bill 495, legislation to stop the Idaho Land Board, which manages the state’s endowment lands and assets, from purchasing and running businesses.

The legislation would also force the board to sell a commercial storage rental facility it bought in 2010 for $2.7 million.

With that in mind, the board called a special meeting Tuesday to discuss the issue. At its conclusion, the board voted 3-1 to inform the Legislature it believes the bill is unconstitutional and violates the principle of separation of powers.

The Idaho Department of Lands (IDL), which acts on behalf of the board in property transactions, voiced several concerns about the legislation. IDL deputy director Kathy Opp detailed her agency’s apprehension about the legislation, saying that the bill could limit the Land Board’s flexibility to make appropriate and diverse purchases.

Opp also suggested that commercial properties, including the commercial storage facility, deliver higher rates of returns than other properties, such as range or agricultural land. While agricultural and range land provide returns of 1 percent or less, the commercial storage facility delivers 8 percent a year or at least $20,000 a month.

Secretary of State Ben Ysursa voiced strong opposition to House Bill 495, saving it is likely a violation of the separation of powers clause in the Idaho Constitution. “I think we can agree to disagree with our friends in the legislative branch of government, but I believe this impinges on our constitutional authority,” Ysursa said.

Board members made reference to Article 9, Section 8 of the Idaho Constitution that gives the board the sole authority to manage the state’s endowment assets, though the Legislature can provide some oversight and regulation.

Idaho’s attorney general, Lawrence Wasden, sided with Ysursa, saying the Idaho Constitution requires the Land Board to provide maximum returns on investments in order to defray the statewide tax burden of school and other program funding. “Each one of those respected bodies have to respect the powers granted to the other,” Wasden said of the clash between the legislative and executive branches he sees in the bill.

Superintendent of Public Instruction Tom Luna offered support for the legislation. Luna said that when the state, which doesn’t pay taxes, buys properties and removes the land from property tax rolls, “we get in the business of picking winners and losers in districts and counties.”

Legislators across the state, but particularly in Boise, are concerned how those purchases might hurt local units of government by, for example, removing a taxpaying entity from the private sector to the public sector. “I think that’s the reason you’re seeing this legislation come out of the Legislature,” Luna said. “I think those are legitimate concerns.”

But Controller Donna Jones joined with Wasden and Ysursa to form a majority on the five-member panel. “I want to reinforce we, as an executive branch board, respect the separation of powers,” Jones said, adding that she feels House Bill 495 “intrudes” on the board’s constitutional authority.

Gov. Butch Otter, citing his conflict between acting as board chairman and governor, abstained from voting on the issues. “That legislation will come to my desk,” Otter said. “I have a responsibility as governor, but I also have a responsibility as chairman of this board.”

Otter did not tip his hand as to what might happen if the bill lands on his desk, but said there might still be “middle ground” somewhere in the process.