Eye On Boise

Crafting the next state revenue forecast…

Idaho House Minority Leader John Rusche is calling on Gov. Butch Otter to consider a broader than usual call for economic expertise in August when the state revises its 2011 budget revenue projection. “These are unusual and somewhat volatile times,” Rusche said. “I know legislative leaders would have a better comfort level if a broader group was to submit in writing to the Division of Financial Management economist their take on the economy and the amount of General Fund revenue they forecast will come in FY 2011.” Rusche suggested that the various groups, from industry representatives to the state Tax Commission to Idaho university economists, who submit forecasts each year to the Legislature's revenue projection committee be called on to have input into the August revision, which normally is prepared by the state's economists in the governor's Division of Financial Management.

Wayne Hammon, Otter's budget chief, said the administration already is working on a plan to do just that, but for the December revenue forecast, not the August update. "I appreciate your interest in getting it up and running in time for the upcoming August update, but I disagree," Hammon wrote back to Rusche. "I think it is essential that the best and brightest economic minds be invited to participate and organizing the group in such short notice just isn’t practical.  Furthermore, the August revenue update is just a mid-year check on how we are doing.  The budget actually submitted to the Legislature for consideration is based upon the December update, giving it much more weight." Click below to read both Rusche's full statement, and Hammon's full response.

House Minority Leader Requests Expanded Review of FY2011 Budget Forecast

Lewiston – House Minority Leader John Rusche has asked Idaho Governor C.L. “Butch” Otter to consider expanding the expertise for the August re-visit of the 2011 budget revenue projection. “These are unusual and somewhat volatile times,” Rusche said. “I know legislative leaders would have a better comfort level if a broader group was to submit in writing to the Division of Financial Management economist their take on the economy and the amount of General Fund revenue they forecast will come in FY 2011,” he said. Rusche pointed out that the 2011 budget and revenue projections set the stage for planning for the 2012 budget process. Rusche suggested that the presenters to the Legislature’s Economic Outlook Revenue Assessment Committee, EORAC, would be appropriate. These presenters include representatives from the Idaho Tax Commission, Idaho universities and the Idaho Taxpayer’s Association.

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From: Wayne Hammon
Sent: Thursday, July 22, 2010 5:32 PM
To: jrusche@house.idaho.gov
Cc: Jason Kreizenbeck; Jon Hanian; Wayne Hammon
Subject: Your Letter to the Governor

Dear John,

Great to hear from you, hope all is well in Lewiston.  The Governor is traveling in Eastern Idaho today, but I wanted to get back to you with some initial thoughts ASAP.

It’s funny that you should mention the idea of expanding the input on the revenue forecast, several months ago the Governor directed me to work on a plan to do just.  Take a look at the attached proposal – I think you will see that we agree on most of the finer points.

Here’s the background:

As you know, DFM issues revenue updates every August and December.  This process has been well established for years, long before Governor Otter was elected.  Since coming to DFM three years ago I’ve been looking for areas where we can improve the budgeting process, including revenue forecasting.  These type of long-term improvements and implementing lessons learned along the way are an important part of what the Governor has asked me to accomplish as DFM Administrator.

Following the revenue update issued in December 2009, I started working on specific improvements to the revenue forecasting system.  That winter (December 2009 / January 2010), I contacted my counterparts in Utah, Washington and Oregon and discussed at length with each of them how their states’ system worked.  As you can imagine, all of them had strengths and weaknesses and no two were alike.  The project got put on the back burner during the legislative session, but in late April I picked up the project again and started working on a written recommendation on how to incorporate many of the ideas raised in your letter into the Idaho system.

On March 26, 2010, I met with one of the economists here at DFM and discussed the concept with him (the other was out of town at the time).  His input helped me shape the first draft of my proposal which I shared with the Governor’s Chief of Staff on June 7, 2010.  Jason liked the idea and together he and I presented it to the Governor on June 23, 2010.

At that June meeting, the Governor signed off on my proposal, made some suggested improvements, and asked me to get to work on implementing it in time for the December 2010 revenue update.

The attached version of the proposal is dated June 28, 2010 and reflects what the Governor agreed to.  Since then I’ve been at work on the project and provided an update to Jason on July 8, 2010.  We are well on our way to having it implemented in time to make a real impact on the December 2010 revenue update.

I appreciate your interest in getting it up and running in time for the upcoming August update, but I disagree.  I think it is essential that the best and brightest economic minds be invited to participate and organizing the group in such short notice just isn’t practical.  Furthermore, the August revenue update is just a mid-year check on how we are doing.  The budget actually submitted to the Legislature for consideration is based upon the December update, giving it much more weight.

I hope this information is helpful.  The Governor looks forward to working with all of legislative leadership on the process during the months ahead.

Give me a call anytime if you want to discuss it further.

Have a great summer!

Thanks.

Wayne L. Hammon
Administrator - Division of Financial Management
Acting Administrator - Division of Human Resources
Executive Office of Governor C.L. "Butch" Otter

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Betsy Z. Russell
Betsy Russell covers Idaho news from the state capitol in Boise and writes the Eye on Boise blog.

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