After JFAC this morning adopted a "contingency plan" to allow Gov. Butch Otter to tap reserve funds and building project funds if state revenues continue to slide after lawmakers leave town this year, Otter's budget director, Wayne Hammon, told reporters, "We're confident that the language that was approved gives the governor the tools necessary to complete his constitutional mandate to balance the budget." He declined to speculate on whether a special session would be needed if that happened. "In his weekly meetings with minority and majority leadership, they've talked about a lot of scenarios," Hammon said.

Among the possibilities: Mike Ferguson, the governor's chief economist, could be right that the state's hit the bottom of the recession, and state tax revenues could stop their slide. The state still has a $23 million cushion, at this point, between the $46.1 million in shortfalls that have occurred to date and the adjusted budget for the current year. Click below to read a report from Associated Press reporter John Miller on Senate Finance Chairman Dean Cameron's thoughts on a possible special session after this year's session ends. Today is the 74th day of this year's legislative session.

Cameron: Special session possible if revenue drops
By JOHN MILLER, Associated Press Writer

BOISE, Idaho (AP) — The Senate's top budget writer said Thursday that Idaho's fragile budget plan for the final four months of the fiscal year could be putting the state on track for a special session before July, if tax revenue drops off a cliff.

The Joint Finance-Appropriations Committee voted 19-0 to give Gov. C.L. "Butch" Otter access to reserve funds totaling about $107 million — just in case the worst-case scenario materializes.

Even so, Sen. Dean Cameron, chairman of the budget writing committee, thinks the Republican governor might have to call a special session should he be forced to use even half that amount to shore up the $2.35 billion fiscal year 2010 spending plan that ends June 30.

Even as the 2010 Legislature enters its final days — it will likely end early next week — lawmakers are on notice that an economy that's teetering on the brink could force them to return to Boise if tax returns collapse in April, always the month when most revenue comes in. Cameron, R-Rupert, declined to say that a special session would mean a tax increase, but it's clear that such a move would likely be part of the discussions.

"If you're $100 million upside down, you can't issue a 4 percent holdback on everybody," he said. "If we get more than $100 million down, he definitely has to ask us back. He may want to even if we get to $50 million."

Idaho's last special session was in 2006, in much happier budget times: Lawmakers cut property taxes and raised the sales tax to make up for losses.

Here's Idaho's dilemma now: If tax revenue over the next four months falls a total of more than $69 million short of what the state expected to take in, it would put Idaho's already bare-bones 2010 budget into a deficit.

And since December, state tax revenue has already missed targets by a total of $46 million.

That leaves just a $23 million cushion before the point where Otter would have to tap into the $107 million approved on Thursday — money that's sitting in the budget stabilization fund, the economic recovery reserve fund and the permanent building fund, which usually goes toward maintenance.

But since almost all of that reserve money is already earmarked to shore up the 2011 budget starting July 1, Otter doesn't have as much flexibility as it looks like on paper.

"We are in very precarious times," Cameron said.

There are other options.

For instance, state agencies probably could probably come up with an additional $20 million by managing their cash flow, delaying payments, canceling contracts.

And there's always a chance the missed revenue targets in December, January and February stem from Idaho taxpayers who are due money back filing their returns as early in the year as possible, because they, like the government, need the cash.

If that's the case, it might mean the state's coffers will be pumped up as those taxpayers who do have to make additional payments wait until the last possible day — April 15 — to file their tax returns.

"We'll all hope the economy strengthens, the numbers come in in April, and this gathers dust," Rep. Maxine Bell, Cameron's budget committee co-chairwoman, said of the contingency plan.

Even so, nobody is counting on a windfall, especially as the economy continues to slumber along and the statewide unemployment rate last month fell to 9.5 percent, within just a tenth of the record from the dark days of 1982-1983. A full 71,600 people are out of work, according to the Department of Labor.

Wayne Hammon, Otter's budget chief, said the Division of Financial Management is formulating how the Republican governor should respond to a tax revenue crisis.

Hammon declined to say by just how much revenue would have to drop to necessitate a special budget session — $40 million, $60 million, $80 million and $100 million are all numbers that have been batted around — but concedes such a drastic measure has been part of the discussions.

"We have a plan for each scenario," he told reporters. "If there is a special session, it would depend on the magnitude of the shortfall."

Copyright 2010 The Associated Press.

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