Here's a news item from the Associated Press: BOISE, Idaho (AP) — Idaho is expecting its second year of big budget surpluses when the 2012 fiscal year ends, presenting conservative Idaho with tough choices that could include restoring programs or cutting taxes. Come July, Gov. C.L. "Butch" Otter's office and the Legislature expect to have $179 million in the bank, based on the spending plan passed by the 2011 Legislature. That's after an $85 million surplus in the fiscal year that ended June 30. All this depends on Idaho's economy continuing to produce healthy tax revenue, something Otter's budget chief Wayne Hammon says is uncertain given the national debt downgrade and European turbulence. But if the forecast holds, it'll leave conservative Idaho lawmakers grappling with the question of managing surplus cash when their natural inclination is to cut spending or reduce taxes. Click below for a full report from AP reporter John Miller.

ID sees $179M surplus, but cash largely spoken for
By JOHN MILLER, Associated Press

BOISE, Idaho (AP) — Idaho is expecting a second straight year of budget surpluses when the 2012 fiscal year ends, but conservative Idaho lawmakers and Gov. C.L. "Butch" Otter say it's much too early to count on the money.

Come next July, the state is projecting $179 million in the bank, based on the spending plan passed by the 2011 Legislature. That's after an $85 million surplus in the fiscal year that ended June 30, most of which was distributed to public schools.

But even if the surplus materializes, Republicans who control the state House and Senate say much of the cash is already spoken for, in the form of higher Medicaid costs, efforts to refill rainy day accounts and replacing one-time federal funding for schools that expires this year. And Otter expects states like Idaho may see less cash from Washington, D.C., as the federal government attempts to cut trillions from its budget to get the national debt under control.

"One of the first places they're going to look is how they can whittle back what they're giving to the states," said Jon Hanian, Otter's spokesman. "We have to be mindful of that. This notion we have a lot of money lying around just isn't true."

Idaho's 2012 revenue forecast is contingent on Idaho's economy stabilizing, something Otter's budget chief, Wayne Hammon, says remains uncertain given the national debt downgrade and European turbulence.

But if there is money left over, House Speaker Lawerence Denney said GOP lawmakers — especially in an election year — still aren't likely to expand programs.

Instead, they'll want to show the largely conservative voters who sent them to Boise that they haven't abandoned the restraint that has dominated sessions since the downturn began in 2008.

"I would not be surprised to see a significant portion of people wanting to hold the line on the budget, and only do the statutory increases, if we have enough to do that," said Denney, R-Midvale.

There are already strings attached to any surplus money.

If Idaho tax revenue grows by more than 4 percent, for example, a portion must go to replenish rainy day funds that have been drained from $350 million to nearly nothing.

What's more, Idaho hospitals, nursing homes and intensive care facilities for disabled adults are scheduled to end voluntary assessments — totaling $35.5 million this year — that have bolstered the Medicaid health insurance program for low-income disabled people. If the assessments aren't renewed, Department of Health and Welfare spokesman Tom Shanahan said Idaho would likely have to fill that hole to preserve a federal match.

Idaho needs to step in if revenue is recovering, said Steve Millard, president of the Idaho Hospital Association industry group

"If there are surpluses coming in now, the state can pick up more than they have in the past," Millard said. "This shouldn't be financed on the backs of the hospitals that have no say in the patients they receive."

For any surplus that remains, Otter's office says he's intent on bolstering education.

And Idaho's colleges and universities have taken an enormous hit since the Great Recession began three years ago, with state funding falling to its lowest level in more than a decade. Students have been asked to pick up the tab, with higher tuition.

"If there's money left over at the end of the day, what the governor has said is, it's going to go to education," Hanian said.

Beyond that, lawmakers among the GOP majority say cutting taxes, not expanding programs, would be a better use of remaining cash. Rep. Marv Hagedorn, R-Meridian, a proponent of cutting Idaho's corporate and individual income tax rates, says, "We need to address all the things that restrict business from being successful."

Meanwhile, minority Democrats want to see money remaining at 2012's conclusion go to restoring college and university funding, but also to Medicaid, which took a $35 million hit this fiscal year.

With the federal match giving Idaho three dollars for each greenback the state contributes, Rep. Grant Burgoyne, D-Boise, said the Legislature would be short-sighted not to take advantage of this leverage.

"It doesn't just help those on Medicaid, it helps those who work in the medical services infrastructure in this state," he said. "When we cut Medicaid, what we are really cutting besides services to the adult disabled population are the jobs of those providing those services."

Still, Burgoyne, one of just 13 Democrats in his chamber, says he's not optimistic the GOP majority sees things his way.

"There's a sentiment, at least in the House, to try to cut taxes," he said.

Copyright 2011 The Associated Press.