The governor's budget - the dollars and details behind the proposals he outlined today in his State of the State message - uses a variety of steps to cope with what had been expected to be a budget shortfall for fiscal year 2012 as of much as $340 million. First, he uses state economists' newly revised forecast of revenue for the current year, fy 2011, of 4.2 percent, which is revised down from their original forecast of 4.7 percent. In the first five months of the fiscal year, state tax revenues actually have been exceeding that forecast. Then, for next year, he budgets based on 3 percent revenue growth, even though his economists forecast 6.9 percent. That leaves $91 million cushion in case the economy falls short of the forecasts.
Lawmakers set this year's budget based on revenue growth of practically zero, so that revenue makes a big difference in cutting into the budget hole. Then, the governor cut into the maintenance portion of the budget to save $20 million because an anticipated PERSI rate increase was delayed and $40 million by covering health insurance cost increases from reserves in the insurance fund for a second straight year. He also got state agencies to kick back to the general fund any unused reserves, including $8 million from the liquor division and $10 million from the permanent building fund. He tapped the remaining $74 million in the non-endowed portion of the Idaho Millenium Fund, a fund made up of tobacco settlement proceeds, with part of that covering a Medicaid shortfall for this year, and the rest boosting next year's budget. All state saving accounts essentially are drained. Plus, hospitals and nursing homes will kick in millions to help fund the Medicaid program, but it still will take a $25 million cut in benefits, which largely will hit adults on the program.
Then, to make up the final piece of the budget hole, the governor called for $35.5 million in cuts from state agencies, with differing amounts for each but averaging 2.2 percent; those don't affect public schools; and he called for delaying for one year the next scheduled step-up in the grocery tax credit, saving the state $15 million next year. That means the grocery tax credit would stay at its current level - $70 per person per year for the lowest-income Idahoans, and $50 for everyone else. There would be no raises for state employees, little or no funding for inflation, and furloughs could continue at some agencies.
The result, at the end of all that, is a balanced budget for next year - should lawmakers choose to go along with the governor's proposals. Overall, state general-fund spending would rise by 7.7 percent next year, under the governor's blueprint, while total spending would be up 5.3 percent. The budget still would contain $78 million in one-time money to help it balance, continuing a 15-year trend of structural imbalances but bottom-line balance.