July 4, 1995 in Idaho

State’s Deficit Won’t Be As Sizable As Predicted About $5 Million Of $33 Million Intended For Prison Expansion Will Be Used To Erase Red Ink

Associated Press

The state opened the new budget year on Monday coping with a much more modest deficit from the last fiscal year than analysts had feared.

Final figures on the red ink from the old budget will not be ready until midJuly, but Batt administration budget director Dean Van Engelen said it appears revenues for the year that ended June 30 will fall about $6 million short of the forecast lawmakers used to make their spending decisions.

Three weeks ago, the state’s financial analysts had feared the slowing economy would produce tax receipts that would fall as much as $10 million short.

But the deficit is not as great as the revenue shortfall. Lawmakers left just over $1 million unspent when they finished their deliberations in mid-March and agencies were expected to report spending as much as $500,000 less than authorized during the past 12 months.

That will mean the state will need less than $5 million to balance its books, and Gov. Phil Batt has the approval of the Board of Examiners to divert that cash from the account earmarked for financing the $33 million prison expansion.

Van Engelen said the administration intends to tap the $33 million budget reserve account to restore the money diverted from prison construction. That would have to be approved by the Legislature by mid-February next winter to avoid any delay in that project, according to Permanent Building Fund Advisory Council Chairman Jerry Wray.

The revenue shortfall was blamed on weak sales and personal income tax collections, and it could have been substantially greater had it not been for a huge surge in corporate tax collections that some analysts believe was spurred by the record profitability of Micron Technology Inc.

But even if revenues were $6 million short of the forecast, the increase in tax collections during the past budget year is over 9.9 percent, less than a half percentage point off the estimate.

Administration economists had anticipated the slowdown and forecast only 7.5 percent revenue growth in the fiscal year that just began.

But the governor said last week that he believes the slowdown will still force some cuts in the $1.35 billion the state has budgeted for the coming year.

If the 7.5 percent revenue growth holds, total tax collections in the next 12 months will fall about $4.5 million short of the forecast that new budget was based on.

© Copyright 1995 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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