Slow Revenue Growth Taxes Batt Budget Many Lawmakers Say Plan Doesn’t Keep Up With State’s Rapidly Increasing Population

Despite a new forecast that Idaho’s slowing economy will still outperform its stabilizing national counterpart, Gov. Phil Batt’s austere state budget blueprint recalls more the near-depression of the mid-1980s than today’s financial stability.

Although some Democrats expect at least a few spending initiatives in the $1.4 billion 1996-97 general tax budget Batt outlines for lawmakers on Wednesday, outgoing administration Budget Director Dean Van Engelen said the plan does little more than maintain the status quo.

“It’s being driven by the revenue, and that’s very tight,” Van Engelen said.

And it appears the overwhelming Republican legislative majority will ignore the traditional election-year pressures for more spending and give its GOP chief executive another budget that holds the line on government expansion. That’s despite the bottled-up demand for increased services to accommodate Idaho’s significant population growth.

“I just think that this is reality,” said House Appropriations Chairman Kathleen Gurnsey, a moderate Republican from Boise. “We’re going to accept the governor’s revenue projection, and we’re pretty much going to accept the governor’s budget, … so now we have a monarchy. We don’t have two branches of government.”

Batt, committed to limited government, has cited what he says is a return to more normal financial circumstances as the reason for another hold-the-line budget plan.

“Two years ago we had a 17 percent increase in our state budget, and I think some people at that point assumed those kind of growth figures can occur forever,” the governor said.

“Obviously, they’re not sustainable, and we’re now back to the category of 3 to 5 percent, somewhere in there, that the rest of the country has been in and the private sector generally operates in,” he said.

Others, including more moderate Republicans, contend that precludes the state from responding to problems like significantly rising college and public school enrollments and the need for more parks and recreation facilities. Idaho’s population, they point out, still is growing at twice the national rate.

And they blame the financial situation on the governor’s $41 million state-financed property tax cut that provided the average homeowner about $60 in relief.

“We gave $40 million of our revenue away, and who benefited?” asked Marguerite McLaughlin, the senior Democrat on the joint budget-writing committee. “I haven’t had anybody come up and tell me, ‘Thanks for my tax relief.”’

Batt defends the cut even though the anti-property tax forces it was intended to appease have called it woefully inadequate. He concedes more relief is needed, although the state cannot afford it in the new budget.

Frugal by nature, Batt was stung by the economic slowdown that left him nearly $12 million short of the cash needed to balance the 1995 budget last June and pay all the authorized spending in the current 1996 budget year. He was forced to slash state spending across the board by $26 million - half in public school aid.

Legislative leaders intend to restore the withheld school aid from the state’s $30 million reserve fund, but the governor wants to make the rest of the cuts permanent. On top of that, he apparently will be basing his new budget on about a 5 percent increase in revenues - the smallest one-year increase since the hard times of the mid-1980s.

That would put anticipated tax collections at just over $1.4 billion for the year that begins July 1. The state will probably wind up spending around $1.35 billion in the current budget year once emergency bills are paid this month.

Just maintaining the status quo for another year - and providing the 3 percent state worker pay raise Batt has already announced - requires about $30 million more, leaving just somewhere between $20 million and $30 million for additional aid to public schools. And even at $30 million, that would only be a 4.5 percent increase from this year’s education aid package.

That kind of budget would keep the water rights adjudication going and accommodate escalating costs of health care for the poor. While Batt has supported welfare reform proposals recently recommended by a special task force, he has conceded they are intended to eventually move people off welfare, not save money, and could initially cost the state a little more.

The administration budget was predicated on no change in the way federal welfare programs are run, since it was becoming increasingly unlikely that debate would be resolved before lawmakers adjourn in March or April.