Batt Orders 2.5 Percent Cut In Budget State Economist Blames Drop In Corporate Income Tax Collections

Gov. Phil Batt ordered a $35.3 million across-the-board cut in Idaho’s already-tight state budget Tuesday.

That means students in vocational classes won’t get the latest high-tech equipment. North Idaho College will lose nearly $200,000 that it had counted on spending on educational programs this year. And the state’s hard-pressed prison system will be looking for ways to cut back without compromising security.

“Budget cutbacks are never easy, but in Idaho we are required to maintain a balanced budget,” Batt said in announcing the 2.5 percent cut.

The move came because Idaho’s corporate income tax collections have fallen dramatically, largely because of a collapse in memory chip prices that hit the state’s semiconductor industry hard.

“It doesn’t appear that it’s even found the bottom yet,” Mike Ferguson, the governor’s chief economist, said of the price drop.

The state budget is based on projections, or estimates, of how much tax money will be generated. But if the money doesn’t materialize, the state can’t spend it. Midyear cuts like Tuesday’s also were imposed last year, as well as in 1993 and 1992.

The state’s economy is healthy overall, both Ferguson and the governor said.

“It’s a revenue problem for state government, not an economic problem for the state’s economy,” Ferguson said.

The so-called holdback, which comes just two months into the state’s fiscal year, is larger than the 2 percent cut Batt ordered last year.

State departments have until Sept. 30 to let the governor know where they’ll make the cuts.

Four departments - public schools, Health and Welfare, colleges and universities and prisons - make up 83 percent of the state’s general fund budget. So they’re among the hardest-hit.

Last year, the public schools department chose not to make the cuts, counting on the money being restored by the Legislature. It was. And that could happen again this year.

State schools superintendent Anne Fox said she is confident the Legislature will find a way to deal with the funding shortfall. However, if state lawmakers do not bail out the schools, Fox can ask each county to collect additional property taxes to make up the difference in school budgets.

“If the Legislature chose not to help in any way, that’s what I would do,” Fox said Tuesday.

Cuts last year were permanent for all other departments.

“It’s going to be real tough,” said Mark Carnopis, spokesman for the Department of Corrections.

Idaho’s prisons are seeing about 31 additional inmates a month, Carnopis said. “You’ve got to house them and feed them and find a place to put them.”

Last year, when the cutback came, Corrections eliminated its training center for prison guards. This year, there’s no easy target, Carnopis said, and cuts will be spread across operating expenditures, programs, and “as a last resort, personnel cuts.”

Rayburn Barton, executive director of the office of the state Board of Education, said each of the state’s colleges and universities will decide on its own how to make the cuts. It’s too late in the year to raise student fees.

“Obviously the interest is always in preserving program quality and protecting the income of faculty employees,” Barton said. So colleges may choose to freeze travel, sharply cut supplies, or take other measures.

The University of Idaho alone will have to cut $1.6 million, and Lewis-Clark State College, $215,400.

Trudy Anderson, administrator of the state’s vocational education department, will have to make more than $700,000 in cuts. “We’ll probably have to reduce operating expenses and equipment purchases (designed) to keep programs technologically up to date,” she said. “It will impact programs both at the high school level and also in the technical colleges.”

North Idaho College expects to cover the loss from its cash carry-over from last year, which added up to more than expected. But Steve Schenk, dean of college relations and development, said, “It’s never good news to find out that money you had planned on being able to use for educational purposes is not going to be available.”

, DataTimes MEMO: This sidebar appeared with the story: CUTBACKS Some of the hardest-hit departments of state government as a result of the 2.5 percent budget holdback are: Public schools, $17.2 million. Health and Welfare, $6 million. Colleges and universities, $4.5 million. Corrections, $1.5 million. Vocational education, $797,200.