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Budget Chief Tries To Ease Concerns Over Batt Plan

Associated Press

Administration budget chief Michael Brassey tried to ease legislative budget writers’ concerns Thursday that Gov. Phil Batt is being overly optimistic about the Idaho economy in his 1998 state budget.

“The economy is strong,” Brassey told the Joint Finance-Appropriations Committee, echoing the governor’s statement a day earlier in his budget message.

But conservative Sen. Stan Hawkins, R-Ucon, questioned how the governor could expect state tax collections could increase 5.5 percent in the budget year that begins July 1 when they are only going to rise 1.7 percent in the current spending year. That anemic performance caused another across-the-board budget cut last fall.

“I’m concerned that next year we may be looking at a holdback far in excess of the past two years,” Hawkins said.

Republican Sen. Evan Frasure of Pocatello had trouble accepting the administration’s projection of a 5.6 percent increase in corporate tax payments on the heels of a 25 percent decline this year. That tax, he argued, is just too volatile and difficult to forecast to rely on to any degree.

But Brassey contended that the bottom falling out of the international computer chip market - erasing a string of record Micron Technology Inc. profits that almost doubled corporate tax receipts in two years - was the culprit in this year’s revenue miscalculation.

“The state’s basic economy is sound,” he said. “What we’re talking about this year is a sector of the economy that dropped off. That sector of the economy is not being given that much weight.”

“I would not expect to see the kind of variations” in the new budget year that the state saw in the current one, he said.

While depressed cattle and potato prices are hurting farmers and could drive some out of the business, Brassey said, most economists believe that as long as farms and ranches operate, the fallout for the overall economy is limited. And countering problems in agriculture, he said, are continued strong taxable earnings for workers in Idaho’s urban areas.