State’s finances look strong for next year

BOISE – The state government’s finances should remain strong through the summer, but not enough to prevent potential trouble two years from now.

Tax experts and economists presented their forecast on state income to the Legislature’s Economic Outlook and Revenue Assessment Committee last week.

Lawmakers will consider their predictions along with Gov. Dirk Kempthorne’s, which will be given Monday night in his annual address to the Legislature.

Lawmakers are trying to be cautious because starting this summer, the 6 percent sales tax is set to revert back to 5 percent, pulling about $180 million from state coffers.

Republican Rep. Dolores Crow, who chairs the House’s tax committee, says the tax collection data won’t matter much.

“The whole issue is in the spending part of it, not how much money we bring in,” Crow said.

In the current fiscal year, which ends June 30, the state will have a carry-over balance of approximately $112 million to put toward next year’s spending, according to the state budget office. The final general fund spending plan is expected to be slightly more than $2 billion.

There were three estimates presented to lawmakers by the Associated Taxpayers, university professors and the State Tax Commission.

All three expect strong tax collections growth, between 6.9 and 7.9 percent this year – excluding the drop in sales tax revenue. All three also expect next year to generate about 6 percent growth in tax collections.

That would be too low to escape another budget crisis in 2006-07, assuming state spending levels continue to grow at around 4 percent.

The Associated Taxpayers of Idaho presented the most optimistic view.

President Randy Nelson said the state’s economy remains fragile and would continue “feeling the impacts from both the uncertain but momentum-building economies in other parts of the nation.”

Last year, Kempthorne said it would take a few years for the state to get out of its economic malaise.