December 17, 2008 in City

Otter asks for more budget cuts

Thinning could amount to additional $169 million
Associated Press
 

BOISE – As economic recovery hopes dim, Gov. Butch Otter has asked state agencies to prioritize programs to be trimmed in fiscal year 2010 in anticipation of possible cuts of as much as 6 percent – or an additional $169 million – from their budgets.

Otter already ordered agencies to slash $130 million, or some 4 percent, from spending in the current fiscal year, which ends June 30. If all cuts are made, the 2010 budget could decline about 10 percent, to $2.64 billion, a level last seen in 2007.

The additional cuts now being incorporated into Otter’s budget recommendations for 2010 “should involve eliminating entire programs if they are not in furtherance of or required by your statutory mission,” Otter wrote agency directors this week. The Republican governor has asked them to have their latest savings plans in his office by Thursday.

“He’s told them, ‘Here’s the number we’re looking at, from a statewide position. I’m not going to make blanket cuts across the board. You tell me where you think you can save, because we’re going to need to make up some serious money,’ ” Jason Kreizenbeck, Otter’s chief of staff, said Tuesday.

Agency heads have been directed to outline specific measures and their associated cost savings, then describe what effect such a move would have on their operations.

Otter will decide what to keep and what to discard in his budget recommendation, due to be released Jan. 12.

“What we’re directing them to do is an accounting exercise” to determine what’s appropriate, said Wayne Hammon, Otter’s budget chief. “It might not be 6 percent across the entire general fund.”

So far, Otter has refrained from tapping about $270 million in economic reserve money that Idaho banked in previous years. Hammon now concedes it will be necessary to use a portion of that cash to help soften the blow on agencies.

“We do not plan to drain the funds, because it’s a multiyear problem, but we anticipate using a portion of them in fiscal year 2010,” Hammon said.

Though most agencies have said they’ve until now tried to limit trimming permanent employees by eliminating temporary or part-time positions and not filling vacancies, a state workers union representative said he’s increasingly concerned more job cuts may be coming.

“People are terrified,” said Andrew Hanhardt, president of the Idaho Association of Government Employees. “I don’t see how you can take more and more money out of the budget, and not have layoffs.”

After receiving Otter’s latest savings mandate, Idaho Department of Health and Welfare officials said new measures will inevitably include deeper cuts to public assistance programs. About 84 percent of their budget is used to provide welfare benefits and other assistance programs to low-income, disabled or elderly residents.

And because most of the money Idaho spends on Health and Welfare programs is matched by federal money, any reductions to the department’s state budget will be magnified. For instance, its previous $22 million cut meant the loss of an additional $30 million from Washington, D.C., said spokesman Tom Shanahan.

So far, Idaho public schools have been able to tap about half of a $114 million public education stabilization fund to cover $61 million they otherwise would have lost due to the previous 4 percent budget cut. That reserve fund is available for hard times and to fulfill existing contracts negotiated last year with teachers, administrators and staff.

Still, Superintendent of Public Instruction Tom Luna won’t have that luxury for the $85 million hit schools could take under Otter’s new 6 percent mandate in 2010.

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