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Cuts in rural grants rile Idaho lawmakers

BOISE - Plans to cut $2.5 million in rural economic development grants from next year’s state budget riled Idaho lawmakers today, who said that’s just the type of spending that’s needed in the current recession.

The Idaho Department of Commerce is proposing a budget for next year that’s 40.8 percent less than this year’s in state general tax funds, largely because of the one-time near-elimination of the rural grants. Last year, Idaho gave out $2.7 million in such grants.

“Can you explain … why it was easier to reduce grants, vs. try and absorb those reductions internally?” Senate Finance Chairman Dean Cameron, R-Rupert, asked state Commerce Director Don Dietrich.

Dietrich responded, “It was a very difficult decision, to be quite frank.”

The cuts in rural grants, he said, are “for a short period of time here, we’re talking hopefully a 12-month period.”

During that time, he said, federal grant funds could help out, and demand for such grants is down anyway in this downturn.

“In essence, we did not feel like we were short-circuiting the folks in our rural communities. Money is still available, the demand for those monies is still running at a reduced level, and I anticipate that probably through 2010 that will probably continue to be the case,” Dietrich said.

Sen. Nicole LeFavour, D-Boise, warned, however, “It may be more than one year.”

The grant program is part of the “rural initiative” started several years ago by Gov. Dirk Kempthorne. The initiative also has paid for part of the salaries for 15 economic development professionals in various rural regions, to help bring in jobs. North Idaho has several.

Dietrich said those positions aren’t being cut, but Commerce has received requests for seven more that it can’t fund.

Cameron told Dietrich he saw a “chicken and egg” issue. “It seems to me that if there isn’t the demand, one of the things the department could be doing is trying to generate the demand. The holdbacks - there are more coming. I would encourage you to look at ways you could internalize those holdbacks rather than look at the local grants,” he said.

“We’ve got to look at ways to turn the economy around,” Cameron said. “Your agency is going to be able to do that. I think it requires not a diminished effort, but an increased effort in working with those local communities and working with those small businesses to advance forward.”

Added Rep. Frank Henderson, R-Post Falls, “It sounds like a de-emphasis of the rural programs through your department - I hope that’s not true.”

Dietrich estimated that the $2.7 in rural development grants awarded by the state to seven communities in 2008 created 331 jobs with an average wage of $13 per hour.

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