BOISE – Idaho lawmakers slashed another $80 million from the current year’s state budget Friday and adopted a budget for next year that will force $101 million in cuts beyond those already recommended by Gov. Butch Otter.
“The news is grim,” said Sen. Shawn Keough, R-Sandpoint.
But hours after the cuts were approved, word came that Idaho’s share of federal stimulus funds would be enough to head off proposed cuts for public schools. That news capped an eventful day at the Idaho Legislature, which received dismal tax revenue reports early Friday.
The plan lawmakers adopted for next year includes a 5 percent cut in personnel funding statewide, for all agencies, colleges and universities, and public schools – and could mean an across-the-board pay cut for state workers. The governor would have to issue an executive order, likely in June, to impose that.
“If we’re going to dig ourselves out of this, we’ve got to keep people working, and a 5 percent cut in pay is much preferable to being laid off,” said Sen. Jim Hammond, R-Post Falls.
The plan also anticipates $110 million in cuts to Idaho’s public schools next year. But officials were rethinking that in light of millions in federal money targeted for Idaho schools.
House Education Chairman Bob Nonini, R-Coeur d’Alene, said that his bills to change the laws governing school funding and teacher contracts may not be needed, and that the state could avoid public school cuts entirely next year.
State Superintendent Tom Luna agreed.
“It appears we’re going to receive a considerable amount of money,” Luna said Friday, “to the tune of $346 million over the next two years, and some of that money could be here as soon as next week.”
Of that $346 million, $243 million is for “budget stabilization,” Luna said, “to resolve the financial crisis that we were trying to deal with in the Legislature to cut public education.”
Nonini said some of the federal money is intended to prevent teacher pay cuts and layoffs as well as program cuts. He postponed three days of hearings scheduled to start Monday on his education bills, which were widely panned by teachers and Democrats in the Legislature.
The stimulus money is “good news,” Nonini said.
The Legislature’s joint budget committee voted unanimously Friday morning in favor of the new current-year cuts and the cuts planned for next year, although lawmakers still must set each agency’s budget for next year. The cuts will be built into those decisions.
For this year, schools will get $28.4 million from the state’s public school stabilization fund to offset the latest cuts, keeping their budget even. But that will deplete the fund by more than half.
“When we set up the public education stabilization fund, we did so for this purpose,” Keough said. “We were hoping we would never come to this day, but we are here.”
As lawmakers met, Otter imposed a statewide hiring freeze, a ban on all bonuses and pay increases, a ban on overtime pay without prior approval from his Division of Financial Management, and limits on all purchasing.
“I understand that implementing these instructions may be difficult, but I assure you they are necessary,” the governor wrote in a letter sent Friday morning to all agency directors.
Final state tax revenue figures for January showed a $33.1 million drop below projections, putting the state $43.6 million below projections for the fiscal year to date. The new cuts take another 2 percent out of this year’s state budget, which Otter had already cut by 4 percent before lawmakers arrived in town last month.
The 5 percent cut proposed for personnel funding calls for the governor and agency directors to use across-the-board pay cuts, furloughs or layoffs or to keep positions vacant.
Wayne Hammon, the governor’s budget chief, said that flexibility will allow the state to “do the least amount of harm to our employees.”
Idaho state-employee pay lags 15 percent behind market rates, and Otter spent the last two years trying to persuade lawmakers to raise state worker pay but cut benefits.