September 3, 2009 in Idaho

Choices loom amid bad budget news for Idaho

By The Spokesman-Review
 

BOISE - Idaho is facing a $151.4 million tax revenue shortfall in the current budget year, according to a new state forecast, and state leaders will have to decide whether to further slash the state budget or dip into rainy-day funds that now total $274.3 million.

Lawmakers and Gov. Butch Otter have been reluctant to spend much of the state’s reserves, which stood at $391 million before the Legislature convened this year. But they spent nearly a third this year, while also imposing deep cuts in the state budget, including the first-ever cut in state funding for public schools and a 5 percent cut in personnel costs statewide, for all agencies. That’s led to furloughs, layoffs and more; for example, this Friday, the legislative services offices is closed due to staff-wide furloughs.

“We have been here before,” Otter said today, in response to the gloomy revenue news. “We have the experience, the tools and the commitment needed to address this situation while maintaining necessary public services. We are fortunate to be far better off than most other states, thanks to sound, conservative fiscal management and a strong understanding of government’s limited role in people’s lives.”

Otter could impose mid-year budget holdbacks, or he could work with legislators to tap the reserves, or there could be some combination of those steps. But one way or the other, Idaho has to balance its budget.

The governor is scheduled to meet with state agency heads Sept. 10 “to discuss potential savings;” he’s meeting with GOP legislative leaders on Sept. 11, and he’s meeting with leaders of the Legislature’s Democratic minority on Sept. 16, all before he puts forth his proposed plan.

Wayne Hammon, Otter’s budget director, said the budget news doesn’t necessarily mean more pain for already struggling state employees. “We have tools available to us other than just the state employees,” he said. “We are looking under every rock.”

He added, “This is not unexpected. … Last year, when we knew things were starting to get bad, there were a lot of people who clamored that we had to spend more of the rainy-day, spend more of the rainy-day. So far we’ve spent 30 percent of the total rainy-day funds, the four funds. So going forward, we still have tools available to us.”

Idaho’s four “rainy-day” funds are its budget stabilization fund; a public education stabilization fund; an economic recovery reserve fund; and the portion of the tobacco-settlement Millenium Fund that’s not set aside in an endowment.

The governor doesn’t have authority to spend rainy-day funds on his own; he’d need legislative concurrence. He does, however, have authority to impose mid-year budget cuts, though lawmakers would then have to decide whether to make those permanent.

“He wants to counsel with all of them, get their perception of what needs to be done before he makes any decision,” Hammon said.

Mike Ferguson, Otter’s chief economist, who issued the forecast, said, “Everybody’s been dreading it, but I don’t think anybody’s going to be particularly surprised by it, because we’ve known that things have not gone terribly well. Hopefully we’re getting closer to the bottom.”

Ferguson said employment in Idaho actually is forecast to start growing in fiscal year 2010, “but this is still September - we’ve got a ways to go before we’re there, and it’s still not going to feel that great.”

Said Ferguson, “What this does is it gives some hard numbers that the policy makers can chew on and figure out how they’re going to deal with it.”

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