September 4, 2009 in Idaho

Idaho faces new shortfall

Leaders’ options: more cuts, another dip into reserve funds
By The Spokesman-Review
 
The Spokesman-Review photo

Otter
(Full-size photo)

At a glance

Shrinking reserves

Idaho leaders will consider dipping again into the state’s rainy-day funds to meet another budget shortfall.

$391 million

Amount in Idaho’s reserve funds before the Legislature convened this year.

$274 million

Amount in reserves now, after legislators used funds to lessen cuts.

BOISE – Idaho is facing a $151 million tax revenue shortfall in the current budget year, according to a new forecast, and state leaders will have to decide whether to further slash the budget or dip into rainy-day funds.

Lawmakers and Gov. Butch Otter have been reluctant to spend much of the state’s $274 million in reserves, which stood at $391 million before the Legislature convened this year. But even though they’ve spent nearly a third of the rainy-day funds, it took deep cuts to balance the budget, including including the state’s first cut in funding for public schools and a 5 percent cut in personnel costs.

“We have been here before,” Otter said in a prepared statement. “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 midyear budget holdbacks, work with legislators to tap the reserves or do some combination of both to balance the budget.

“It’s obvious that Idahoans aren’t doing very well, and so we need to set up clear priorities for the services that we deliver and make some hard decisions from there,” said Sen. Shawn Keough, R-Sandpoint, vice chairwoman of the Legislature’s joint budget committee.

Keough said tapping rainy-day funds and further cuts both should be explored, including “a serious look at what services Idahoans feel they can do without.”

Before putting forth a plan, Otter is scheduled to meet with state agency heads Thursday “to discuss potential savings.” He’ll meet with GOP legislative leaders next Friday and with leaders of the Legislature’s Democratic minority Sept. 16.

Mike Ferguson, Otter’s chief economist, issued the forecast. “Everybody’s been dreading it,” he said, “but I don’t think anybody’s going to be particularly surprised by it.”

Ferguson said employment in Idaho is forecast to start growing later 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.”


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