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With budget, Otter faces ‘vicious circle’

Sun., Sept. 20, 2009, midnight

Work force cuts worsen job-loss spiral

BOISE – As Gov. Butch Otter ponders whether to make additional cuts in Idaho’s already much-trimmed state budget, he faces a dilemma: Budget cuts could trim state jobs at the same time that a precipitous drop in jobs is driving Idaho’s state budget crunch.

Last month, Idaho had fewer jobs than it had in August 2005 – despite adding more than 100,000 residents. “To me, that’s a scary number,” said Wayne Hammon, Otter’s budget director. “We need jobs. A jobless recovery doesn’t help balance the state’s budget – we’ve got to get people back to work.”

Most of Idaho’s state tax revenue comes from the individual income tax – 47.8 percent of the state’s general fund – and the sales tax, at 40.5 percent. When people lose their jobs, they stop contributing entirely to income tax, and their purchases drop, too.

“We’re 60,000 jobs less than we were two years ago,” said House Minority Leader John Rusche, D-Lewiston. “We talk about the budget shortfall, but that’s the symptom. The disease is the fact that people aren’t working.” Rusche, a physician, said, “My prescription is to do whatever we can to focus on jobs.”

In the past week and a half, the governor has met with legislative leaders from both parties and all his agency heads to seek their input on how to cope with a $151 million shortfall in the current year’s state budget. He could impose holdbacks – mid-year cuts – or cut a deal with lawmakers to instead dip into the state’s remaining $274 million in reserves, or opt for a combination of the two. Otter has ruled out a tax increase to cope with the shortfall.

Most expect Otter to impose some kind of additional cut, though this year’s state budget already is $330 million less than Idaho’s budget was two years ago.

But if Otter made up the entire shortfall with new cuts, rather than dipping into reserves, he’d have to cut another 6 percent from the state’s general fund budget.

State agency heads all have been asked to turn in money-saving plans; about 15 of the 50 had sent theirs in to the governor’s budget office by noon on Friday. “We haven’t raised $151 million at this point,” Hammon said.

Some of the proposals call for further layoffs or furloughs of state employees.

Since the current state budget crisis began, Idaho has laid off 71 employees due to budget cuts, according to state payroll records. In addition, more than 4,500 state employees were given unpaid furloughs in the last fiscal year, which ended July 1, resulting in more than 12,000 unpaid days off work. Since July 1, 4,625 employees have been put on furlough and taken more than 7,000 unpaid days off, and that’s less than three months into the fiscal year. Some agencies have shut down entirely on specified days, for agency-wide furlough days.

Not included in those figures are cuts made by attrition, where state agencies opted not to fill vacancies when they occurred and instead eliminated the positions.

Rep. Maxine Bell, R-Jerome, co-chairwoman of the Legislature’s joint budget committee, said Idaho clearly has to look into restructuring state government, which could mean eliminating entire programs or services. But, she said, “We let a thousand or so state workers go because we can’t afford them and we stop doing those services, and then they’re in the food stamp lines. It’s a vicious circle.”

Bell said restructuring discussions will take time and research, and can’t happen now – they’ll need to wait until lawmakers convene their annual session in January.

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