Gov. Butch Otter announces new budget cuts (Betsy Russell / The Spokesman-Review)
Gov. Butch Otter announces new budget cuts (Betsy Russell / The Spokesman-Review)

Otter orders new Idaho budget cuts

BOISE - Gov. Butch Otter has announced 4 percent cuts in the state budget, effective immediately, to make up about two-thirds of the state’s $151 million budget shortfall in the current year.

The governor said for the remaining $50 million of the shortfall, he’s planning to work with state agency directors to find additional savings. “If we can’t, then there will be a discussion with the Legislature on how we can ease the pain with those rainy-day funds,” Otter said.

The governor opted to protect public schools from the new budget cuts, by instead dipping into the state’s public education stabilization fund for $49.3 million to make up what otherwise would have been a 4 percent mid-year cut for schools.

State Superintendent of Schools Tom Luna said, “I think the reality that we find ourselves in today validates … the decisions that we made in the last legislative session,” when lawmakers made the state’s first-ever cut in state funding to public schools.

Luna said some urged spending all of the state’s reserves instead to avoid that. Instead, he said, “We took a more prudent” approach. “If we had not done that, we would be talking about cutting schools in the middle of the school year. … For that reason, we’re not cutting education today.”

Otter’s plan calls for different levels of cuts for different agencies, with the biggest percentage holdback hitting the state Labor Department, at 39.1 percent, but it’s one-time savings due to a balance in a penalty and interest account shifting to the general fund; it would have done so anyway at the end of the fiscal year. Second-biggest is 11.4 percent at the Department of Commerce, but that’s also one-time savings, due to unexpended grant funds.

The governor divided agencies into three categories: “Critical and constitutionally required services,” such as the state police and elected officials, which are being cut back from 2.5 to 5 percent; “essential services,” from higher ed to public health districts, which mostly will see 6 percent cuts; and “other services,” which mostly will see 7.5 percent holdbacks.

Colleges and universities will take a 6 percent hit, as will community colleges - even as they see enrollment swell due to the down economy.

Asked how higher ed will handle that, after already taking big budget cuts, Otter said, “I don’t know - that’s why they’re managing their shops. I suspect every campus will look at it in a different way.” University presidents were involved in meetings yesterday and are working on their own plans. “They don’t like to hear it, I don’t like to deliver it, but it’s the reality,” Otter said.

Idaho’s legislative minority party says it’s unhappy with the governor’s holdback plan, but the Democrats, like Otter, also say they oppose raising taxes to cope with the state’s budget shortfall.

Senate Minority Leader Kate Kelly, D-Boise, said the Democrats would prefer to tap more of the state’s $274 million in reserves; Otter is only tapping the public schools portion. Kelly noted that Idaho also has about $50 million in unspent federal stimulus funds that it’s saving to use in next year’s budget.

“Sitting in a savings account, the money does not do us any good from an economic development standpoint and from a recovery standpoint,” Kelly said. The Democrats also oppose cutbacks in higher ed and Commerce during the current recession. “Higher ed is taking a bigger hit than the governor’s office or legislative services,” she said. “It really is a question of priorities.”

Idaho House Assistant Majority Leader Scott Bedke, R-Oakley, said, “We’re ready to stand and work with the executive branch to work this thing out.”

He said many lawmakers, particularly in the House GOP majority, are wary of spending down the state’s budget reserves, when they already face a daunting challenge to put together next year’s state budget. Many holes in this year’s budget were filled with so-called “one-time money,” which won’t be there next year.

“Every dollar that we use to prop up the 2010 budget is a dollar we can’t build the 2011 budget around,” Bedke said. “You can’t keep having the worst economy since World War II without it starting to show up in government. All of the slack is out of the system, and the impacts now are going to be real.”

Layoffs could be part of the budget cuts, Otter acknowledged, but he said he’ll leave that up to agency directors. “I’m going to let that director, that cabinet member, call those shots,” he said. “They are the managers. I trust them.”

Said Otter, “State government must live within the people’s means.”

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