June 3, 2010 in Idaho

Idaho outlook getting brighter

Cautious budgeting braced for bad news
By The Spokesman-Review
 
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BOISE – Idaho is on track for an economic recovery next year, according to the state’s latest official forecast, although state lawmakers and the governor have set a pessimistic budget for 2011 that requires deep cuts in education.

According to the newest state forecast, issued in May, “Idaho’s economic recovery should be well established after this year, entering a period of modest growth beginning in 2011. … It has been awhile, but it is beginning to feel like a recovery.”

The forecast is considerably sunnier in tone than January’s, which suggested “cautious optimism” and said, “Admittedly, risks to the economy exist, but it appears the worst is behind us.”

In the most recent session, the Legislature and Gov. Butch Otter cut their own estimates of state tax revenues far below the official forecast to be safe, even though the decision meant deep cuts in government programs, including schools. Public schools saw an unprecedented 7.5 percent cut for next year – $128.5 million – along with state authorization to cut pay for teachers and administrators and a statewide declaration of financial emergency for schools.

“The governor has said all along that we expect there to be a recovery – it’s not a matter of if, it’s a matter of when,” said Otter’s spokesman, Jon Hanian. “We’ve gone through this difficult period. … His view is we need to be very frugal, very cautious and conservative in our budgeting. Really, nothing has changed to suggest that isn’t the prudent way to go. It’s Idaho common sense, that’s how he’s built this budget.”

Otter’s Democratic challenger, former nonpartisan citizen mediator Keith Allred, has been sharply critical of the budgeting decisions, which resulted in a state general-fund budget for 2011 that’s $143 million lower than the state’s official revenue forecast.

“The economic forecasts confirm two things: First, the Idaho economy is turning the corner,” Allred said. “Second, it’s not recovering fast enough. In response to the first, I’ll say again what I’ve been saying since January: Cutting our kids’ education on the assumption that 2011 would be worse than 2010 was a terrible mistake – Otter’s worst mistake.”

Allred added that he favors “strategic investments in our kids’ education” and eliminating “special-interest tax exemptions that don’t make sense” while lowering overall tax rates to spur Idaho’s economic recovery.

Jana Kemp, a Boise businesswoman and former GOP state representative who’s mounting an independent campaign for governor, sided with Otter on budgeting for 2011. “I think that the legislators and the seated governor did the absolute best they could with the information they had on hand and with caution, looking toward the future,” she said.

In addition to Otter, Allred and Kemp, the ballot for governor also includes independent candidate Pro-Life, formerly known as Marvin Richardson, and Libertarian candidate Ted Dunlap.

Worried about continued drops in expected state tax revenues, the Idaho Legislature this year set a revised budget for the current year that’s $69.1 million below the state’s official revenue forecast. Then, the tax revenue numbers slipped even further; as of April 30, Idaho had collected $82.6 million less in taxes this year than forecast. The aggressive cuts seem to have paid off. Should those trends hold through the final two months of the fiscal year, which ends June 30, the net shortfall should be $13.5 million. Otter said the state will be able to make it up through transfers from reserve funds and won’t need further midyear budget cuts.

For fiscal year 2011, which begins July 1, 2010, Otter recommended a no-growth budget that would have totaled about $83.8 million less than the revenue forecast for next year. Lawmakers cut that even further, dropping an additional $59.1 million below the governor’s recommendation, or $143 million below the revenue forecast.


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