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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Lawmakers: More budget cuts coming in 2011 session

Associated Press
BOISE — Idaho legislators are preparing for more scrounging when the 2011 session starts in January. Even if tax revenue next year is 10 percent greater than the current year, Idaho faces a $140 million budget shortfall, according to Legislative Services analysts in the Capitol. If revenue grows just 1 percent, expect a $350 million shortfall — and calamity. The Republican-dominated Legislature could improvise, including raiding an $80 million fund from Idaho’s settlement with tobacco companies. And everybody is hoping for better-than-expected economic growth. But with state reserve and federal stimulus funds largely exhausted, trimming budgets sounds more likely in hyper conservative Idaho than the prospect of raising taxes, said Rep. Maxine Bell, House budget committee leader. “There’s no expert way to read this economy,” Bell said. “You’ve got to fly by the seat of your pants and say, ‘I don’t think it’s going to be there, so let’s not spend it.’” The state Division of Financial Management says a new recession is unlikely, but only slow economic growth is forecast. Legislative Services analyst Ray Houston in Boise said the just-ended downturn left deep scars on Idaho’s ability to balance its books. Despite recent news that Idaho’s tax revenue in the first two months of this fiscal year is $10 million ahead of oft-reduced expectations, the budget remains out of kilter. “Idaho’s general fund budget is structurally out of balance by $140 to $350 million,” Houston told state agencies in a presentation obtained by the Associated Press. Republicans and Gov. Butch Otter argue that balancing 2011 spending with tough cuts was a sign of their fiscal responsibility. That’s attracted barbs from Democrats, including gubernatorial candidate Keith Allred, especially for a $128 million public education hit. They suggest more could have been done, including bolstering tax collector ranks, tackling $1.7 billion in tax exemptions that help privileged sectors, or raising beer and wine taxes that have long gone unchanged. Given this divide, Rep. Wendy Jaquet, one of four Democrats on the Joint Finance-Appropriations Committee, agrees the 2011 session could be tougher than 2010. “There are no easy answers,” said Jaquet, of Ketchum. For one thing, budget reserves that added up to $214 million in July are nearly gone. Same goes for millions of federal stimulus dollars Idaho got for public education, among other programs. GOP lawmakers say a tax hike to fill this vacuum sounds like heresy — even a temporary penny-per-dollar sales tax boost akin to the one Gov. Dirk Kempthorne pushed through in 2003 to ease the last economic downturn. Senate President Pro Tem Bob Geddes, R-Soda Springs, expects his chamber’s roster will grow more fiscally conservative with November elections. “People are not happy with the taxes that they’re paying now, let alone paying more taxes,” Geddes said. Minority Democratic leaders say they’ve heard the talk but insist Republicans are defaulting to slash-and-burn budgeting at the expense of critical programs like higher education whose finances could be buttressed with fresh ideas. “Personally, I think additional revenue in some manner is going to be part of the equation,” said House Minority Leader John Rusche, D-Lewiston. “But when you’re only 25 percent of the body, you’re not really driving the boat.” What else can lawmakers do? They could target Medicaid, reducing insurance benefits for the poor and disabled or reducing provider payments. Delaying expansion of Idaho’s grocery tax credit is a perennial talking point, but Otter has so far pledged to stick with a program that this year could top $60 million in relief. Some even suggest Idaho should start selling assets. The stark reality is, revenues now would have to grow about 15 percent in fiscal year 2012 to balance the budget without cuts. But Mike Ferguson, Idaho’s outgoing economist, predicts it will grow just over 9 percent. And even that prediction may be difficult for wary lawmakers to stomach. They’ll set the budget for the year starting in July in February and March, so many will be reluctant to rely on his forecasts so far in advance. Most point out Ferguson, like many other economic forecasters, also aimed too high with his targets as the economy spiraled. “We would love it if Mr. Ferguson’s numbers were correct, or if the numbers were even better than that,” said Sen. Dean Cameron, R-Rupert and the Senate’s budget leader. “I can’t think of anything that would make my life better right now.