BOISE - Strong tax revenues in April, the biggest month of the year, could mean Idaho’s public schools will get up to a $55 million one-time boost at the end of this fiscal year on July 1 - an amount that exceeds the $47 million cut state lawmakers imposed on schools for next year.
That wouldn’t stop the bleeding - it doesn’t reverse the unprecedented $128.5 million in cuts schools took this year, which are continuing next year. But it’s a sign that the gloomy revenue assumptions lawmakers used to slash budgets were off.
“We’re not out of the woods yet,” said Wayne Hammon, Gov. Butch Otter’s budget chief. “I’m very grateful that we set a low number and that we managed our way to it, and that we have a little extra. It’s a much better problem to have than what I had the first four years of this job, when every number seemed to be too high. It’s a much better way to run the government.”
It may not seem that way to Idaho’s school districts, however, who have to set their budgets by mid-June, before knowing how much extra money will come - or if it will come at all.
“School districts should not be setting their budgets based on whether this money will come or not, because we just don’t know,” said Luci Willits, chief of staff for state Superintendent of Schools Tom Luna. “We’ve seen positive indications about this in the past, and then it’s evaporated.”
The projection for the extra funds assumes the final two months of the fiscal year will come in on target for state tax revenues; so far, the state is $74.2 million ahead. Because of federal maintenance-of-effort requirements attached to $300 million in stimulus funds Idaho accepted in past years, a certain percentage of any additional funds has to go to schools. Lawmakers passed a “surplus eliminator” bill this year, SB 1207, to ensure that happens.
“I think we can all agree this is a positive sign for our economy and good news for our schools today and in the future,” Luna wrote in an email Friday to school districts.
Tom Taggart, business manager for the Lakeland School District, said, “It’s excellent news, it’s great news, but it really complicates budgeting and negotiations.”
Taggart said if the full $55 million came through, it’d mean about $800,000 for the Lakeland schools. The money is treated as a one-time appropriation, which forecloses committing it to ongoing expenses.
He said his district likely would look at building in cuts in its budget, such as furlough days, that could be reversed if the extra money showed up.
“It’s just a very complicated year with very demoralized staff, and we’re now thrown another wild card in the middle of it,” Taggart said.
Idaho lawmakers this year set a tax revenue estimate for the current year of $2.36 billion, but if the last two months come in on forecast, it’ll collect $2.43 billion. That would match the forecast for fiscal year 2011 made more than a year ago by now-retired chief state economist Mike Ferguson.
In 2010, former Gov. Cecil Andrus bet Otter $100 that the actual collections for 2011 would be closer to Ferguson’s figure than the low-ball $2.29 billion Otter and lawmakers adopted that year. It now looks like Andrus is on track to win the bet.
For next year, state economists projected $2.52 billion in tax revenue, a 6.9 percent increase over this year, but Otter and lawmakers budgeted for only a 3 percent increase, or $2.43 billion next year. With the 2011 revenue now on track to hit that mark, that’d mean zero growth in fiscal year 2012.
House Minority Leader John Rusche, D-Lewiston, said, “I just think that we picked numbers that were incredibly conservative.”
He called it “curious” that the state could end up cutting school budgets, then giving money back, noting that funding shortfalls were a major arguing point for this year’s sweeping school reforms, which shift money from teacher salaries to technology boosts starting next year. That shift plus the anticipated bottom-line shortfall prompted lawmakers to approve cuts in base pay for Idaho teachers and administrators as part of the school budget for next year.
“I’m not saying that there was an ulterior motive or shell game involved, but it is curious that one of the main reasons for the educational changes, the Luna program, was because we couldn’t afford to support education, we were going to have to cut it,” Rusche said.
Taggart said lawmakers have been “extremely conservative” in their budgeting, but said given shortfalls in recent years and the draining of state budget reserves, “I still don’t know that it was a bad idea. … I’m not willing to criticize ‘em too much. If they do it again, I might.”