BOISE - With Idaho’s state budget flush for the first time in years, a cautious Idaho Gov. Butch Otter is calling for $45 million in tax cuts next year, a $5 million research initiative aimed at creating jobs, small boosts in education funding and conditional, one-time pay boosts for state workers - but only if state revenues meet targets.
“It is my pleasure to report that Idaho, having been tested by the Great Recession, now is emerging leaner, stronger, more resilient and better prepared to compete, prosper and prevail in the years to come,” Otter told a joint session of the state Legislature in his sixth State of the State and budget address.
His talk kicked off Idaho’s legislative session, which is expected to include a tough fight over Otter’s proposal for a state-run health insurance exchange. The governor downplayed the issue in his speech, saying he and lawmakers will decide together how best to proceed.
Otter laid out a budget proposal for the coming year that’s based on two key assumptions: A drop in forecast revenue growth for the current fiscal year from 6.4 percent to 4.4 percent, and then a forecast for next year’s general-fund tax revenues to grow 5.8 percent over the lowered total for this year. He’s then capping overall general-fund spending growth in his proposed budget at 5 percent, for a spending level slightly below the forecast.
The result: $2.655 billion general fund budget for next year, up 5 percent from this year.
Otter didn’t lay out specific plans for tax cuts, instead calling on lawmakers to discuss their ideas with him. “There remains a wide diversity of opinion on how best to target tax relief,” the governor told lawmakers. “I look forward to hearing your proposals.”
He also called for moves to begin refilling Idaho’s various reserve funds, drained over the past four years of economic downturn.
Otter wants to put $60 million in the funds next year. Of that, $9.5 million would be from a statutorily-required transfer to the Budget Stabilization Account. Otter also wants to deposit an additional $16.5 million into that account; $29 million into the Public Education Stabilization Fund; and $4.98 million into the new Higher Ed Stabilization Fund, which would be that fund’s first general-fund appropriation; it now contains $365,000 from tuition interest.
“That will help us maintain the kind of fiscal stability, certainty and responsibility that Idahoans deserve and employers look for in their state government,” Otter told lawmakers. “And that’s what Idaho citizens will keep getting under my administration, with your help and continuing support.”
Lawmakers now will begin debating which of Otter’s proposals to support and which not, as they move toward setting the state’s budget for the coming year. Idaho’s legislative session generally lasts about three months, though there’s no set closing date - it ends when lawmakers have decided how they want to address the state’s needs. Once they’re done, every seat in the Legislature is up for election this year, with the primary election set for May 15.
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