The Joint Finance-Appropriations Committee will set budget targets for both the current year and for the next fiscal year tomorrow morning, after it holds brief budget hearings on four agencies and a discussion of state employee health insurance. The budget target debate and vote is tentatively scheduled for 9:45 to 10:30 a.m., though the committee often runs early or late compared to its schedule; you can see the committee's full agenda here and listen live here.

The budget target chosen by the joint committee will determine just how deeply lawmakers will have to cut into both the current year's state budget and next year's. Click below to read AP reporter John Miller's full story on how the governor's now supporting deeper cuts than he proposed in the budget he submitted to lawmakers in January.

Otter to support more cuts as Idaho revenue tanks
By JOHN MILLER, Associated Press Writer

BOISE, Idaho (AP) — Gov. C.L. "Butch" Otter will support deeper cuts to Idaho's 2010 and 2011 budgets than he proposed in January after the state missed its tax revenue collection targets by a combined $25 million over the last two months.

Otter's budget chief, Wayne Hammon, said Wednesday the governor is increasingly convinced a more pessimistic revenue forecast is warranted.

Based on his original forecast, Otter had proposed cutting an additional $40 million from the fiscal year 2010 budget, including $28 million from public schools.

However, lawmakers on a forecasting committee on Jan. 20 decided millions more in cuts would be necessary in order to fulfill the Idaho Constitution's requirement that lawmakers balance spending. Otter now agrees with them.

"The governor believes it's more prudent to budget to the lower number," Hammon said. "Even if we miss it by a little, that little has real consequences."

Last month, the 18-member Economic Outlook and Revenue Assessment Committee recommended setting a 2010 spending package based on just $2.28 billion in tax revenue, $69 million less than the Republican governor's original proposal.

For 2011, the forecasting panel recommended a revenue target of $2.29 billion, about $60 million less than Otter's January recommendation.

Hammon said he doesn't plan on issuing a revised budget proposal to reflect Otter's change of heart, but said the Republican governor's office is working with the Joint Finance-Appropriations budget-writing committee members and legislative leaders to establish new spending priorities under a more pessimistic scenario.

Members of the joint budget panel plan to adopt target 2010 and 2011 revenue figures this Friday.

Rep. Maxine Bell, R-Jerome and the panel's co-chair, said its 16 GOP members agree with Otter: The more-conservative forecast of lawmakers makes the most sense.

"We're pretty much united," Bell told The Associated Press. "''That's the reality of it. That's what we've chosen to work toward."

Minority Democrats make up only a quarter of the Legislature and have been relegated to a largely observer role in this debate.

Still, they insist policy changes driven by Republicans in recent years have boxed Idaho into making deeper cuts to programs than otherwise would be warranted.

For instance, GOP lawmakers during a 2006 special session voted to eliminate a $260 million property tax levy for public schools, covering that share of school funding instead by hiking Idaho's sales tax rate from 5 to 6 percent.

That move under then-Gov. Jim Risch may have temporarily reduced property taxes, but House Minority Leader John Rusche, D-Lewiston contends it has left Idaho without responsible alternatives to slashing programs during a downturn.

For instance, when the sales tax rate was just 5 percent in 2003, lawmakers in the midst of the last recession mustered the courage to pass a temporary one-penny sales tax hike — it expired in 2005 — to mitigate what otherwise would have been deep cuts to public education, Rusche said.

Under the current policy, however, schools must compete with other agencies for a shrinking pool of state cash.

"Because of tax policy changes made earlier by Republicans, we have more instability and fewer tools to use," Rusche said. We don't have the tools available, plus we're in a more-severe situation."

Copyright 2010 The Associated Press.

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