Senate Approves Scheme To Avoid Future Budget Cuts Reserve Fund For Emergencies Wins Overwhelming Support

As the House unanimously ratified a $17.7 million cut in this year’s state budget on Wednesday, the Senate was about the business of amassing cash.

The Senate voted overwhelmingly for a relatively rigid scheme to scrape together money to alleviate future budget reductions and finance emergencies.

“This is nothing but common sense,” Republican Sen. Hal Bunderson of Meridian said. “We counsel ourselves, we counsel our families, ‘You better have some money set aside for emergencies’.”

The House was unanimous in passing the 2.5 percent across-the-board budget cut Batt imposed last fall to cope with a precipitous decline in corporate tax revenues due to the collapse of the computer chip market.

Only public school aid escaped the entire holdback, although budget writers have slashed it by nearly $4 million to help replenish the existing budget reserve.

The omnibus budget-cutting measure now goes to the Senate for final action.

Under the revision of the existing reserve system, now headed for the House, an amount equal to 1 percent of the general tax budget - about $14 million - would be automatically deposited in the new Budget Stabilization Fund unless two-thirds of the Legislature voted to reduce or forego the deposit.

The fund would be capped at 5 percent of the budget and withdrawals would be limited to half the fund balance in any year.

There were only five skeptics, but among them was respected Republican Laird Noh of Kimberly, who questioned coming up with such a rigid plan when the state does not even have the cash for modest state employee pay raises or to maintain its original commitment for public school aid.

“If you look at the difficulties we have this year, there’s only one way to put additional revenues in this fund next year - with a revenue increase,” Noh said. “That’s the implication.”

The Legislature created the existing Budget Reserve Account in 1989 when the economy was rebounding and producing unexpected revenue surpluses. It was built up to $50 million in March 1990. But within a matter of days, lawmakers tapped it for $15.5 million in road projects in a spread-the-wealth euphoria that gripped the closing days of that session.

The reserve was used sparingly after that until last year when it became the source of cash to deal with flooding and sustaining school aid.