Revenues trigger state worker bonus

BOISE – There’s good news for state employees: The state’s budget picture has improved enough that they’ll be getting a check in the mail.

“We’ll be able to probably take care of state employees a little bit better now, if things keep going this way,” said Rep. Bob Schaefer, R-Nampa, chairman of the House Commerce and Human Resources Committee.

Idaho’s state employees have been under a pay freeze for the past two years, but lawmakers this year approved 2 percent merit-based raises for them in the fiscal year that starts this week. In addition, they approved an additional 1 percent for one-time bonuses, but only if state revenues exceeded projections for 2003-2004 by $5 million. At the time, that was considered unlikely.

But on Friday, state officials said strong revenues in May and June have pushed the state’s year-end surplus up to at least $11 million, easily triggering the bonuses. Schaefer and Senate Commerce Chairman John Andreason, R-Boise, said lawmakers decided to hand out the bonuses in single, lump-sum payments to virtually all full-time, permanent state employees.

“This is across the board, period,” said Andreason.

The checks could be out by early August. The average state employee makes a little over $30,000 a year, so the average check will be about $300 – “which won’t buy a new car, but it’s nothing to sneeze at,” Andreason said.

Andreason, who was the Legislature’s longtime budget director before being elected to five terms in the Senate, said this is the first time in memory that state employees will get an across-the-board bonus.

Rep. Kathie Garrett, R-Boise, a former state employee who pushed for the bonuses, said, “To me this is an exciting day not only for state employees, but for the state of Idaho, because it shows that the economy is turning around.”

“When we came up with this 1 percent, people said, ‘This is disingenuous, it’s not going to happen, and you’re giving them false hope,’ ” she recalled.

But all three lawmakers said they thought all along that there was a good chance workers would get the money. Andreason said, “If we had not thought the possibility was there, we would not have written this resolution.”

Said Schaefer, “It’s one way that the Legislature is showing that we do care about state employees.”

During the two-year pay freeze, state employee pay scales continued to slide below market levels, and the state began losing key workers, especially in competitive areas.

Gov. Dirk Kempthorne’s budget chief, Brad Foltman, said continued strong income and corporate tax collections boosted state revenue well over projections for June. The state’s fiscal year ended on June 30.

Foltman estimated the year-end surplus to be at least $11 million for the 2003-2004 fiscal year while legislative analysts put the figure at $17 million or more.

“It indicates a very good, strong economic performance by this state, especially in the last two months,” Foltman said.

That not only provides the carry-over cash Kempthorne needs to make his long-term budget-balancing plan work, but it frees up the money to give over 17,000 regular state employees a one-time, 1 percent pay increase.

“We are confident that the two-year budget plan I laid out for the Legislature in January is solidly on track,” Kempthorne said in a statement.

June’s collections followed an even more robust May, where tax payments covered an $18 million deficit and created the state’s first surplus this year of $3 million.

Tax receipts for the fiscal year that ended Wednesday totaled nearly $2.1 billion. State Controller Keith Johnson will validate the final revenue, spending and surplus figures by mid-July.

But Foltman urged caution about reading too much into the fiscal report in terms of the state’s economic future.

“When you look at some of the other states and the huge surpluses they’re reporting, our situation is positive in that we hit our target, but our variance is expected to be less than 1 percent,” Foltman said. “We budget and project very close to the line.”

It was still a sharp contrast to the past two years during the economic downturn that created huge deficits and prompted hundreds of millions of dollars in spending cuts and a two-year tax increase to raise $180 million each year.

Kempthorne has been counting on stronger economic growth this year and next to make sure that temporary sales tax increase expires as planned in mid-2005.

Foltman said while the tax revenue increase this year over last was only about 4 percent, it reinforced Kempthorne’s outlook for the coming year that was seen as overly optimistic by a special legislative panel making its own short-term economic analysis last January.