Revenue surge doubles surplus

BOISE – Stronger-than-expected state insurance tax receipts and significantly higher collections from various sources more than doubled the final state budget surplus from earlier estimates.

The surplus totaled over $26 million, $15 million more than estimates made July 2 from preliminary revenue figures, State Controller Keith Johnson said on Thursday.

Although only a fraction of the nearly $2.1 billion in receipts projected for the 12 months through June 30, the $26 million surplus fueled speculation that the economy was on the upswing. While just over 1 percent of the state budget, the additional money is critical in the debate over spending in a state that typically commits every expected dollar.

“Things are getting better,” Johnson said, “but I don’t know if it’s a trend yet.”

House Speaker Bruce Newcomb, R-Burley, also remained cautious about the future despite the spring surge in revenue.

“I just hope this continues,” he said.

The extra money has already triggered a bonus for state employees, who went two years without a pay raise to help keep state spending in balance. But questions of how to distribute that $5 million have delayed the payout, and Gov. Dirk Kemp-thorne has sought clarification from legislative leaders.

State Sens. John Andreason of Boise and Rep. Bob Schaefer of Nampa, who co-chair the special legislative committee on state employee pay, two weeks ago predicted 17,000 regular state workers would be getting 1 percent checks in a matter of weeks.

The bonuses would supplement the 2 percent merit-based pay raise that took effect this month, ending the two-year pay freeze.

But a disagreement has developed over whether the bonus should be issued across-the-board to all employees or left to agency managers to disburse based on merit.

In his letter to legislative leaders this week, Kempthorne asked whether lawmakers intended the bonus be across-the-board and if it should go to probationary employees, employees on disciplinary status, relatively new employees and part-time employees working under 20 hours a week.

Kempthorne also sought reso-lution of the seeming conflict between the bonus directive for immediate payments and the policy imposed earlier on University of Idaho employees that delays any pay raises until at least January because of the school’s severe financial problems.

Newcomb conceded that lawmakers did not discuss details of the bonus plan and that there is a division among them over whether it should be across-the-board to all workers. He suggested a possible compromise would be to make the payments across the board but not to probationary, part-time or disciplinary-status workers.

Schaefer said he believed the bonus money should be distributed on a merit basis just like the pay raise, but “I don’t care how they handle it, quite frankly. I don’t want to spend any political capital on this issue.”

Overall, Kempthorne had planned on going into next winter’s budget deliberations with a cushion of about $72 million to help offset the scheduled repeal of the temporary penny sales tax next July. The surplus has grown to over $92 million because of the revenue surge, and that’s even allowing for the $5 million in bonus pay.

The budget outlook for 2005-2006 remained austere without the extra $180 million from the temporary sales tax, but the higher cash surplus combined with more than $100 million squirreled away in various special accounts might be enough to finance a hold-the-line budget for another year.

State budget director Brad Foltman said the state will have a clearer view of the longer-term financial picture next month when chief economist Michael Ferguson determines whether this spring’s strong economic performance was the beginning of a trend that justifies increasing revenue projections.

Lawmakers based their spending decisions last winter on an anticipated 5.4 percent growth in tax receipts.