Idaho budget writers approve cuts to personnel

BOISE – Legislative budget writers on Wednesday agreed to give state agency directors discretion over how to cut personnel costs in fiscal 2010, but limited the austerity measures to 3 percent, down from a previously planned 5 percent.

However, it’s unclear whether Gov. Butch Otter and House Republicans will support the plan, since it uses $6.2 million from the federal stimulus package, money Otter wants for road, water and communication projects.

What’s more, House Republicans insist the deteriorating economy makes a 5 percent cut the most fiscally responsible. If the economy improves, they say, money could be returned to agencies.

This is one of the so-called “going-home issues” lawmakers must resolve before they adjourn and head back to their districts, and the battle lines are clear: Otter wants flexibility for agency directors to make cuts as they see fit; House GOP leaders say they want to pass a budget that doesn’t require a flurry of holdbacks like the state experienced during the current fiscal year; and Senate lawmakers say they want to protect as many state jobs as possible.

A veto of the appropriations bill, on the off chance it passes a clearly hostile House, could delay the end of the Legislature that’s now on course to conclude a week from Friday.

Sen. Dean Cameron, R-Rupert and co-chairman of the budget-writing Joint Finance-Appropriations Committee, argued that limiting personnel spending cuts to 3 percent was prudent because it would protect jobs at agencies, including the Department of Correction and Department of Health and Welfare.

“The motion that protects public safety is the most fiscally conservative,” Cameron said. “To get out in front and prejudge what the economy is going to do (with 5 percent cuts), you may be creating a self-fulfilling prophecy. You may lose the jobs; you may lose the services.”

The vote was 12-8, with all 10 Senate members of the committee backing the 3 percent cut. Eight House Republicans voted against it, while two House Democrats, Reps. Wendy Jaquet and Shirley Ringo, cast the deciding votes. The full House and Senate still must approve the plan, and Otter must sign it.

House GOP members on the panel favored a plan that would immediately cut personnel costs by 5 percent but give Otter the option of restoring about $17 million later in the year, if the state economy improves. The problem with starting with a less severe 3 percent cut, said Rep. Cliff Bayer, R-Boise, is that tax revenue could continue its downward spiral and leave state government no choice but to cut personnel costs with emergency measures.

The plan that passed “sets the stage inadvertently to issue holdbacks,” Bayer contended.

Rep. Frank Henderson, R-Post Falls, said he didn’t think he could support the 3 percent cut when it comes to a House vote.

“I haven’t seen an economic justification to go to 3 percent from 5 percent,” he told the Associated Press.

Wayne Hammon, Otter’s budget chief, said he can live with 3 percent. The plan, he said, fulfills the governor’s demand that agency heads be given maximum flexibility to make cuts to personnel as they see fit, including through furloughs and possible layoffs.

Hammon also liked elements of the plan that give Otter authority to use as much as $200 million, including transfers from rainy day funds for general government and public education, to address an economic crisis in the coming 12 months, should tax revenue continue to deteriorate. The state’s fiscal 2010 budget, expected to total some $2.54 billion, is already more than $420 million less than the original 2009 spending plan.

Still, Hammon said Otter dislikes provisions that foresee using federal stimulus money, not the rainy day funds, to soften the personnel cuts. Otter wants to use about $44 million in discretionary funding from the stimulus package for water projects, road building and the Idaho Education Network, arguing that doing so will help create more jobs than using the cash for state agencies.

“I told them, ‘He did not support that’; the governor’s position has never changed,” Hammon said.