‘The holdbacks - there are more coming’

Lawmakers are none too happy about how the state Department of Commerce had dealt with its budget cutbacks in part by sharply cutting into state funding for rural economic development grants. “We’re in tough times, and every agency has had to deal with holdbacks in different ways,” Senate Finance Chairman Dean Cameron told state Commerce Director Don Dietrich. “Your agency is one of the areas in which … we could actually turn the economy around a little bit. And yet as I look at … holdbacks, most come out of grants that could be money on the ground, rather than out of administrative staff and internal. … Can you explain … why it was easier to reduce grants, vs. try and absorb those reductions internally?” Dietrich responded, “It was a very difficult decision, to be quite frank.” The cuts in rural grants, he said, are “for a short period of time here, we’re talking hopefully a 12-month period.”

During that time, he said, federal HUD funds could help out, and demand for such grants is down anyway in this downturn. “In essence, we did not feel like we were short-circuiting the folks in our rural communities. Money is still available, the demand for those monies is still running at a reduced level, and I anticipate that probably through 2010 that will probably continue to be the case,” Dietrich said. Sen. Nicole LeFavour, D-Boise, warned, however, “It may be more than one year.” Cameron told Dietrich he saw a “chicken and egg” issue. “It seems to me that if there isn’t the demand, one of the things the department could be doing is trying to generate the demand. The holdbacks - there are more coming. I would encourage you to look at ways you could internalize those holdbacks rather than look at the local grants. We’ve got to look at ways to turn the economy around. Your agency is going to be able to do that. I think it requires not a diminished effort, but an increased effort in working with those local communities and working with those small businesses to advance forward.” Added Rep. Frank Henderson, R-Post Falls, “It sounds like a de-emphasis of the rural programs through your department - I hope that’s not true.”