Idaho lawmakers are predicting lower tax revenues than Gov. Butch Otter, which could lead to further spending reductions during the next 18 months. Lawmakers would need to trim an additional $69 million from the current budget that ends July 1 and $59 million from the budget for fiscal year 2011. Otter presented his figures in his budget address last week.
The new revenue projections decided by the joint Economic Outlook And Revenue Assessment Committee are below projections from both Otter’s chief economist and projections submitted by committee members one week ago. Only five lawmakers voted in favor of Otter’s projections. The new projections call for $2.28 billion in revenues in the current budget and $2.29 billion in the next budget. These new numbers will go to the Joint Finance-Appropriations Committee, which will consider it when writing budgets. Eight lawmakers serve on both committees.
“There’s clearly a lot of pessimism embedded in this,” chief economist Mike Ferguson said about the new projections. “This makes for some tough decisions.”
One key reason for the pessimism is low December tax revenues. Those revenues were down $12.6 million below expectations from a forecast Ferguson made a few weeks earlier. “I think that’s just an indication of how far down we’re going to be in (fiscal year) 2010,” said Rep. Brent Hill, R-Rexburg.
“We do not have the luxury of missing it this year like we did last year,” said Rep. Scott Bedke, R-Oakley. Bedke said Otter’s plan to balance the current and next budget rely on emptying state rainy day funds. That means that if revenues continue to come in lower than expected, it will be difficult keep the budget balanced. “I think we need more cushion built into this recommendation,” Bedke said.
Lawmakers have yet to lay out a plan for where additional cuts could come from. Public education and health and welfare are the biggest line items in the budget and could face additional cuts. “Any underestimating of revenue means we’re going to cut programs in education and health and welfare,” Sen. John Goedde, R-Coeur d’Alene said.
The five lawmakers on the committee who voted no on the lower projections, including all four Democrats, all voted yes on larger projections that didn’t get enough support. Rep. Bill Killen, D-Boise, said lawmakers overvalued the latest tax revenue report. “December numbers that came out caused some concern,” Killen said. “However, I don’t think one month a forecast makes.”
“It’s important to understand the consequences of undershooting the revenue figures for this year,” Sen. Nicole LeFavour, D-Boise said. “To make those cuts before we know that it’s that bad seems really, really irresponsible.”
The majority of lawmakers didn’t agree with LeFavour. “We don’t have evidence that things will turn around,” said Sen. Russ Fulcher, R-Meridian. He said the lower revenue projections could force difficult cuts, but said that’s the Legislature’s job. “It’s doable, because we have to do it.”
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