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Federal dollars account for 36 percent of state’s budget

Federal dollars account for 36 percent of state’s budget

Dustin Hurst
February 11, 2014
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February 11, 2014
[post_thumbnail] Idaho's total budget for the current fiscal year relies on 36 percent federal funding.

It’s a common refrain heard at the Idaho Capitol: “We need to push back against the federal government.”

But while the Legislature might use one hand to push back against Uncle Sam, the other is wide open, searching for any type of cash handout it can get.

According to research by the Idaho Freedom Foundation and IdahoReporter.com, the state’s reliance on federal funds continues to grow each year.

In 2003, Idaho received and spent about $1.23 billion in federal cash, used to fund education, roads and health and welfare programs. In 2014, the state budgeted $2.35 billion in federal dollars.

Cathy Holland-Smith, the Legislature’s top budget analyst, told IdahoReporter.com that much of the growth comes from health and welfare and higher education spending.

A look at the numbers reveals that Medicaid, tucked inside the annual health and welfare budget, is likely the top driver in the state’s growing reliance on federal cash. In fiscal year 2004, the state spent $1.29 billion on Medicaid, including $375 million in state funds and $837 million in federal dollars. A decade later, the numbers have grown considerably. In fiscal year 2014, state lawmakers budgeted $660 million in state funds and $1.61 billion in federal cash.

The Department of Environmental Quality, Idaho’s version of the EPA, also logs a huge increase in federal cash among state departments. According to Holland-Smith, the agency’s federal cash flow has jumped from $15 million annually to just more than $40 million.

Overall, federal spending made up 36 percent of the state’s $6 billion budget this year, which includes all funding sources. A decade ago, the numbers were similar. In fiscal year 2004, federal spending made up 33 percent of the money in the state’s $4 billion spending plan.

Joe Luppino-Esposito, a senior analyst with State Budget Solutions in Washington, D.C., told IdahoReporter.com that the state’s continued reliance on federal dollars puts Idahoans in a dangerous situation.

“That puts the state in a very precarious situation if, or more likely, when, the feds decide that there need to be cuts in order to slow the growth of the national debt,” he said in an email. “Politicians on both sides of the aisle have openly considered cutting joint federal/state programs, such as Medicaid, as a way of saving money.”

He urged states to plan for the worst. “Rather than assuming that federal money will continue to flow, states need to prepare for spending cutbacks,” he said.

Utah, Luppino-Esposito said, is developing a plan that would help the state deal appropriately with moderate or severe cuts in federal dollars. Instead of foisting blunt program reductions on Idahoans when federal revenues slow, Luppino-Esposito wants Idaho leaders to prepare a more detailed and thoughtful plan of action.

“Too often, states are caught off guard by budget shortfalls and simply apply across-the-board cuts that only serve to make government less effective,” he said. “Specific, planned cuts are the better option.”

Idaho’s governor, Republican Butch Otter, recognized this for at least a short period of time in 2012. Ahead of the fiscal cliff fight of late 2012 and early 2013, Otter asked departments to prepare for 20 percent cuts in state funds as Washington, D.C., lawmakers battled over tax increases on the wealthy and federal spending levels.

Note: IdahoReporter.com is published by the Idaho Freedom Foundation.

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