Last week, Idaho Gov. Brad Little laid out his vision for Idaho in his first State of the State address. In concert, Little’s administration released his first budget blueprint, which sets the tone for the 2019 legislative session.
Here are five takeaways from Little’s first spending blueprint:
Little’s budget calls for a large spending increase
The general fund increase request for Fiscal Year 2020 is shown as 6.7 percent over the original Fiscal Year 2019 appropriation. However, we assert, the spending increase is 8.1 percent because 8.1 includes money transferred from the general fund to spending programs. For example, the Public Defense Commission will receive an $11 million fund transfer, which is not included in the 6.7 percent number but it is included in the 8.1 percent.
Medicaid spending is out of control
The governor requested a 17 percent increase in Medicaid spending from the general fund. However, this does not fully pay for Medicaid expansion. The funds would only cover six months of expanded Medicaid in FY20.
Medicaid is a shared state and federal program and its price tag has grown steadily for decades. It is the largest driver of Idaho Department of Health and Welfare spending. In Fiscal Year 2001, Health and Welfare comprised 26.2 percent of all-funds spending (including federal money). For FY19, the last year for which we have data, the Idaho Department Health and Welfare comprised 36.5 percent of the total state budget, meaning that Medicaid now munches about 90 percent of the additional $857 million consumed by Health and Welfare in the state budget.
Autopilot spending is worrisome
The maintenance budget, known as the portion of the budget for maintenance of continuing operations, is out of control. For FY20 the request to maintain the current functions of state government is a 5.2 percent increase over the prior year appropriation.
Last year, the maintenance portion of the budget required a 3.5 percent budget hike. To put that in raw figures, lawmakers needed $140 million more last year just to keep the doors open and the lights on in state offices. This year, state officials want $171 million more to keep things running.
Little cut agency requests in a big way
Little has trimmed agency discretionary requests far more than his predecessor’s budget did. For FY20, the governor reduced agency discretionary requests and fund transfers (excluding education and fire funds) by 45 percent, or $89 million compared to Otter’s final budget. This is especially important as the incoming governor had to use as a starting point the budget his predecessor developed. We hope that for Fiscal Year 2021 the governor will tackle the growth in the maintenance budget and review the untouched base budget—which uses the prior year's budget, minus one-time and replacement items, as a starting point.
State government spending is growing faster than your income
Government spending continues to grow faster than personal incomes in Idaho. For FY19 the forecast for Idahoans' total personal income growth is 4.5 percent and for FY20, it is 5.3 percent. Recall that Little’s budget seeks to grow spending 8.1 percent.
The governor's budget requests are reviewed and acted upon by the Legislature, so they are not final at this point. The Legislature should step up to the plate, and carefully review the larger budget requests, like the Medicaid budget.