Idaho lawmakers will set the revenue targets on Friday that will shape the current and next state budgets. Joint Finance-Appropriations Committee (JFAC) co-chair Rep. Maxine Bell, R-Jerome, said the committee will choose the revenue projections set by a different panel of lawmakers last month. Those figures, $2.28 billion for the current budget and $2.29 billion for the next fiscal year, which starts in July, would be below the numbers set by Gov. Butch Otter, and lead to agency cuts of roughly 7.5 percent in the current budget, according to Bell.
“We start down the path of making difficult decisions, and tomorrow (Friday) will be the first,” Sen. Dean Cameron, R-Rupert, the other JFAC co-chair told the committee at the end of its Thursday meeting. Setting the revenue figures Friday will keep the Legislature on a schedule of starting to write the budget before the end of February, finishing the budget on March 12, and ending session before April.
Public schools would be exempt from those reductions in the current year due to drawing down reserves and backfilling some money from the next budget. “We’ve taken care of their cut [this year] with the savings accounts and the stimulus,” she said. “When you go into 2011, there is nothing left.” She said all state reserve funds lawmakers can tap, except the tobacco Millennium Fund, will be exhausted during budget making this year. Gov. Otter has recommended setting aside $68 million from the Millennium Fund, which came from a legal settlement with tobacco companies, for potential Medicaid costs. “Last year, we thought we’d really cut and we didn’t cut enough. We left (Gov. Butch Otter) a couple of signed checks, but we don’t have that luxury this year to leave him anything. It’s a little bit of a worry.” Lawmakers gave Otter more than $7 million in unused federal stimulus dollars, some of which went to the state immunization program.
Not all members of JFAC are on board with the revenue decision coming Friday. “I think we’re hurting the economy further,” said Rep. Wendy Jaquet, D-Ketchum. “I think what that does is just make more of a downward spiral for the state and more unemployment.” She said she’s optimistic and thinks lawmakers should go with a higher tax projection, based on forecasts by Idaho chief economist Mike Ferguson and other economists who submitted numbers to lawmakers last month. The forecasts from Ferguson, the State Tax Commission, the Associated Taxpayers of Idaho, and economists at Idaho universities all projected more revenue than the$2.28 billion and $2.29 billion lawmakers settled on.
Jaquet said she would pair a higher projection with a contingency plan in case revenues continue to decline. “There are a bunch of dibs and dabs of money out there that could be made available to the governor if things do not turn out the way we thought,” she said. Those backup funds would include possible tax revenues from hiring more auditors with the state tax commission, which could bring in up to $60 million. Jaquet’s also supported adding a means test to the grocery tax credit, which she said could save $7 million. “We’ve never been in something like this before, but I don’t think that means we should go to the lowest common denominator. I think we should be more optimistic and I think having a contingency plan is a responsible thing.”
The potential 7.5 percent cuts are higher than what the governor has called for. He issued a 4 percent holdback in September, and called for a 1.6 percent holdback in January. That would mean state agencies would need to trim another 2 percent of their general fund spending before June 30. Bell said that state prisons, as well as schools, would be exempt from some of those reductions. And while the next budget’s revenue would be slightly higher, Bell said it will lead to further reductions in money for state services. “That $10 million only covers additional school children, so that budget will have another 2 percent cut, all the way across,” she said.