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Legislative committee accepts governor’s 6.4 percent economic growth projection

Legislative committee accepts governor’s 6.4 percent economic growth projection

Idaho Freedom Foundation staff
February 18, 2014
[post_thumbnail]Rep. Maxine Bell, R-Jerome, co-chair of the Joint Finance-Appropriations Committee, says the committee is "hopeful, we are prayerful, we are optimistic," in adopting the governor's projected 6.4 percent growth figure for the economy.

The Joint Finance-Appropriations Committee (JFAC), comprised of members of both the House and the Senate, have agreed with Gov. Butch Otter and his staff that the Idaho economy will likely grow by 6.4 percent in fiscal year 2015 and is now planning to set the new state budget according to that prediction.

“We are hopeful, we are prayerful, we are optimistic,” Rep. Maxine Bell, R-Jerome, co-chair of the committee, told IdahoReporter.com about the adoption of the governor’s forecast.

Last week the committee considered three different forecast figures as a guide for how Idaho’s economic output might expand in the fiscal year ahead. Rejecting two less optimistic figures—one suggesting that the 2015 economy would grow by 3.8 percent, the other suggesting that it would grow by 4.6percent—the committee agreed with Otter’s 6.4 percent estimation and will now craft a budget for fiscal year 2015 that will be based on that economic growth assumption.

“Hopefully we won’t spend all of that anticipated growth,” Sen. Steven Thayn, R-Emmett, a JFAC member, told IdahoReporter.com. “Just because the economy might grow by a particular figure doesn’t mean that we have to expand government spending to the same degree.”

Despite the governor’s upbeat outlook for 2015, in January of 2014 the state collected far less tax revenue than it anticipated when setting the current year’s budget. According to an analysis published last week by the Legislative Services Office, tax revenues were off by nearly $24 million relative to budget forecasts for this year.

“These are two entirely separate issues,” Bell explained when asked about the committee adopting the most robust forecast for 2015 in the same week where revenues were shown to have fallen in January of 2014. According to her, last month’s revenue drop does not suggest that next year’s budget forecast should be more modest. “2014’s budget is set, we’ve fixed it, and we’re focused on 2015 now,” she said.

Last month, in his annual State of the State address, Otter said that “I will not sanction growing our state government as fast as our economy, and I will continue to work for greater efficiency, effectiveness, stability and predictability in fulfilling the proper roles of government.” He also noted that “our shared commitment to those principles has seen us through some tough times, and it remains our best path forward.”

Since its disclosure, however, Otter’s budget proposal for 2015 has come under criticism by some. For example, an analysis published by the nonprofit Idaho Freedom Foundation states of Otter’s proposal that “the $18 million he’s setting aside for wolves, water and to defend the state’s ban on gay marriage are also treated as fund transfers in 2015, not direct general fund spending.” The analysis also notes that “Medicaid spending is treated as a reduction in general fund expenses, rather than new Medicaid spending, which is what it really is.”

Additionally, according to the national nonprofit State Budget Solutions organization, the practice of inflating tax revenue projections and relabeling government expenditures has become common practice with the formation of many state government budgets.

Despite the remaining optimism about the fiscal year ahead, at least one member of the JFAC committee took January’s revenue drop seriously. “Gov. Otter’s 2015 forecast was published before the January revenue decline was known to us,” said Sen. Steve Vick, R-Dalton Gardens, a member of JFAC. “I think it’s quite naive to necessarily assume that this was just an isolated incident, and that revenues will continue to grow and grow.”

Vick was among the committee members who last week supported the two smaller forecast figures of 3.8 percent and 4.6 percent growth, respectively.

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

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