Little’s budget serves as an important course correction

Fred Birnbaum Articles Leave a Comment

It is no secret that fiscal conservatives felt let down during the final years of Gov. Butch Otter’s administration. Otter abandoned his pledge to hold the growth of state government spending at or below Idahoan’s own personal income growth.

Thankfully, we have a new governor in Brad Little and a new Division of Financial Management Director, Alex Adams. The regulatory roll-back that was initiated in 2019 is being followed by a proposed Fiscal Year 2021 (FY21) budget that meaningfully reduces the growth of state government spending.

How so?

The budget Little presented during Monday’s State of the State address grows General Fund spending by a mere 3.75%. For those paying close attention, that’s a huge improvement over Otter and his budgets. 

Consider that actual General Fund spending during Otter’s final three full years (FY16 – FY19) grew at 6.81% per year. The difference between 3.75% and 6.81% is meaningful because had Otter simply kept spending growth on a 3.75% trajectory, more than $600 million, cumulatively, would have been be available for road and bridge repairs and tax relief. 

Little’s budget also dispenses with the gimmicks and misdirections. Otter used fund transfers, shown as offsets — or reduction — to revenues, to hide spending increases. For example, Otter proposed FY19 transfers to cover spending for buildings, wolf control, and the STEM education fund.

The usual gang of big-government proponents in the media are questioning the wisdom of Little’s budget given Idaho’s economic growth. Amid the noise and media backlash, let’s keep a few things in mind.

Little’s budget doesn’t cut overall government spending. Rather, it merely slows its rate of growth. There is a saying popular with farmers, “It is not the bad years that kill you, it is what you do during the good years that kills you.” Simply translated, that means properly managing public finances should not mean spending tax dollars because you have them. The larger you grow government during good times, the more painful the program or service cuts or tax hikes during a downturn.

Budgeting is about prioritizing, not trying to meet every unmet need of every agency or special interest group. Let’s remind ourselves how well that is working in Washington, D.C – where there is never enough money.

Though not perfect, Little’s fiscally responsible approach is a nice start to 2020. Challenges remain with education funding because student results have not improved with recent spending increases over the last several years. And, of course, the overall Medicaid request is up 5.2% in General Funds from FY20.  Medicaid will now consume one out of every three dollars that the state appropriates in total funds.

Let’s recognize that Little and Adams proactively proposed reducing the growth of government. This is a course correction to be heralded.