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Little’s budgetary response to the virus is a good start

Little’s budgetary response to the virus is a good start

Fred Birnbaum
April 12, 2020
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April 12, 2020

On his Tuesday morning conference call with legislators,  Gov. Brad Little reminded lawmakers that his administration is paying much closer attention to the state’s budget and fiscal health than his predecessor.

Idaho ended the 2020 legislative session with a General Fund appropriation increase of about 4%, which was about half the spending increase that former Gov. Butch Otter left as his parting gift. And since the pandemic began, Little and his able Division of Financial Management administrator, Alex Adams, have continued the theme of fiscal prudence: public employees have been frozen; a hiring freeze has been implemented for most state agencies; and, additional Fiscal Year 2021 (FY21) budget reductions have been made to agencies not connected to public health. 

On Tuesday, the governor signed an executive order, “forming his new Coronavirus Financial Advisory Committee to oversee the approximately $1.25 billion in federal funds that Idaho will receive to fight the COVID-19 pandemic.” It is reassuring that the governor wants to provide transparency on the use of federal funds so that they are not used to simply grow government.

To his credit, for the coming fiscal year, Adams has suggested that additional budget reductions of 5% are being advanced for many state agencies. However, that may not be enough.

Though it is likely the state can close the current fiscal year, which ends June 30, with a  positive balance, a significant revenue challenge lies ahead. How that challenge is met depends on the decisions Little makes as to whether more businesses can open after April 15. There is simply no precedent for closing such a large swath of our economy for what may be months. Think about what closing retail operations and restaurants has done, will do, to sales tax receipts. Further, when people don’t receive paychecks, there will not be tax withholdings from those checks.

We bring this up because the thinking from the public health community is that the costs of lifting the order will be greater than maintaining it. That reflects their sole focus on the Coronavirus.

Let’s put the local pandemic experience in perspective, year-to-date there have been 27 Coronavirus deaths in Idaho. This year, through March, 58 people have lost their lives on Idaho’s highways, with 28 in March alone (which is lower than recent years). Can anyone imagine the governor shutting down “non-essential” driving because road fatalities are more than two times the rate of virus fatalities?

We are not being flippant here. We just assert, effectively shutting down an enormous chunk of Idaho’s economy, throwing people out of work, and setting people up for poverty is a response that is out of proportion to the impact of the virus. One must also take into account the cost of people’s mental health as they face financial ruin. 

Reasonable people understand there is always a trade-off between safety or public health, and the free movement of people. If we never left our homes except to buy food we could probably save hundreds of lives every year due to reduced driving. But does anyone really want this sort of trade-off?

Letting public health officials drive decisions about which businesses are “essential” is a recipe for disaster. It is time to revise the governor's self-isolation order, keep encouraging people to maintain a safe social distance and good hygiene practices. 

However, let's eliminate the part that divides businesses into "essential" and “non-essential” categories, so no person’s livelihood is sacrificed based upon the advice of risk-averse public officials. A holistic approach that deems all businesses as being essential is necessary. If such a step is not taken, a 5% cut to state spending will simply be the tip of the economic iceberg that Idaho will strike.

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