As Idaho closed the book on a state budget that saw a dramatic drop in tax revenue, reductions in spending to state agencies, and no large tax increases, Gov. Butch Otter said he and the Republican-led Legislature acted responsibly.

“I’m proud of the fact that we did go forward with what we needed to do,” Otter said Tuesday.  “There were some tough decisions, but those decisions were made in concert with the Legislature, and we’ve gone forward.”

Idaho took in more than $200 million less in taxes in the just-ended fiscal year than in the year before, thanks to a weak economy.  The state saw a $6.9 million tax revenue shortfall in June, which put it $17.4 million below the budget approved by lawmakers earlier this year.  The state balanced the budget by shifting $8.26 million from the Permanent Building Fund, and by having agencies hold the line on spending during the last month of the budget.

Idaho’s Medicaid program is also carrying over approximately $20 million in June payments to July, which is the first month in the current state budget year.

Otter said it was crucial that, unlike in other states facing similar circumstances, Idaho lawmakers didn’t raise taxes.

The governor said he will meet with leading GOP lawmakers before the next legislative session, and see if they bring forward proposals to raise or lower tax rates, including possibly removing some of Idaho’s sales tax exemptions.

Sen. Shawn Keough, R-Sandpoint, said she’s heard from families in Idaho who are thankful that lawmakers balanced the budget without raising taxes.

Rep. Darrell Bolz, R-Caldwell, who serves with Keough on the legislative panel that writes the state budget, said lawmakers didn’t have easy decisions, but came to the right conclusions.

Otter said tough decisions and difficult economic times often spur criticism of elected officials.  “When you have good years, it’s easy to govern,” he said.  “When you have bad years, it’s more problematic and it gets a little tougher.”

Public schools will see a $128 million reduction in the new state budget, though Otter said he and lawmakers prioritized school funding over other state agencies, which have seen a high percentage of their spending disappear.

The governor’s office issued a news release showing support from other Republican lawmakers.  Sen. Dean Cameron, R-Rupert, one of the leading budget writers, said GOP leaders made the correct call on the budget.  “While the armchair quarterbacks, pundits, and the minority party criticized us, the fact is they were wrong,” he said.  “Public schools, public health and public safety would have been in even more dire straits under their misguided approach.”

“Today’s budget numbers confirm that the Democrats were wrong,” said House Majority Leader Mike Moyle of Eagle.  “If left unchecked, they would have spent us into financial ruin."

The governor said that while there are signs that the state economy is turning around, including a lowering unemployment rate, the economy could be slow to recover.  He recently told state public employees that he can’t promise that the next two years will be better than the last two years.  Tuesday, Otter said it’s important to let state workers and state agencies know as early as possible about shifting state finances

Democratic candidate for governor Keith Allred criticized Otter’s work on the budget.  “The governor was wrong to build next year's budget based on the assumption that it will be as bad economically as this year,” Allred said in a news release. “ Butch Otter has shown us that he's out of ideas for
how to lead Idahoans out of this economy.  Instead of building fiscal year 2011's budget based on sound evidence and good planning, he's chosen to go down in history as the first governor to cut funding to our schools.”