Otter unveils no growth budget with cuts to education, parks

Otter unveils no growth budget with cuts to education, parks

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Idaho Freedom Foundation staff
January 12, 2010
Idaho Freedom Foundation staff
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January 12, 2010

Gov. Butch Otter’s $2.45 billion state budget recommendation is $500 million dollars less than the one presented to lawmakers a year ago. That trimming of state spending reflects lower than expected tax revenues, said Otter, due to Idaho’s sluggish economy. Low revenues are also leading Otter to ask for $40 million in spending cuts in the 6 months left on the current budget.
Public education, parks and recreation, and some state agencies seen by the governor as redundant are among the programs on the chopping block. Those cuts will be covered by a mix of increasing efficiency, adding user fees for some services, borrowing from other state funds, and eliminating vacant job positions.
One possible option not in Otter’s budget is raising taxes to prevent cuts. “It is not our place to impose an additional economic burden on the people of Idaho who already are struggling, or to put a damper our economic recovery,” Otter said in his budget address to lawmakers Monday.
The governor’s budget does call for spending almost all the money in Idaho’s rainy day funds. More than $100 million from two reserve funds, the Budget Stabilization Fund and Economic Recovery Reserve Fund, would be spent in the next budget.
Another $71 million, almost entirely from the Tobacco Millennium Fund, would cover Medicaid spending if a more generous federal matching rate for Medicaid runs out at the end of the year. The Millennium Fund is supposed to go to programs that prevent drug and alcohol abuse. Last month lawmakers said that using Millennium Fund dollars would be a last resort in budget negotiations.
“For all intents and purposes, we’ve spent all the rainy day funds,” said Wayne Hammon, Otter’s budget director.
A fourth rainy day fund, dedicated to public schools, was tapped for $49 million in September to prevent cuts to public schools. There’s still $22 million left in that fund, but Hammon said it can’t be touched because of changes to the education system likely to be passed by lawmakers this year.
In his budget address, Otter said public schools have to start dealing with cuts other agencies have felt for months. “This is not the course that any of us would prefer to follow,” Otter said. “It is unfortunate, but it is a temporary situation made necessary by our circumstances.”
Otter wants to cut $27 million from public schools in the current budget, which is the bulk of the $40 million in cuts he’s calling for in the next 6 months. Next year’s schools budget would also be lower than the original budget lawmakers passed last year.
Superintendent of Public Instruction Tom Luna said reducing school spending will be felt in classrooms. “If we’re going to make cuts, it is going to have an impact on student achievement,” Luna said. “We just have to minimize that impact”
Otter’s budget also calls for merging the Idaho Department of Parks and Recreation with the Department of Lands and cutting their combined budget by $4.6 million. Hammon said the governor’s long-term goal is to make state parks solely dependent on user fees. Park fees covered 69 percent of the department’s budget in the last fiscal year.
Seven smaller state agencies could also be phased out of the budget under Otter’s plan. Those agencies—the Hispanic Commission, the Independent Living Council, Idaho Public Television, the Human Rights Commission, the Developmental Disabilities Council, the Deaf and Hard of Hearing Council, and the Digital Learning –would need to find money from somewhere else, such as fundraising. Those groups receive about 25 percent less funding in Otter’s proposed budget. Removing them from the state budget could save $2.4 million over the next four years, according to Otter’s budget staff.
Otter’s budget now heads to the Legislature. The Joint Finance-Appropriations Committee, made up of 10 senators and 10 representatives, will hold hearings and set the next state budget. House and Senate leaders say final votes on the budget could come by the end of March.
The $2.4 billion budget Otter is sending to lawmakers is slightly below the revenue forecasts that Idaho state economist Mike Ferguson expects to have on hand during the next 18 months. Ferguson is expecting the Idaho government to grow by 3.57 percent in the next fiscal year, which starts in July. Otter’s “no growth” budget takes a more cautious stance, projecting zero growth. The difference between those expectations is $83.4 million.
Hammon said if the economy does grow, the state could give out that added money. “It’s easier to give money than it is to take it away,” Hammon said. “It’s better if we build a lower baseline and add to it.”

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