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State’s August budget update won’t get second opinion, as Dems requested

State’s August budget update won’t get second opinion, as Dems requested

Idaho Freedom Foundation staff
July 27, 2010

Idaho’s next state budget revenue projection, due out in August, won’t be formally reviewed by outside economists, despite a request from the top Democrat in the Idaho House of Representatives.  However, the state could set up a new council that could review a December projection.

House Minority John Rusche, D-Lewiston, publicly sent a letter asking Gov. Butch Otter to have outside economists at Idaho universities, the Idaho Tax Commission, and the Associated Taxpayers of Idaho review the August projection.

“I’m used to asking for a second opinion” Rusche, a retired physician, told IdahoReporter.com.  Rusche posted his request on the Idaho Democrats' website.

The governor’s budget chief, Wayne Hammon, sent Rusche an e-mail saying that the Department of Financial Management is looking into creating an Executive Economic Council, but that it won’t be ready for the August budget update.

“I think it is essential that the best and brightest economic minds be invited to participate and organizing the group in such short notice just isn’t practical,” Hammon said in the letter.  “The August revenue update is just a mid-year check on how we are doing.  The budget actually submitted to the Legislature for consideration is based upon the December update, giving it much more weight.”

Hammon said in the letter that the idea for the new council came from researching how governors in other states set their projections for how many tax dollars the state will collect.  The governor would appoint five economic experts with a range of backgrounds to the Executive Economic Council to evaluate revenue forecasts.

Rusche said he didn’t understand why other economists couldn’t review the August budget projection.  “I don’t know why it would have to wait,” Rusche said.  He recognized that creating a new executive council could take months, but that other economists are regularly updating their forecasts for Idaho.  “We’re not asking them to change the process or anything, just check outside the state government to see if other economists view it the same way.”

The August budget projection can affect state spending.  Last year’s August update preceded a September spending holdback for some state agencies by Otter.  Idaho state economist Mike Ferguson, who has been working on the projections for two decades, has said that he may have overestimated Idaho’s tax revenues for the next year.

The outside groups Rusche tabbed to review the forecast all provide their own tax revenue estimates to a panel of lawmakers that helps set what revenue number the state uses to balance its budget.  When that panel met in January, all three projected higher tax collections than Ferguson for the recently completed FY 2010 budget year, though the Tax Commission and Associated Taxpayers all projected lower collections for the next 12 months.

Rusche said he didn’t want the state to seek a second opinion in an effort to raise revenue projections, which could lead to a larger state budget.  “When things go good, nobody predicts how good they’re going to go, and when things go bad, nobody predicts how bad they’re going to go,” he said.  “We’re in a time of turbulence.”

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