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Steps to balance current state budget could tilt the next budget

Steps to balance current state budget could tilt the next budget

Idaho Freedom Foundation staff
February 19, 2010
Idaho Freedom Foundation staff
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February 19, 2010

A panel of lawmakers approved a plan Friday to restore balance to the current state budget, and some of those steps will have ramifications for the next budget year, which begins July 1. The Joint Finance-Appropriations Committee (JFAC) set the final spending plan for the current, fiscal year 2010 budget.

“We had to balance 2010 before we could even start balancing (the next budget, for fiscal year) 2011,” said Sen. Dean Cameron, R-Rupert, one of the co-chairs of JFAC. “We don’t have to redo the existing budget in normal years. This year obviously we had to because the revenue had fallen so severely.” When lawmakers first put together the budget last year, they were expecting $2.53 billion in tax revenues. That number has now gone down to $2.28 billion.

“I am pleased that a workable solution has been found for Fiscal Year 2010,” Gov. Butch Otter said in a news release. “The JFAC plan is an appropriate response to the latest economic news.”

Democrats on JFAC voted against the reductions to state agencies that total at least 7 percent. “There are certain assumptions and approaches to problem solving that are difficult for me to embrace,” said Rep. Shirley Ringo, D-Moscow.

“I do see a level of job loss that really we honestly cannot restore,” said Sen. Nicole LeFavour, D-Boise. "We’re gambling on some (revenue) numbers.” Democrats had opposed the lower revenue forecast JFAC approved Feb. 12.

The balanced budget includes spending reductions for most state agencies, but fully funding public schools for the rest of the school year. Lawmakers found $86 million for schools, which will now likely see a comparable reduction in the next budget. “The education of our kids is our top priority,” Cameron said.

Superintendent of Public Instruction Tom Luna said all the stakeholders in education called for shifting future money for schools to the current year. “It’s helpful because it’s very difficult to make cuts mid-year,” Luna said. “Everybody needs to understand that it makes cuts next year that much deeper.” He said the state spending reduction for education could reach $200 million in the next budget.

Cameron said JFAC’s decision for the education budget could make or break budget talks. “It’s the ultimate test case,” he said. “We don’t want to go through and set all these budgets (for other agencies) and then set public schools’ budget and have it fail on the Senate floor or the House floor.” JFAC will set the education budget on March 1.

JFAC took some first steps on the 2011 budget in its efforts to balance the current 2010 budget. Lawmakers approved spending down some of the reserves in a state health insurance fund. That fund currently has $101 million. The plan would give state agencies two "premium holidays," in which they wouldn’t have to pay into the insurance reserve fund. The move could save $14 million in general funds in the next budget. State employees would also get two premium holidays. “We feel like it’s an appropriate step, given the circumstances we have,” Cameron said.

JFAC also rejected the governor’s recommendation of increasing the cost of health insurance by 10 percent in the next budget, which could save $9.7 million. If that increase isn’t funded, it’s unclear what changes would be made to state employees’ health insurance.

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