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Tax and spend: Otter grows government faster than economy, swells education spending

Tax and spend: Otter grows government faster than economy, swells education spending

Dustin Hurst
January 12, 2015
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January 12, 2015

As a political principle, Gov. Butch Otter pledges not to grow government faster than the economy.

He achieves that goal in his new budget, at least at first glance. A second and deeper look, though, reveals more spending than the governor wants to reveal.

First, Otter set the economic growth benchmark at 5.5 percent, the rate at which his analysts believe the economy will expand next year.

In his budget documents, handed out to reporters Monday morning at a briefing, Otter’s staff touted a 5.2 percent hike in government spending for fiscal year 2016, which begins July 1, 2015, and runs the end of June 2016. Specifically, that’s $3.08 billion in total spending, up from last year’s $2.93 billion.

Achievement unlocked? Not so fast.

The governor’s 2016 budget hides nearly $40 million in spending, dubbing those items “fund transfers.” Otter is, more or less, transferring money from the general fund into dedicated accounts, including the state’s $6.2 million for the Permanent Building Fund, $400,000 for the Wolf Control Fund, and $10 million in grants for labor and commerce projects.

The governor also wants more than $33 million for state savings, which doesn’t count toward overall spending.

In all, the transfers, not including the savings elements, adds another $39 million to Otter’s spending request. That hikes the total spend for 2016 to $3.13 billion in state funds.

Achievement unlocked? Nope. In fact, Otter’s budget grows spending by a whopping 6.5 percent.

Still, that didn’t stop Otter from touting his fiscal thrift in his annual State of the State address, delivered Monday at the Capitol in Boise. “My total general fund budget request for the coming year represents a 5.2 percent increase,” the governor boasted behind the rostrum in the Idaho House of Representatives.

So where does it all go? First, Otter spends big on education. His budget provides $87 million in new spending for Idaho’s public schools, including $25.9 million for his career ladder initiative, $17.6 million for teacher development and $18 million in operational funds.

The governor also provides nearly $17 million in additional merit pay for state workers, $6.3 million in raises for school administrators and numerous other goodies.

For limited government types, there is at least one thing to like. The governor continues his reduction of Idaho’s top income tax brackets, bringing them down from 7.4 percent to 6.9 percent. That reduction means Idahoans will keep about $17.8 million in their own pockets next year if the governor comes through.

Even that’s in jeopardy, though. State Sen. Jeff Siddoway, R-Terreton, has promised no tax relief until lawmakers make whole the education budget -- whatever that means. Siddoway, chair of the Senate Local Government and Taxation Committee, wields enough power to follow through on the promise.

The governor’s budget and State of the State include other items free market advocates might detest. Otter called on lawmakers to prepare the state to tax the Internet, something he’s resisted in the past but seeks now to generate more revenue.

“Simply put, every dollar of sales tax from online purchases that goes uncollected is the better part of a dollar not going to support the necessary and proper roles of our state government -- especially meeting the education and infrastructure needs of our growing economy,” Otter said.

Otter also suggested lawmakers examine finding more money for roads and bridges, saying the time is right for the state to invest in infrastructure.

“I welcome fiscally responsible legislation that addresses steady, ongoing and sustainable transportation infrastructure in Idaho,” Otter said. He also rejected spending general fund dollars on roads, as that would put transportation in competition with education for money.

Idaho Freedom Foundation President Wayne Hoffman slammed the governor’s agenda. “The governor has now had multiple opportunities to advance free market principles and once again he has failed to do so,” Hoffman said. “The governor's agenda is more of the same -- lots of spending, reliance on government to solve problems and nothing that helps Idahoans get ahead and stay ahead.”

Lawmakers start their work tomorrow and will spend the next three months setting the budget. Legislative leaders have signaled support for more spending on education and roads.

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