State budget woes could prompt special session in Boise

BOISE (AP) - The Senate's top budget writer said Thursday that Idaho's fragile budget plan for the final four months of the fiscal year could be putting the state on track for a special session before July, if tax revenue drops off a cliff.

The Joint Finance-Appropriations Committee voted 19-0 to give Gov. Butch Otter access to reserve funds totaling about $107 million - just in case the worst-case scenario materializes.

Even so, Sen. Dean Cameron, chairman of the budget writing committee, thinks the Republican governor might have to call a special session should he be forced to use even half that amount to shore up the $2.35 billion fiscal year 2010 spending plan that ends June 30.

Even as the 2010 Legislature enters its final days - it will likely end early next week - lawmakers are on notice that an economy that's teetering on the brink could force them to return to Boise if tax returns collapse in April, always the month when most revenue comes in. Cameron, R-Rupert, declined to say that a special session would mean a tax increase, but it's clear that such a move would likely be part of the discussions.

"If you're $100 million upside down, you can't issue a 4 percent holdback on everybody," he said. "If we get more than $100 million down, he definitely has to ask us back. He may want to even if we get to $50 million."

Idaho's last special session was in 2006, in much happier budget times: Lawmakers cut property taxes and raised the sales tax to make up for losses.

Here's Idaho's dilemma now: If tax revenue over the next four months falls a total of more than $69 million short of what the state expected to take in, it would put Idaho's already bare-bones 2010 budget into a deficit.

And since December, state tax revenue has already missed targets by a total of $46 million.

That leaves just a $23 million cushion before the point where Otter would have to tap into the $107 million approved on Thursday - money that's sitting in the budget stabilization fund, the economic recovery reserve fund and the permanent building fund, which usually goes toward maintenance.

But since almost all of that reserve money is already earmarked to shore up the 2011 budget starting July 1, Otter doesn't have as much flexibility as it looks like on paper.

"We are in very precarious times," Cameron said.