Idaho sets budget target

BOISE - Lawmakers plan to write a state budget that will require nearly $92 million in cuts to Idaho agencies next year.

While the budget scenario is worse than what Gov. Butch Otter predicted in January when estimating a $35 million deficit for the next fiscal year, the revenue outlook is better than the $185 million shortfall lawmakers feared roughly two weeks ago.

Republicans on the Joint Finance-Appropriations Committee voted 15-4 to set a spending target Friday based on $2.43 billion in tax revenue. That's the forecast Idaho's GOP governor used when crafting his budget recommendation based on 3 percent growth in revenue.

The four Democrats on the budget committee rejected that forecast, which is significantly below the 6.9 percent growth rate favored by state economists, as too pessimistic.

Sen. Dean Cameron co-chairs the panel and said the lower budget target represents a responsible approach because state lawmakers don't have the benefit of knowing how tax returns will be in April, by far the state's largest revenue month.

"I think it's intended to be cautious," said Cameron, R-Rupert. "We're not necessarily saying the economy will be worse, but we are budgeting to a 3 percent level because that is the more, I will say, responsible and cautious approach. "

For the past several weeks, state lawmakers have wrestled with an ever-changing budget deficit.

When the session kicked off in early January, Otter spoke of a $35 million shortfall that would have been painful but manageable. By the end of the month, there was talk of a $185 million shortfall as the state was hit with unexpected news like potential rebates for wind farms.

As a result, the budget writing committee warned public schools and Medicaid to brace themselves for deep cuts.

But earlier this week, the State Tax Commission retracted a dire report that sales tax rebates for wind energy developments would take an unexpected $47 million bite out of Idaho tax revenue over the next two fiscal years. This news, coupled with legislation that substantially mitigated the cost of federal tax conformity, leaves the deficit at an estimated $92 million.

And that number that could still drop, should Idaho have better-than-expected tax returns during the remaining months of this fiscal year.

Sen. Nicole LeFavour, D-Boise, argued that it didn't make sense to budget with the lower revenue projection for next year when Idaho's tax revenue, as of the end of January, is running slightly ahead of lowered projections for the current fiscal year.

"I find that really pessimistic, and I find it pretty low compared to what seems like a reasonable expectation for our economic recovery," said LeFavour, who complained lawmakers were leaving money on the table while setting the stage for deep cuts to programs like Medicaid.

Republican Rep. Fred Wood, of Burley, countered that the appropriations committee was simply "splitting up the pie" that had been handed to them.

"Let's get on with the job we're here to do," Wood said. "It's a very difficult year. We're all going to come out of here with frayed nerves because of the amount of budgetary cuts that we have to make in every single department, so let's just get on with it."