Budget will rule 2011 session

BOISE - The struggle to craft Idaho's budget amid a drastic tax revenue shortfall will yet again set the 2011 Legislature's tone.

The Senate's new Republican leader, Brent Hill, says just three issues matter: Money, money and money.

Consequences for public education, social services and Idaho's public colleges and universities should dominate headlines starting Monday, when Gov. Butch Otter gives his State of the State speech starting at 1 p.m.

Otter said he's seen encouraging but moderate tax revenue growth - Idaho is more than $30 million ahead of downgraded projections - though the ranks of some 70,000 unemployed are continuing to dent an economic rebound.

Otter, a rancher and rodeo rider starting his second term, promised to stick with the horse he rode to the Capitol back in 2007: less government, austerity and cuts.

"What Idaho has done over the last couple of years has really become very fashionable," he told reporters at the Associated Press Legislative Preview last week. "That is cutting budgets, leaning down government, looking for more efficiencies, looking for combinations, relocating, whatever they could do to cut costs. I think we can expect that to continue."

Idaho's tax revenue has slipped to only about $2.3 billion, from some $2.9 billion just three years ago.

The potato state, with its projected budget gap of as much as $340 million, depending on revenue growth in the year starting July 1st, is hardly alone: The National Conference of State Legislatures projects waning federal stimulus funds and slow revenue growth will leave a gap of $82.1 billion in all 50 states in fiscal year 2012.

"If you've got a price tag, we've told our legislators, please leave it in your drawer until a better time," Hill, R-Rexburg, said. "We're probably facing the worst year coming up that I've ever seen."

However inevitable the budget knife may be, Democrats warn of consequences: Slashing Medicaid will mean hospitals will face more patients without coverage; cutting drug courts and mental health programs will mean more violators in prison.

"I'm concerned we act responsibly and for the greatest good for the most people," said House Minority Leader John Rusche, D-Lewiston. "But I expect we'll be borrowing from the future."

Despite the focus on the budget, there will be no shortage of sideshow issues for lawmakers to fret, fight and fume about between now and April.

After the relisting of Idaho's wolves under federal protections, expect at least a flurry of resolutions taking on the wild beasts. Anti-bullying measures, Arizona-style immigration bills, another shot at banning texting-while-driving and a long-thwarted effort to join other states that want to tax Internet sales are also likely suspects for debate.

And there's a plan in the works to increase cigarette taxes, now 57 cents a pack, by $1.25.

Rep. Dennis Lake, R-Blackfoot and head of the House's taxation committee, says he'll sponsor the bill. He says it's not so much to raise revenue - it will kick off an additional $50 million to cover tobacco-related Medicaid costs, if passed - but to discourage price-conscious young smokers from lighting up.

"You're going to save lives and bring the cost of Medicaid closer to the ... $83 million in tobacco-related expenditures," said Heidi Low, head of a coalition of health groups pushing the plan.

Given the shift to an even-more-conservative Legislature in November - for instance, already overwhelmed Democrats lost another five state House seats - there's certainly no guarantee Idaho lawmakers will sign on to a hike.

They're already getting pressure from groups including Americans for Tax Reform not to.

The Washington, D.C.-based group sent out a press release last year - distributed by an Idaho tobacco-company lobbyist - urging them to just vote no.

With Friday's resignation of Idaho State Tax Commission Chairman Royce Chigbrow - amid allegations that he intervened for family and friends on tax cases - there will be added momentum to revamp the agency. Some lawmakers want a system where a Department of Revenue is separate from the appeals board that hears tax protests.

Currently, four politically appointed commissioners oversee employees and stand judge on appeals.

"What Idaho needs is a system similar to Montana or California, where there's a paid professional, nonpartisan person at the top of the organization subject to possible political scrutiny," said Robert Huntley, a Boise attorney who has sued the Tax Commission alleging commissioners for years have improperly settled cases with politically connected taxpayers.

Public employee groups have also been girding themselves for a fight to preserve their existing pension plan.

If they could, some lawmakers would follow many private-sector companies in shifting to a system modeled after less-generous 401(k)-style plans that could weather market downturns without a feared taxpayer bailout. Otter hardly assuaged union concerns last week, saying he was at least open to the idea.

"It bears looking into," Otter said.