Otter: Plan for 20 percent cuts in federal money

BOISE (AP) — Idaho Gov. Butch Otter has told agency chiefs to start planning for possible reductions in federal aid and come up with a plan in dealing with having reduced budgets.

"I've asked them to factor in a 20 percent cut in their federal funds and then come back to me with an action plan on what we're gonna have to do," Otter said in a speech last week to the Idaho Association of Commerce and Industry.

Federal aid supports more than one-third of state spending.

A possible $1.2 trillion in automatic, across-the-board budget cuts in domestic and military spending could be triggered under the Budget Control Act over the next 10 years. The cuts, known in Congress-speak as "sequestration," are due to start in January because a special panel failed to reach a deal last summer to reduce the deficit.

"I want us to be ready because there is a lot of importance to those federal funds," Otter said in the speech, the Idaho Statesman reported (http://bit.ly/KuBamj ) in a story published Sunday. "They do a lot of great things. But those things are going to have to be prioritized because I can't fathom, nor would I ask the Legislature to replace, all of those federal funds that are not going to be coming to Idaho."

Sen. Mike Crapo, R-Idaho, said it's unclear what will happen after the November election, but Otter was doing the right thing.

"I think it's very wise advance planning," Crapo said. "If Congress acts prudently, cuts to the level of 20 percent probably won't happen. If Congress doesn't act prudently, we could see a huge economic collapse. So, it's hard to know."

Lt. Gov. Brad Little suggested the 20 percent number, though he thinks it's likely Congress will strike a deal, putting the cuts closer to 10 percent.

"If you did 20 percent, you'd have so much stress on the economy that it would slow the economy and make the numbers even worse," Little said. "We don't want to have a gun pointed at our heads like some other states where you turn a bunch of prisoners out, go to four-day-a-week schools and close all the parks. We can do this if we're smart about it."

Wayne Hammon, Otter's budget chief, has asked state agencies to inventory all federal grants by Aug. 1.

"When we receive this information, we will have it ready should cuts come from (Washington) D.C.," he said. "Until then, the information will be kept at the ready and updated as conditions change. But I want to stress — the governor has not ordered any cut."

Various state agencies have been making plans for possible cuts, including Department of Environmental Quality Director Curt Fransen.

"At some point, these long projected federal cuts might come true," Fransen said. "I look at it as a planning exercise."

The agency gets about three-fifths of its budget from the federal government.