‘Doom prevails over gloom’ as Idaho lawmakers set pessimistic tax revenue recommendations

‘Doom over gloom’ as Idaho lawmakers set targets

BOISE, Idaho — An Idaho legislative committee voted to recommend a budget package based on a tax revenue forecast that was $70 million less than the one favored by Gov. C.L. “Butch” Otter.

The GOP-dominated Economic Outlook and Revenue Assessment Committee’s recommendation on Wednesday would set a spending package based on just $2.28 billion in tax revenue for the fiscal year ending June 30. For 2011, the 18-member forecasting panel also recommended a revenue target of $2.29 billion, about $60 million less than Otter’s recommendation.

Agencies like public education already face the prospect of losing $28 million this year under Otter’s plan. If the budget writers in the Joint Finance-Appropriations Committee adopt the panel’s dour recommendation, it would be forced to slash spending by another $110 million this year, a figure that could only be mitigated by using reserves now slated to be drawn down in 2011.

“There’s clearly a lot of pessimism,” said Mike Ferguson, Otter’s chief economist, whose forecasts were dismissed as overly optimistic. “This is going to make for some very tough decisions.”

December revenue collections came in about $12 million behind estimates that have been revised downward in the 18 months since Otter ordered the first in a series of painful holdbacks that cut the state budget by a fifth.

In the worst economy in 40 years, Sen. Russ Fulcher, a Meridian Republican on the forecasting panel, said he had no other choice but to prepare for a worst-case scenario.

“I hope that’s wrong,” Fulcher said of the panel’s 2010 and 2011 revenue forecasts. “But I can see the numbers. I know what happened in December. I don’t want to fall prey to having to come back and do this again.”

Sen. Dean Cameron, the Republican co-chair of the budget-writing committee, said he won’t set a final revenue figure until February. By then, he’ll have the benefit of seeing January tax collections, which he hopes will show improvement.

“I said to them, ‘Guys, give me your best shot, then we’ll look at January,’” Cameron said.

Democrats on the forecasting committee, as well as a single Republican, Sen. John Goedde of Coeur d’Alene, voted against Fulcher’s recommendation on grounds it discounted signs of an economic resurgence that could prop up tax revenue sooner than pessimists are willing to accept.

“Doom prevailed over gloom,” said Rep. Bill Killen, D-Boise.

But committee members, who voted 13-5 in favor of the recommendation, bought into the grim reality that recovery of Idaho’s economy won’t quickly produce the jobs necessary to jump-start tax revenue. Unemployment is now at 9 percent.

“Picking a bottom seems to be presumptuous,” said Scott Bedke, R-Oakley, the House Assistant Majority Leader and a committee member.