News Story - Idaho State Journal

yranaivo@journalnet.com

IDAHO FALLS -- Gov. C.L. "Butch" Otter asked the Gem State for "perseverance" and teamwork as it weathers the nationwide financial crisis and deals with its own economic declines.

Otter addressed a City Club luncheon early Monday afternoon as part of a day-long visit through Idaho Falls. The governor embarked on a tour of the recently completed Center for Advanced Energy Studies earlier in the morning and later discussed economic challenges facing the Gem State.

Otter spoke on the state budget, growing Idaho's gross domestic product and the transportation funding shortfall. He also made remarks on the nation's financial crisis, medical education in the Gem State and maintaining proper treatment for the state's water resources.

The governor's visit came in light of last week's federal bailout as well as a statewide mandatory reduction in general fund spending, an upcoming overseas visit to Southeast Asia and a unresolved $240 million shortfall in Idaho's transportation budget.

Otter, who first addressed the state's spending reduction, said a 1 percent holdback for both agencies and institutions was necessary to avoid a possible budget deficit next year. He said the nation's economy last winter gave indications for lawmakers to plan for a possible budget shortfall in fiscal year 2009.

"Idaho is not immune to the economic downturn nationwide," Otter said. "That's why last month we had a 1 percent holdback. And I was impressed with the redirection of the decisions."

As part of his mandatory order, most of the state agencies reduced their spending budget by 1 percent and were told to reserve another 1.5 percent in case economic conditions worsened. State agencies and institutions will make temporary cuts early next year until the governor's office gives them the green light to resume normal spending.

Otter said he didn't mandate "major holdbacks" and was aware of concerns about dipping into the rainy day funds. The governor said the rainy day funds were set aside to cover major financial emergencies and that public schools were forced to use about $14 million from that fund.

"We're (also) not as bad off as many other states," Otter said, adding that California suffered larger budget shortfall projections.

Otter, though, said cutting back on spending is not the only way that the Gem State will be able to maintain a stable economy. He said one of his goals is to increase the state's income.

Otter spoke about Project 60, a plan that aims to grow the Gem State's gross domestic product from $51.5 billion to about $60 billion. The project will be highlighted next week during meetings with business executives in Hong Kong, Taiwan, Macau and Vietnam.

The governor said part of Project 60's goal is to attract foreign companies into opening up businesses in the Gem State, thereby increasing the number of out-of-state investment and Idaho jobs. Some of the project's intentions, he said, are already seen through two companies that are building a presence in Eastern Idaho.

Otter pointed to Areva Inc., and Hoku Scientific. Areva, a French energy company, opened a uranium deposit plant outside Idaho Falls earlier this year, and Hoku's materials division is building a polysilicon plant in Pocatello.

"It's the diversity in our economy that is the strength in our economy," Otter said. "The weak dollar has created a platform (from which the state can expand its foreign business). ... And we are seeking reverse investments from foreign markets."

But while Otter signaled for no major worries over the state's budget and expressed optimism in Project 60, he still reminded the public about the shortfall facing transportation funding.

The transportation budget faces a $240 million shortfall, which economists and lawmakers have mostly attributed to a stagnant fuel tax and declining federal dollars.

Otter listed transportation as a major issue for both himself and the Legislature because most of the budget is responsible for funding local governments and maintaining the state's roads.

He said one out of every five miles of highway is in poor condition while 60 percent of the state's 4,000 bridges are reaching their 50-year life span. Additionally, he said about $180 million of the needed $240 million is supposed to go toward road work and local governments.

"And I'm convinced that if we don't put a great deal of revenue into our transportation then the infrastructure will start falling apart," Otter said.

The governor told the public about this summer's transportation conference, which was part of his office's initiative to gather suggestions on alternative transportation funding. A number of suggestions were brought up and Otter said he supported a "user pay" system that would charge drivers a small fee per miles traveled.

The ideas have not been turned into proposals, but Otter said they provide a working plan for state lawmakers. And aside from ensuring safe roads, he said poor highway systems hurt the state's commerce.

"Idaho is a merchant state," he said. "Every plant that we have in this state is a merchant plant that is directly connected to our highway system. If you can't get it there, it won't be considered and you can't sell it."

Otter fielded some more questions about economic and environmental issues and closed out with a reminder for Idahoans to work together in facing both statewide and nationwide challenges.

"Let's roll these sleeves up and let's get to work. There's a reason why that (43rd) star shines the brightest," he said. "Sure they'll be some off-and-on times, but we won't overcome that unless we rely on each other."

By Yann Ranaivo

This document was originally published online on Tuesday, October 07, 2008

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