News Story - Idaho State Journal

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BOISE -- Sen. Bob Geddes, R-Soda Springs, believes there will be a greater budget shortfall than what state economists projected earlier this fiscal year.

The Soda Springs lawmaker is part of the Revenue Projections and Economic Outlook Committee, a legislative panel that meets before every session to discuss revenue projections.

The committee, which will meet with statewide financial experts today and tomorrow to discuss the economy, is expected to draw up the state's revenue projections later this month.

Aside from lawmakers, the two meetings will involve representatives from the banking industry, university economists and stock brokers, among others.

Geddes, whose committee also includes Sen. Diane Bilyeu, D-Pocatello, said the state's two major revenue sources have worked in tandem to paint a bleak picture of the budget.

"Our state revenue almost exclusively comes from sales tax and corporate income tax. They are the two revenue generators," he said, adding that the recent holiday season generated fewer sales than usual. "Christmas shopping is done. And people are not spending because they are losing money, losing their jobs and getting their homes foreclosed because of credit card debt."

Rising unemployment did partly contribute to the state's nearly

6 percent budget shortfall this year. In October, the jobless rate rose to 5.4 percent, which was double the rate it was in the fall of 2007.

Geddes said taxpayers this year have been reluctant to spend because of the bad economy while others who are unemployed have been unable to spend.

"This is going to be a very tough budgeting session," he said.

However, agencies previously urged the state to begin dipping into the more than $200 million worth of rainy day funds. Agency directors believe the emergency funds will offset future budget cuts, and the call has gotten backing from some lawmakers.

Idaho State University, which has cut nearly $3 million in spending this year, previously called on the rainy day funds to offset future cuts.

"The president has said that and there is certainly a lot of logic as to why that makes sense," said James Fletcher, ISU's vice president of finance and administration. "If this isn't a rainy day, I don't know what is."

While ISU has already cut nearly $3 million, the university is reserving another $1.4 million in case the state orders another 2 percent holdback.

In total, the state ordered most agencies to cut their budgets by

4 percent this year. State universities and colleges made the second biggest cuts of all agencies at a combined $8.2 million.

"We're higher education. It's essential for higher economic growth and development," Fletcher said. "The future of Idaho and the country is dependent on the graduation of students. Education is an investment."

But Geddes said it is unlikely that agencies will receive a portion of the rainy day funds anytime soon. The lawmaker argued the funds are strictly for emergency purposes and only provide a short-term solution for a declining and unpredictable economy.

"We can go into the rainy day fund, but that fund is only a small fraction of what will be necessary," Geddes said. "Would you live off your savings account?"

Geddes said one way to generate more revenue is to raise taxes, but contends he wouldn't support the idea.

"The only alternative is to raise taxes, which is not going to happen I don't think," he said. "Or at least, I won't support it."

He said the state will most likely ask its agencies to consider a number of scenarios, which include cutting back on services and possibly laying off employees.

"The next alternative is how can we cut programs and trim budgets," Geddes said.

ISU initiated its spending cuts by slashing travel costs and increasing scrutiny on the hiring of new employees.

During previous meetings with faculty, ISU administrators asked the departments to submit more thorough reviews of their spending plans before drawing money out of the university's budget.

By Yann Ranaivo

This document was originally published online on Wednesday, January 07, 2009

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Reader Comments

The following are comments from the readers. In no way do they represent the view of our paper.

Paul wrote on Jan 7, 2009 11:47 AM:

" Is Geddes for real? What kind of logic is that? Unbelievable! If these quotes are correct then my question is how do these nuts keep getting elected? For each person who looses their state job the economy takes a hit and shrinks because they can't spend. This is not rocket science it's 101 Econ. Use the "raining day fund" and keep people employed. And yes in times like this people do live off their savings account. Sheesh! "

Sheryl Hill wrote on Jan 7, 2009 8:27 PM:

" According to Mr. Geddes, "Our state revenue almost exclusively comes from sales tax and corporate income tax. They are the two revenue generators." And yet, less than a month ago, the Idaho State Tax Commission cut 63 employees, many of whom were responsible for ensuring that state taxes owed were, in fact, collected. In other words, state employees whose work generates more money for the state than their wages and benefits cost the state, have been terminated. And in May of 2008, Stan Howland, an auditor for the State Tax Commission, presented substantial evidence to Governor Otter and state legislators that Idaho tax officials have systematically allowed corporations (particularly out-of-state corporations) to avoid paying millions of dollars in taxes by cutting deals when corporations appeal their tax bills.

If Senators Geddes and Bilyeu are serious about addressing state revenue shortfalls, they will recommend that a) Governor Otter reassess his across-the-board cuts in state agencies and reinstate essential services (such as tax collection), and b) demand that an independent and unbiased review of State Tax Commission practices be performed immediately, as recommended by Mr. Howland. The review by legislator Brent Hill, which essentially cleared the Tax Commission of making deals that cost Idaho substantial tax revenues, was neither independent nor unbiased. "

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