Road funding among Otter's top priorities

COEUR d’ALENE — When Idaho Gov. Butch Otter first took office as the lieutenant governor in 1987, the economy was bleak.

Things are better today, but making government run efficiently with inflation running rampant will require changes in the way things are done, Otter told about 80 who attended the Concerned Businesses of North Idaho annual meeting Tuesday at The Coeur d’Alene Resort.

“The first thing we need to do is make sure money is spent in the right places,” he said.

One way he plans to accomplish that is by reviewing the budgets of each agency in the state to see where savings can be found.

“Programs that seemed like a good idea in the ’60s, ’70s and ’80s, and into the ’90s may not still be relevant,” Otter said.

That means going to a zero-based budget, with all departments starting from scratch rather than automatically carrying over line items from year to year.

“We will see some blanks in budget requests,” Otter said. His goal is to have every agency thoroughly reviewed by 2012.

He said he does not want to see a repeat of the troubles of 21 ago, when Idaho’s total budget was $600 million, compared to $3 billion today, and ran a $17 million deficit. Double-digit unemployment, interest rates near 20 percent, and most frightening, Otter said, the departure of 5,000 families from the state between 1985 and 1987 because they saw no economic future, led to the formation of the Idaho Department of Commerce.

The goal was to find ways to improve the climate for business, rather than putting obstacles in its path.

“We told them what they should or shouldn’t do, what they could or couldn’t do,” Otter said.

Today, the state’s economy totals $51.5 billion, in spite of diminishing industries such as timber. Unemployment of 4.1 percent is what many states would consider full employment, and mining is making a resurgence.

“The economy of the state is in pretty good shape,” Otter said.

However, he said, “Don’t let 4.1 percent fool you. There is probably in excess of 30 percent who are under-employed.”

A lot of them could be doing twice the job with improvements in workforce training, beginning in middle school and continuing into high school with dual enrollment programs that will allow high school graduates to simultaneously earn an associate’s degree.

“That’s the cheapest education we can deliver,” Otter said.

Recruiting business to the state without that focus will be nearly impossible, he said.

“They tell us, ‘We can’t hire the product you’re turning out,’” he said.

One of the most daunting challenges, but also among the most urgent, is upgrading the state’s 67,000-mile transportation infrastructure, especially in the face of escalating prices of steel, cement and asphalt.

Prioritizing which roads will be improved starts with the human factor, Otter said.

“No. 1, where are we killing people,” he said.

Otter wants user fees to pay the cost of highway construction and maintenance.

Last year’s proposal for an increase to $150 for vehicle registration fees “didn’t get a very soft landing” in the Legislature, he said.

Instead, an increase in gas taxes and administrative fees would mean those who use the roads most would pay the most.

Rep. Frank Henderson, R-Post Falls agreed with that idea, even with drivers already hurting with gas prices in the $4 range.

“Absolutely,” he said. “A one-cent increase in the gas tax would raise $9 million to start.”

Sen. Mike Jorgenson, R-Hayden Lake, also said the zero-based budget would be a way to replace the use-it-or-lose-it mindset of state agencies, and should have been done long before now.

“We have got to wipe that out,” he said.

Concerned Business member Dean Haagenson also agreed user fees are a more fair way to allocate the costs of highways.

Addressing the need for more jail space, Otter said the counties should look at partnering with the state to build facilities that could run more efficiently.

Incoming CBNI president Ronda Mitchell, vice president of commercial lending at Bankcda, said she likes that idea, because increased taxes hurt not only business but homeowners.

Todd Tondee, Kootenai County commissioner, said that will probably not be an attractive option if the proposed $145 million jail expansion is rejected by voters in November, largely because of the paperwork costs of more than 8,000 jailed each year.

“Processing is what kills us,” he said.