Idaho deficit could balloon up to $185M

Idaho legislators might be facing a more extreme budget situation than expected.

By 2012 the state’s deficit could reach $185 million, according to House Assistant Majority Leader Scott Bedke, rather than the $35 million Gov. Butch Otter announced earlier this month.

It isn’t too surprising, said Sen. Steve Vick, R-Dalton Gardens.

“We were told earlier that there was going to be a $200 or $300 million shortfall,” Vick said on Thursday. “I guess I was always under the assumption that that ($35 million) was an optimistic number.”

The larger gap naturally means lawmakers will be forced to make more cuts, Vick said.

He pointed out that the Health and Welfare and Education departments comprise roughly 80 percent of the budget, and will probably take the most hits.

“I think some hard choices need to be made,” Vick said.

As a member of the Health and Welfare Committee, he anticipated reductions to Medicaid.

“I don’t think that we can do what we need to do without affecting Medicaid,” he said.

The staggering deficit difference is due to multiple reasons.

It may cost as much as $70 million over two years to conform Idaho’s state tax code to federal rules.

Also, sales tax rebates for alternative energy projects could cost nearly $50 million.

And the extra $33 million in tax revenue Otter hoped to bring in above the current forecast isn’t looking so certain, after all.

Rep. Marge Chadderdon, R-Coeur d’Alene, said cuts will have to be broad to meet the constitutional requirement for a balanced budget.

“It jolts us all,” Chadderdon said. “I don’t think there’s any (extra) pockets of money.”

A member of the Education Committee, Chadderdon said all school districts will have to participate in discussing possible cuts.

It will be painful, she predicted. She has already received numerous e-mails from parents upset about recent reform proposals like expanding classroom sizes, she said.

“Some of the comments were, ‘What are you thinking?’” she said. “But I’m thinking we’re also going to face that whether we like it or not.”

Sen. Jim Hammond, R-Post Falls, said he would still like to see another month’s worth of revenue before making any final decisions on budget projections.

“Either way, it’s going to continue to be a real challenge,” Hammond said.

He also pointed to Health and Welfare and Education as the most obvious for the chopping block. He expected that would be reflected today when the Joint Finance-Appropriations Committee holds Health and Welfare hearings.

Tax increases aren’t a likely possibility, Hammond added.

“Most of us feel that really isn’t an option, just because the economy hasn’t recovered well enough to raise taxes,” he said. “What it would do is discourage employers from further efforts to expand their businesses and create more jobs.”

Sen. John Goedde, JFAC member, said he doesn’t want to see any more cuts to Health and Welfare after making so many last year.

“There are proponents of every one of these programs, and those people will face cuts in services,” Goedde said.

Trimming the corrections department might be a possibility, he said, like shortening sentences for certain crimes.

“The general public doesn’t tend to like that very much,” Goedde said.

Even with the hefty deficit, Hammond said, things could be worse.

“Everything’s relative,” he said. “Because we’ve been so conservative, we’re still in a much stronger position than most of our sister states.”