Battening down for a long siege on the fiscal 2009 Idaho budget, Joint Finance-Appropriations Committee (JFAC) Co-Chair Senator Dean Cameron (R-Rupert) asked agencies to not spend any more of their capital expenditures budget, or other non-operating expenses budget, until further notice.
In addition, depending on how the January revenue numbers come out, the Legislature may have to issue further holdbacks, on top of the ones Governor C.L. “Butch” Otter already issued, which JFAC ratified earlier this week, Cameron warned.
Agency budgets include several types of allocations. Ongoing allocations happen every year and pay for items such as ongoing salaries and agency programs. Capital expenditures buy large equipment such as vehicles and computers. One-time allocations are given for a single year for a specific purpose, and are most often paid for out of excess funding for the previous year. JFAC is asking agencies to hold off on spending money from these latter two types of allocations.
“All agencies need to act within their operating funds as frugally as possible to obtain as many of those funds as possible,” said James Hammond (R-Coeur d’Alene). “Look in every nook and cranny to make the 10 budget work,” such as by avoiding hiring for positions they don’t absolutely need, purchases they don’t absolutely need, trips, and other travel. “It’s the only way we’re going to make it.”
Part of the committee’s concern is due to hearing the report this morning from the Economic Outlook and Revenue Assessment Committee, which hears testimony from economists and representatives from various industries about how they predict the upcoming year will go. That committee — which shares a number of members with JFAC — issued an even more somber recommendation than did Otter at his State of the State speech on Monday.
While Otter laid out a budget for 2010 that was 7% lower than that for 2009, the committee is recommending a revenue projection that is even $100 million lower than that.
JFAC is not held to the committee’s recommendation, Cameron said, noting that in the previous year, JFAC had used a lower number than the committee recommended — which had ended up serving the state well during the 2008 economic downtown. However, whatever number the committee decides on for a final revenue projection, JFAC and the Legislature must then stay below that number in setting the budget for fiscal year 2010, which begins July 1, because Idaho is required by its Constitution to have a balanced budget.
That is why JFAC is asking agencies to hold off on spending money — to help retain whatever 2009 budget it can, in case the anticipated revenues for the remainder of fiscal year 2009 are below the projections made last year.
However, JFAC and the agencies are also on a tightrope for not creating more expensive problems for the state later. For example, cutting preventive health care could result in more expensive health care costs later, and cutting economic development funding could result in fewer jobs in the long run. “It is incumbent on us, as the ones who control our ability to balance how we raise revenues, to keep in mind that some of what we’ve already done for 09 and 10 is on the verge of causing problems,” said Senator Nicole LeFavour (D-Boise). In some departments, such as Corrections, “we’ll see actual growth in costs for the taxpayers if we’re not careful.”