The state’s budget has seen better days.
That’s one story of the numbers that Wayne Hammon, Gov. C.L. “Butch” Otter’s budget chief, showed in a presentation on Wednesday at the Twin Falls Rotary Club’s luncheon at the Turf Club.
The figures also told a tale of cautious optimism that the economy and the state’s budget have hit bottom, without the need for any more cuts to the budget.
“We’ve taken a slow, cautious conservative approach,” Hammon said. “… I’m cautiously optimistic that we’re going to be OK. I’m cautiously optimistic that we’re done cutting things.”
He said the state’s approach of gradual holdbacks dating back to September 2008 has helped avoid drastic cuts, adding that Idaho’s approach has helped the state’s budget fare better in the crisis than other states like Oregon.
“We’ve reduced the size of state government back to what it was almost five years ago,” Hammon said in an interview. “And so to think that that’s going to come back overnight is unrealistic, but over the next three to four to five years we should be able to return service levels to where they were before.”
For fiscal year 2010, which ended on June 30, the state’s revenues were $2.26 billion, less than forecasts that ranged from $2.65 billion in December 2008 to $2.34 billion in January.
Hammon also defended the state’s approach toward hiring additional auditors to collect unpaid taxes through the State Tax Commission, which has drawn some criticism for not being aggressive enough. He said it’s important to ensure that there will be a return on the additional investment.
Potential funding increases for the commission are reviewed each quarter, based on the amount of additional revenues being collected, Hammon said.
While there’s $255 million in uncollected taxes, only about $67 million of it is collectable, Hammon said, noting bankrupt corporations and inmates as examples of difficult or impossible cases.
Uncertainties still remain in Idaho’s budgetary future.
The federal match for Medicaid increased from 70 percent to 80 percent due to the American Recovery and Reinvestment Act. At the end of December, it’s due to return to 70 percent, unless Congress extends the higher match.
If Congress doesn’t, that will leave a $71 million hole in this fiscal year’s budget that the state will have to plug with its remaining rainy-day funds, Hammon said.
State lawmakers said that while recovery could be ahead, the coming months remain critical.
“The real good news here is we think we’ve hit bottom,” said Sen. Bert Brackett, R-Rogerson, a member of the Joint Finance-Appropriations Committee.
Rep. Stephen Hartgen, R-Twin Falls, agreed that it will likely take years for spending to return to pre-recession levels.
“We should be very cautious,” he said.
Ben Botkin may be reached at bbotkin@magicvalley.com or 735-3238.
