For Idaho chief, budget cuts will continue to be key
Public education may take big hit

By JOHN MILLER
Associated Press
Tuesday, January 13, 2009 10:07 AM PST

Gov. C.L. ‘Butch’ Otter outlines his proposed budget cuts during his State of the State speech Monday at Boise State University in Boise. During his speech, he outlined his plan to raise $174 million in new money for highway projects.

BOISE — State public education programs are among the biggest targets of $217 million in proposed budget cuts Gov. C.L. ‘‘Butch’’ Otter outlined Monday during his State of the State speech, where he called for ‘‘frugality and common sense’’ as well as compassion.

Otter recommends that Idaho spend about $2.74 billion in fiscal year 2010, starting next July, a 7.3 percent reduction from the original fiscal 2009 appropriation of roughly $2.96 billion. Otter has already cut some $130 million from current year spending.

During his speech, he also outlined his plan to raise $174 million annually in new money for highway projects by 2014, including increasing the state gas tax to 35 cents a gallon from 25 cents and raising vehicle registration fees.

Minority Democratic lawmakers said Otter’s transportation focus while cutting budgets ‘‘puts potholes before people.’’

Idaho’s economy has been hurt as home sales slipped 50 percent in two years and companies, including Micron Technology Inc., the state’s biggest private employer, cut thousands of jobs.  After last month’s unemployment rose to 6.6 percent, the highest in more than 20 years, economists expect tax revenue in the current fiscal year to fall 9.5 percent to $2.63 billion. Though state economist Mike Ferguson predicts a modest 1 percent revenue increase in 2010 — Idaho hasn’t experienced two years of revenue declines since at least 1971 — the economic forecast remains relatively bleak and requires government to pare back many services, Otter said.

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‘‘The question that you and I must honestly answer on every occasion is whether meeting those real needs falls within the sphere of the necessary and proper role of taxpayer-funded government services,’’ he told more than 100 state lawmakers, family members, lobbyists and others. At a news conference following the speech, he declined to give specifics about where agencies would make their cuts.

Democrats who confronted Otter after his speech said they couldn’t support tax increases for roads while schools, the Department of Health and Welfare, and other agencies were paring back staff and programs. Around 100 workers could be cut statewide, according to Otter’s plan.

‘‘We won’t prioritize people over potholes,’’ said Sen. Elliot Werk, D-Boise.

Rep. James Ruchti, D-Pocatello, said the minority party — Democrats make up just a quarter of the 105-person Legislature — favors using more of the roughly $330 million in four economic reserve funds set aside by legislators in previous years to fill budget holes, rather than deeply cutting services.

‘‘We feel like we need to front load more of the’’ reserve funds, Ruchti told Otter during a brief exchange.

Instead, Otter has proposed injecting only $75 million in reserves into the general fund.

By holding on to $253 million, the Republican governor aims to make sure the state has rainy day money, should an economic recovery take longer.

Though he used some $60 million from an education reserve fund to shield education from budget holdbacks during the current year, Otter won’t use the remaining $53 million and told teachers he expects them to accept less during contract talks slated for upcoming months.

His plan calls for cutting $75.8 million from Idaho’s share of public education funding, which would slip to $1.34 billion. Superintendent of Public Instruction Tom Luna said he’s told public school administrators and teachers that they should expect a $60 million to $80 million cut, compared to last year.

‘‘We will prioritize teacher-student hours,’’ Luna told The Associated Press. ‘‘We want to preserve those. That’s where teaching happens.’’

Rep. Bob Nonini, R-Coeur d’Alene and chairman of the House Education Committee, said Otter’s planned education budget cuts appeared to be less than what some agencies face, which he considered positive.

Under Otter’s plan, the Department of Agriculture budget will fall 30 percent, or $5.3 million; colleges and universities stand to lose about $28 million, or 10 percent; the Department of Health and Welfare would be out $44 million, or 5.5 percent; and the Department of Correction, which oversees Idaho’s 7,300 inmates, would give up more than $20 million, or nearly 12 percent of its budget from a year ago.

‘‘It sounds like the governor is working with a scalpel and not a hatchet,’’ Nonini said.

After Otter’s transportation funding proposal was spurned in 2008 by legislators who said it was too costly, he sent state Transportation Department Director Pamela Lowe on summer roadshows throughout the state to make the case that aging highways and bridges were in dire need of more cash.

‘‘We are shirking our responsibility and ignoring the facts if we don’t step up to our duty to maintain what taxpayers already have built,’’ Otter said.

Though his plan to raise an additional $174 million annually by 2014 falls short of the $240 million figure he insists Idaho highways need annually, Otter said the dour economy made it tough for him to ask for the full amount.

Boosting Idaho’s current 25-cent-per-gallon fuel tax by 2 cents a year over five years to 35 cents would raise $17.6 million in the first year, and $88 million annually after five. Meanwhile, his registration fee increase would generate $15 million annually in 2010, with the phased-in plan due to bring in about $51 million more after five years, he said.

Otter also hopes to eliminate the tax exemption for ethanol, slap rental cars with a 6 percent tax and shift $16 million in fuel tax revenue from the Idaho State Police to highways. Sen. John McGee, R-Caldwell and the Senate Transportation Committee chairman, said the plan makes sense.

‘‘It’s a responsible plan considering the current economic conditions,’’ McGee told The AP. ‘‘It fixes Idaho’s infrastructure and provides jobs at the same time.’’