Democrats discuss budget shortfall
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Dec 4, 2009 Posted by Judy Ferro
Short-term tax increase is better than cutting vital state services - Idaho Statesman (op-ed) Dec. 3, 2009 BY JUDY BROWN AND REP. SHIRLEY RINGO
Abridged:
State revenues have not met levels fiscal year 2010. At the end of September, Gov. Butch Otter declared another budget holdback of 4 percent - almost $100 million.
Problems with respect to building a budget for fiscal year 2011:- Even with holdbacks and cuts, we may be $52 million short of paying fiscal year 2010 bills.
- Twenty-three school districts have declared financial emergencies; 15 districts and three charter schools are operating on four-day weeks. The budget request prepared by the State Department of Education would maintain current operations and pay for growth. Currently, it would take all public school rainy-day funds and stimulus money and $122 million of general fund money to pay for it.
- The National Center for Budget Policy already gives Idaho an F for affordability of public colleges and universities. A bare-bones budget for higher education would use the remainder of stimulus funds plus $18 million.
- Health and Welfare must function with $12 million less because of holdbacks. The enhanced federal matching rate for Medicaid is set to expire in January 2011. If it is not extended, the state would pay an additional $94 million in 2011.
- The Department of Correction is requesting
$20 million.
These approximations show a need for $224 million new money for fiscal 2011 (it will be more if the federal matching rate is reduced). We expect state revenues to grow, but perhaps not in time to meet this crisis. These sources are available: - $134 million in unspent reserve funds
- $14.1 million in unspent stimulus monies.
- (Another $80.8 million could be used from
the "Traditional Millennium Fund," but this
money is usually reserved for substance-abuse
treatment and related health
issues.)
Solutions and problems: - Eliminating some of the 120-odd tax exemptions cannot be done quickly
- Raising the sales tax would burden those who are employed or struggle with low-paying jobs.
- A modest 5 percent surcharge on state
income tax for those with taxable income
exceeding $50,000 would generate about $44
million per year. (A couple with two children
earning $76,000 per year and taking the
standard deduction would pay a surcharge of
$162 to help protect public schools and other
core services.)
Judy Brown is an economic consultant and past director of the Idaho Center on Budget and Tax Policy. Rep. Shirley Ringo, D-Moscow, represents District 6. The authors note that the views expressed here are their own and not those of a political party.