Gov. Butch Otter's blown-up budget empowers lawmakers

Dan Popkey
January 29, 2011
Idaho Statesman

Legislators and headline writers like saying a chief executive's budget is "Dead on arrival."

In Gov. Butch Otter's case, the dying was operatic.

It took 18 days for Otter to acknowledge that trimming a projected $340 million two-year gap to $35 million couldn't withstand scrutiny. Now, says Otter, the shortfall is $185 million.

That tragic end rewards budget hawks who prepared for a death scene they knew was coming.

"It's the governor's obligation to balance the budget when we're not here," said a leader of the hawks, House Majority Caucus Chairman Ken Roberts, R-Donnelly. "When the Legislature comes to town, it's our responsibility."

Roberts is targeting a rich new prospect: $128 million in revenue sharing passed from the state's sales tax to city and county governments.

"The state has been forced by lack of revenue to reduce spending," he said. "Counties and cities and other local taxing districts need to do the same thing because their property taxpayers are paying the bill."

Roberts said he wouldn't be raising the idea had Otter's $35 million figure held. "But now that we've got a much more significant hole to fill, we have to look there."

The collapse of Otter's Jan. 10 budget has three causes: revenue that dropped in December after a few months of positive returns; $47 million in unexpectedly high claims for sales tax rebates on renewable energy equipment; and $70 million to conform with federal tax law changes enacted in late December.

The new shortfall raises questions about gubernatorial attention to detail:

* Three days after Otter's cheery assessment for the first five months of fiscal 2011 put the $33 million in the pot, his economist told lawmakers that December revenue was down $10.7 million. Was Otter unaware of the news?

* Otter campaigned last year as a booster of renewables, signing blades on wind turbines and running a TV spot touting his vision. How did he miss the tax implications of a 6 percent break on $783 million in machinery and equipment?

* Federal income tax changes were long anticipated, including doubling the accelerated deduction for capital investment. Why didn't Otter at least raise a red flag for lawmakers on Jan. 10, even if he didn't have a firm estimate of the cost to Idaho?

"We have asked those questions," said Senate Finance Committee Chairman Dean Cameron, R-Rupert. "I am surprised that the Tax Commission or (Otter's Division of Financial Management) would not have anticipated those items."

Cameron's co-leader on the Joint Finance-Appropriations Committee, Rep. Maxine Bell, R-Jerome, balks at the notion that Idaho must simply agree to the larger federal tax breaks. "We're conforming to the federal Tax Code? Why?"

In fact, in 2003 and 2004 the Legislature rejected conformance, costing state taxpayers $75 million.

The chance to use lower revenues to shrink government has turned lion-hearted resisters of federal fiat to compliant kittens. "We're trapped," said Sen. Monty Pearce, R-New Plymouth, ordinarily a fed fighter. "If we don't comply, we have to keep two sets of books."

GOP leaders including Senate President Pro Tem Brent Hill, R-Rexburg, are talking about suspending rules next week to speed conformance. "Our citizens can't even file their 2010 tax returns," Hill said.

Hill said Otter deserves a break and described a meeting in the governor's office Thursday morning where participants were making hasty calculations "on the back of an envelope."

"This is brand-new news," Hill said. "I don't think there are any games being played."

Gamesmanship or not, Otter has ceded leadership on reshaping government to the legislative branch.

Rep. Steve Thayn, R-Emmett, has drafted a bill to eliminate the Idaho Commission on the Arts, a $1.7 million agency. "We're shopping it around," Thayn said, adding that sufficient interest could mean runs at killing funding for the Hispanic Commission and Idaho Public TV.

Thayn also is circulating a list of cuts to the $1.2 billion K-12 budget. Among the savings: raising class size by two ($100 million); cutting teacher compensation 12 percent ($89 million); cutting 3,000 teachers' aides ($70 million in salary); cutting kindergarten by two-thirds ($40 million); creating a teacher health insurance pool ($15 million to $35 million), spurring early graduation ($13 million to $90 million); and cutting technology ($6 million to $12 million).

Lawmakers aren't being disrespectful of the governor, who remains well-liked. They're filling a vacuum.

Though he's been continuously employed in elective office since 1985, Otter chickened out on offering his own restructuring plan in his State of the State speech.

"Now is the time to come forward with your ideas for eliminating whole programs that may fall outside the statutory or constitutional responsibilities of state government," he told lawmakers.

They're taking him at his word.

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