Idaho's Grumpy Gus governor gets more upbeat
March 25, 2012
Wow! Did Idaho's economy suddenly brighten or what? At least Gov. C.L. (Butch) Otter must think so.
A couple of years ago, Otter was a veritable Grumpy Gus.
In 2010, chief economist Mike Ferguson told Otter the state's struggling economy would produce enough tax money to support $2.43 billion worth of programs. The governor didn't believe him. Otter agreed to low-ball the revenue estimate by another $143.4 million - a move that compelled the state to cut spending for schools, higher education and programs to help the needy that much more.
Former Gov. Cecil D. Andrus was so certain Otter had misread the situation he placed a $100 wager on Ferguson.
It turned out Andrus and Ferguson were right. But many of the cuts remained in place.
Today, the situation is reversed.
With state tax collections outpacing projections by about $32 million for the first two months of the year, Otter now expects the trend to continue.
In other words, he's willing to bet the state will have 5.7 percent more money next year - while more sober-minded lawmakers think the number is closer to 4.4 percent.
Nobody knows. Spring lies ahead, notably April when income tax returns are finalized. Since the Great Recession began, that's been a troubled season for state revenue collections. For instance, it's unclear if the state collections got ahead in February because the economy is progressing and more people are working - or simply reflects the state not finishing as many income tax refunds as it expected. In other words, when those refunds are processed in March or April, would it provoke an unexpected dip in revenues?
Even so, there's a structural imbalance looming ahead. Otter's revised budget recommendation relies on $47.3 million that's available to spend just once to pay for ongoing programs. Two years ago, Otter resisted drawing money from reserves for continuing obligations. Now it doesn't cause him so much grief.
Not that Otter intended to spend the state's bounty on people who sacrificed during years of scarcity.
State employees, he said, could get by on a one-time 3 percent bonus. Lawmakers decided a 2 percent permanent pay hike was justified.
Nor was Otter planning to restore nearly $19 million pulled from teacher payrolls to pay for school Superintendent Tom Luna's online learning and technology initiatives. But legislative budget-writers backfilled the funding.
No, Otter plans to sock away $60 million in a rainy day account - even though the state budget has yet to recover from years of reductions - and a $35.7 million income tax cut. Most of that tax relief would go to Idaho's wealthiest citizens - the 16 percent or so who earn enough to fall into the top income brackets. After they pay federal tax on this new income, these fortunate few will receive about $25 million worth of relief from the state. For a person earning $1 million a year, Otter's tax break trickles down to $2,600 extra.
Just the same, they could count on receiving it every year. Otter wants to make the tax cut permanent - something he was unwilling to do for state workers or teachers.
So when it comes to justifying deeper than necessary cuts to schools, colleges and health care, Otter sees the revenue glass as half empty.
But when it comes to helping the rich to a bigger share, the governor's glass is overflowing.
Originally posted at http://lmtribune.com/opinion/article_f407eac4-5431-57ae-9bc4-fe71d65cb5da.html
The editorial posted here is provided by permission of its original publisher and does not necessarily reflect the views of Idaho Public Television.
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