Idaho Policy Center Analysis Finds Lawmakers Can't Afford More Tax Cuts

Feb 19, 2015

Credit Emilie Ritter Saunders / Boise State Public Radio

The non-partisan Idaho Center for Fiscal Policy finds the governor's budget proposal isn't balanced, when taking into account wildfire fighting costs and ongoing expenses. 

The center's analysis shows Gov. C.L. "Butch" Otter's recommended budget doesn't include money to pay for last year's $27.7 million firefighting bill. The governor's office says it doesn't budget for wildfires because costs vary from year to year. Instead, lawmakers pay for fire costs the year after they're incurred.

"Depending on what the legislature chooses to do with spending and tax cuts, growth in the economy should cover the fire costs," Otter spokesman Jon Hanian says.

The center estimates Idaho's long-term budget hole could be as much as $323.7 million.

"The executive budget has a proposed ending balance of approximately $3 million. But simply including the pending fire suppression costs leaves a $24.7 million shortfall between the state’s basic needs and the resources available to cover them. This demonstrates that there is no capacity in the General Fund to divert to other programs like education, public employee compensation, and roads and bridges." - Idaho Center for Fiscal Policy

The governor's proposed budget asks lawmakers to cut individual and corporate income taxes and the tax on business equipment. At the same time, he wants lawmakers to spend more on education and infrastructure costs.

"When additional state expenses are included, the proposed executive budget for fiscal year 2016 does not appear to have room to implement the proposed tax cut of 0.5 percentage points for corporations and highest earning households without making cuts elsewhere. Nor is there room in the budget to fully fund broadly shared goals for education without generating new revenues or cutting other parts of the budget." - Idaho Center for Fiscal Policy

Lawmakers are working to approve a pay increase for some state employees, a proposal the governor supports. Plus, the Idaho Statesman reports legislators are talking about creating a flat income tax and raising the sales tax to pay for needed road improvements.

The center's analysis finds that by foregoing the governor's proposed tax cut, the state would have $17.8 million more to budget. In addition, the center says the state could budget an additional $33.9 million if Idaho lawmakers expanded federally-funded Medicaid to more low-income people.

The cost of the troubled school broadband network could end up creating an even larger budget hole.

"Further revenue cuts risk exacerbating this imbalance and may make it impossible to reach broadly shared goals around education investment," the Idaho Center for Fiscal Policy writes.

A separate report released Thursday by the Idaho State Tax Commission finds the tax burden on Idaho citizens is one of the lowest in the country.

On Friday, legislative budget writers will hear from the public before finalizing their spending plan.

Find Emilie Ritter Saunders on Twitter @EmilieRSaunders

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