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Richard Larsen: Idaho Leadership and Fiscal Pragmatism

August 30th, 2010 by Halli

By Richard Larsen

The financial condition of the country and of many states across the Union continues to deteriorate. And there’s no readily apparent recovery in sight, even though the White House, evidencing its continued detachment from reality, is calling this the “summer of recovery.” With a net loss of 2.5 million jobs since January, 2009, and everything emanating from Washington creating more uncertainty in the private sector, there is little to motivate companies to begin rehiring.

This moribund economy is felt deeply at the state level. According to CNN Money, budget deficits for the fifty states could be as high as $260 billion in 2011 and 2012. Some states are essentially insolvent as revenues continue to diminish and politicians lack the spine to reign in profligate spending. California and Illinois, the two states with the highest budget gap, 49.3% and 47.3% respectively, are continuing to witness double-digit decreases in revenue due to the weakness of the economy. Their answer is to increase taxes and levy increased fees and fines in an attempt to make up the difference.

The least logical time to increase taxes is when the economy is struggling, as that takes more capital out of the hands of the citizens, especially small business owners who otherwise might be creating new jobs. Mark Zandi, chief economist at Moody’s, confirms that at the federal and state levels, increased taxes “will be a serious drag on the economy at just the wrong time.”

We’re fortunate in Idaho to not only have a constitution which requires a balanced budget each fiscal year, but we also have a governor and legislative leaders who apparently are able to balance the states checkbook. Fiscal year-end (June 30) figures for the state validate the responsible and disciplined decisions made by Governor Otter and legislative leaders during the last legislative session, despite the criticism leveled against them by single-issue advocacy groups, especially the education lobby.

According to a press release from the Governor’s office, the state had to transfer $8.2 million from the State’s Permanent Building Fund to the General Fund in order to balance the budget at the end of the fiscal year. That means the Governor and legislative leaders were only off by three-tenths of a percent in their revenue projections. With a budget of $2.2 billion, that’s a remarkable accomplishment.

Commenting on the year-end figures, Governor Otter said, “Some people vigorously opposed our cautious, conservative approach to budgeting, and some still do. They…urge us to spend millions of dollars in make-believe money, and have nothing but contempt for any other view. Fortunately for Idaho taxpayers, common sense and a steadier hand carried the day. The Legislature and I did what any family does when facing financial trouble – we looked for savings, we thought about what we could do without, and we made do with less. We lived within our means, and we didn’t raise taxes.”

State leaders faced horrible accusations and headlines during the legislative session for the cuts they made in state expenditures. The final figures paint a picture, however, of discipline and proper priorities. Executive branch agencies are facing a net reduction in funding of 19.45% from FY 2009-2011, while the General Fund portion of the education budget was reduced much less, by 8.9%. And even with that reduction, the FY 2011 budget makes up 50.9% of General Fund spending going to public schools, which is the highest percentage of General Fund support since 1989.

While many would have us believe that state leaders were merciless with public education cuts, it appears they did everything they could to protect it while facing the daunting challenge of balancing the state’s budget in economically perilous times.

House Appropriations Committee Chairman Maxine Bell said of the budget, “The past couple of years have been tough. Nobody likes cutting services or reducing support for public schools. I’m thankful that we have a Governor who’s willing to join us in this heavy lifting and open to working with the Legislature in making the tough decisions necessary to ensure our State government lives within the people’s means.”

Vice chairman of the Senate Finance Committee Shawn Keough said, “As painful as the budget was for us to construct, Idaho is in a better position than most states right now. We ended the fiscal year with a balanced budget, did not raise State taxes on Idaho’s families and caused no additional impact on State agencies and public schools.”

We have in Idaho a superb leadership committed to the public services we pay them to provide for us, while concurrently they’re pragmatic and realistic in maintaining the state’s solvency and fiscal viability. Governor Otter and the state’s legislative leaders should be commended for protecting our public and collective interests. If only we had such sagacity and fiscal responsibility at the federal level.

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