Legislature’s revenue committee receives optimistic financial outlook

A committee of Idaho lawmakers taking an early look at the 2019 budget picture received a dose of good news Thursday.

Several economists and analysts told the Legislature’s Economic Outlook and Revenue Assessment Committee that the state and country’s economies appear to be in good health, with few signs of concern for the near future.

At least two number-crunchers even tossed around the phrase “Goldilocks” economy. Riffing off the popular fairy tale, their assessment was that the economy and capital markets were just right — not too hot, and not too cold.

“The economy is expanding, we’re at full employment and there is no inflation,” Division of Financial Management Chief Economist Derek Santos said. “That’s where we are at right now.”

That’s great, but what do fairy tales and labor market projections have to do with education?

Next week, the Economic Outlook and Revenue Assessment Committee is expected to develop a revenue forecast to share with Gov. Butch Otter and the rest of the Legislature. The revenue forecast gets the ball rolling slowly toward setting a new state budget. And, each year, education is the largest general fund expense in Idaho’s budget.

Generally speaking, a healthier economy and optimistic revenue projections could leave lawmakers more confident to invest in programs such as education. On the other hand, economic concerns and declining revenues would be more likely to lead lawmakers to tighten up budgets or look to cuts or freezes.

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Superintendent of Public Instruction Sherri Ybarra has already called for increasing state spending on K-12 by 6.8 percent from 2017-18, about a $113 million increase. Within that plan, she is calling for lawmakers to increase spending for teacher pay by another $46.6 million.

But there is bound to be competition for state dollars in a conservative Statehouse.

After being shut out last year, lawmakers are likely to push for some sort of tax cut package, especially with a big election year looming.

There is also funding competition from higher education, roads and infrastructure, Health and Welfare and corrections.

On Monday, Otter will kick off the 2018 session with his State of the State address, and make his own case on spending priorities.

Some of the economic highlights from Thursday’s meeting include:

  • Idaho is the fastest growing state in the nation, according to the U.S. Census Bureau.
  • Idaho’s unemployment rate is at near-record low levels at 2.9 percent.
  • Since being revised in August, state revenues have beat projections by more than $32 million, which projects to a positive, year-end fund balance of $214 million.
  • Idaho housing starts and wages are forecast to continue growing.

The only sobering news had to do with the unemployment rate. Analysts said employers might struggle to find qualified job-seekers and might be forced to raise wages.

The Economic Outlook and Revenue Assessment Committee meets at 8:30 a.m. Friday at the Statehouse, and again at 3 p.m. on Jan. 11.

 

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