State economist: A recession is no foregone conclusion, but it’s a possibility

After a long period of economic expansion — the longest in U.S. history — a recession could be on the horizon.

But not necessarily.

As members of Gov. Brad Little’s Our Kids, Idaho’s Future education task force got down to work Wednesday, they got a glimpse into what the future might hold. It’s an important question. One thing Little wants from his 26-member task force is a blueprint for spending money on Idaho’s top education priorities, even during tough times.

Tough times are always possible, because the economy can slip into a recession at any time, said Derek Santos, chief economist for Little’s Division of Financial Management. But in a presentation to the task force’s K-12 budget stability subcommittee, Santos tried to handicap the future.

The modeling suggests a 30 percent chance of a recession in the next three years, he said. If a recession does occur, it’s most likely to start in early 2020 and linger for about nine months.

And this recession wouldn’t be as severe as the Great Recession of nearly a decade ago, Santos told the subcommittee of educators, business leaders and legislators.

That recession — the nation’s deepest downturn since the Great Depression — had a profound short-and long-term effect on K-12 spending and budget stability. During the throes of the Great Recession, lawmakers cut state K-12 spending for the first time in history. Even a decade later, Idaho’s K-12 and higher education spending hasn’t fully recovered, according to a recent national study from the Pew Charitable Trusts.

Meanwhile, Idaho’s short-term revenue picture is likely to rebound next year — and this, in turn, could cover increases in education funding.

Santos projects an 8.2 percent increase in tax and revenue collections for next year. That translates to an infusion of more than $300 million in new dollars, and it would push Idaho’s general fund collections past the $4 billion threshold for the first time in state history.

By comparison, and with only one month left in the current budget year, Idaho tax collections are down $22 million from the preceding year. The culprit is a decline in personal income tax collections, a result of the federal tax cuts passed in late 2017.

This year’s revenue drop wasn’t a surprise, and next year’s predicted rebound shouldn’t be a surprise either. The effects of a new tax law should be measured over two years, Santos said. “You have the initial hit, and then you have the reaction.”

Wednesday’s meeting was largely an overview, heavy with presentations on the education budget and education spending. Over the next several months, this subcommittee hopes to take a closer look at several key education line items — such as the five-year teacher salary career ladder, classroom technology spending and an advanced opportunities program that covers dual-credit college classes for high school students.

Little wants his task force to come up with five or six recommendations by November — focused on literacy and college and career readiness. The task force held its first meeting on June 3, and will meet next in Twin Falls on July 1.

Meanwhile, four subcommittees will meet through the summer. Other subcommittees will focus on three other broad topics: recruiting and keeping teachers; rural education; and school facilities and school safety.  The teacher pipeline subcommittee is scheduled to meet Tuesday.



Kevin Richert

Kevin Richert

Senior reporter and blogger Kevin Richert specializes in education politics and education policy. He has more than 30 years of experience in Idaho journalism. He is a frequent guest on "Idaho Reports" on Idaho Public Television and "Idaho Matters" on Boise State Public Radio. Follow Kevin on Twitter: @KevinRichert. He can be reached at [email protected]

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