Almost two-thirds of the legislative session is over and JFAC has yet to set a revenue forecast. Why does that matter? The revenue forecast sets the guardrails for legislative spending. Article VII, Section XI of the Idaho Constitution requires the State of Idaho to operate with a balanced budget. Once JFAC sets the revenue forecast, spending cannot exceed that forecast. Otherwise, the State runs a budget deficit—an act prohibited by the Constitution.
The Governor presented a $6.407 billion budget to the Legislature. It includes $242 million in budget enhancements including funding for transportation expansion and congestion ($50 million) parental choice tax credits ($50 million), public school gap funding ($50 million), state public defender ($35 million) and tax relief ($100 million).
While JFAC has not officially adopted a revenue forecast, the Joint Economic Outlook and Revenue Assessment Committee (EORAC) recommended a similar general revenue forecast of $6.400 billion to JFAC. JFAC voted on the recommended forecasts back in January but two motions, one to adopt EORAC’s recommendation, and one lower recommendation of $6.3 billion did not pass. JFAC has yet to bring the revenue forecast back up for consideration.
Is the Legislature fulfilling its fiscal responsibility—balancing the budget? JFAC approved all the maintenance of operations budgets in the Governor’s budget ($5.4 billion—base operations plus inflation adjustments and increases in employee compensation and benefits). In addition, the House passed a $253 million income tax cut, a $50 million sales tax cut, a $100 million property tax cut, and $50 million for the parental choice tax credit—totaling $453 million in revenue decreases. There are other proposed revenue decreases in the Legislative pipeline. If all of these bills pass, and the Legislature follows the Governor’s other budget recommendations, we will have a budget deficit ranging from $20-$80 MILLION depending upon the budget forecast accepted.
Of course, the Legislature could cut the Governor’s proposed budget enhancements to take care of the budget deficiency, but Idaho has more revenue cuts coming due to decreases in federal government spending. The INL and the Mountain Home Air Force Base depend upon federal government spending as does the Veteran’s Administration, Social Security offices, Medicaid, and our national parks. Neither of the revenue forecasts mentioned above takes account of the loss in revenue that will occur from cuts to these entities’ budgets.
While the federal government budget cuts may be a surprise to the Legislature, the looming budget deficit isn’t. The majority of the Legislature are not in their first terms; the leaders of the House and Senate are veteran legislators, old hands at this budget setting process. Why aren’t they following the process households follow in setting their own budgets—determine household income (revenue), then decide how much to spend?
It’s time to ask the Legislature to accept their fiscal responsibility. JFAC must set a revenue forecast NOW while giving Idaho residents the opportunity to weigh in on suggested changes. Waiting to deal with this issue is irresponsible.
John Rusche, MD, Former Idaho Legislator, retired Pediatrician, Lewiston
Christine Loucks, Ph.D. Professor Emerita, Department of Economics, Boise State University
Nancy Vannorsdel, Retired Banker and VP, Former President of Chamber of Commerce, Eagle
