Idaho get $173 million worth of bad budget news today.

Tax collections are now expected to come in $173 million below initial projections for 2009-10, wiping out a state surplus and leaving a $151.4 million shortfall.

Gov. Butch Otter isn't ruling out options — including budget cuts and raids on the state's budget reserves. No word on when Otter will decide how to address the shortfall

Here's the press release from Otter:

A new forecast of Idaho’s General Fund tax revenue for the budget year that began July 1 indicates State government will be significantly more cash-strapped than expected for the next 10 months.

In fact, the continuing recession has Idaho’s State tax revenue running about $173 million below forecasts that economists made back in February. So rather than ending the 12-month period next summer with a positive balance of more than $49.5 million as earlier predicted, the worsening revenue picture and additional anticipated expenses now are expected to leave State government about $151.4 million short of what was budgeted by the Legislature earlier this year.

The Idaho Constitution requires a balanced State budget. The Governor and Legislature are responsible for meeting that requirement. Last year’s economic downturn prompted holdbacks in funding to State agencies, additional cost-reduction and efficiency measures, and a draw on reserve accounts or “rainy day” funds to make up the difference between revenue and expenditures.

As the recession continues, Governor C.L. “Butch” Otter said those mechanisms still remain available. He is scheduled to meet with Cabinet members on September 10th to discuss potential savings, with leading Republicans in the Legislature on September 11th and with leading legislative Democrats on September 16th to consider options for keeping State government operations within taxpayers’ means.

“We have been here before. We have the experience, the tools and the commitment needed to address this situation while maintaining necessary public services,” Governor Otter said. “We are fortunate to be far better off than most other states, thanks to sound, conservative fiscal management and a strong understanding of government’s limited role in people’s lives. Our job is not to protect government, but rather to protect the people who pay for government as well as those who rely on it. These difficult economic times require that we work even more closely together toward those goals.”