A third mid-year spending holdback is now likely, a co-chairman of the Legislature’s joint budget committee said Tuesday, and one Senate Democrat responded by saying tax increases should now be considered.
Senate Finance Committee Chairman Dean Cameron, R-Rupert, told Idaho Health & Welfare Director Dick Armstrong during the department’s budget hearing to expect another cut before fiscal year 2010 ends June 30.
In September, Gov. Butch Otter ordered cuts that averaged 4 percent. Last week, he said another 1.6 percent reduction would be necessary to meet the constitutional requirement for a balanced budget. But lower than expected revenues in December have prompted the Republicans who control the Legislature to talk of further fiscal 2010 cuts.
Sen. Nicole LeFavour, D-Boise, a member of the Joint Finance-Appropriations Committee, told Cameron and the rest of the 20-member committee that the Legislature should consider raising taxes.
“We do really need to have a discussion about taxes,” LeFavour said. “When we say we don’t have any alternative but to cut, I think we’re being disingenuous.”
During a break after LeFavour's comments, Cameron said there is little support among Republicans for a tax increase, an option that has been ruled out by Otter, also a Republican.
"I believe attempting to raise revenue in this economic climate will not generate additional dollars," Cameron said. "It will force businesses to close and layoff employees. It would compound the problem."
Cameron said he raised the issue of further cuts Tuesday as a warning to all state agencies. "We don't have any other choice. I think it's disingenuous not to follow the constitution."
As for the size of a third mid-year holdback, Cameron said he doesn't have a number in mind, but said $25 million is saved for every 1 percent cut. December revenues were about $13 million below projections.
During the hearing, Cameron asked Armstrong to detail how he would make additional spending cuts “because in all likelihood, that’s what you’re going to be faced with.”
Armstrong said office closures and layoffs are likely. “We will probably have to look at the closure of some offices…which will ultimately lead to layoffs,” he said.
That would mean the department’s goal of giving benefit applicants same-day service will be difficult to meet, Armstrong said. People past a certain point in line would likely be told that they couldn’t be served that day and asked to return another time, he said.