Lawmakers face brighter budget prospects when they convene in January but considerable uncertainties remain, the Legislature’s budget chief said Thursday.
“There’s positive to this, but also there’s a sense of caution,” Cathy Holland-Smith, division manager for budget and policy analysis, told the Associated Taxpayers of Idaho.
Current projections say the state will have a surplus of about $130 million when fiscal year 2012 ends in June.
“That’s not money in the bank,” Holland-Smith said. “It is a projection and the concern is spending money that we don’t yet have.”
She predicted two flash points for the 2012 Legislature: When to make good on the promise of Gov. Butch Otter and many lawmakers to restore education funding when the economy revives, and how to contain soaring health care costs.
“Both of those will be very, very challenging and it could be somewhat divisive,” Holland-Smith said.
One competing idea will be cutting taxes, she said. Another will be efforts to restore agency budgets after three years of deep cuts.
Holland-Smith outlined $84 million in non-discretionary spending increases that likely will come off the top for fiscal 2013, principally for Medicaid and schools. After accounting for growth in fiscal 2013 revenue, that leaves a balance of about $78 million for increases. State agencies, however, have asked Otter for $143 million more, a 12.2 percent increase.
Holland-Smith also noted the state has drained about $395 million in reserves since fiscal 2009. In fiscal 2009 alone, expected revenue fell $444 million short in a $2.9 million general fund budget. Fiscal 2012 is budgeted at $2.53 billion.
“One thing that concerns me more than anything is what’s Plan B?” Holland-Smith said. “ We have fewer choices because we don’t have reserves.”
Lawmakers must balance the books on 2012 and write a budget for fiscal 2013. Holland-Smith predicted they will begin to restore reserves and moderate government growth to cushion the blow for the next downturn.
A key to their approach will be the consensus about where the economy is headed. “There will be very mixed feelings about the strength of the economy,” Holland-Smith said.
ATI, a group of Idaho’s leading companies, is holding its 65th annual conference at the Boise Centre. About 300 business leaders, lobbyists and government officials are attending.