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“State of the State” Reaction: Break Out the Rainy Day Fund, and Other Options

January 13, 2009

Boise, ID – Governor Otter's 2009 "State of the State" address focused on getting through the tough economic times with budget cuts, and new taxes dedicated to road construction. Several budget watchers suggest, however, that Idaho could also look at other options.

Economist Judy Brown, executive director of the Idaho Center on Budget and Tax Policy, says the state has been good at saving large amounts of money in a "rainy day" fund that can, and should be, tapped in just this kind of situation.

"One of the things we learned in the last downturn was the importance of having a rainy day fund, and we have quite a bit of money socked away. And now, what we need to learn is the importance of spending it when it 'rains.'"

Public school funding is on the governor's list for budget cuts, although the proposed cut is not as deep as some state departments and agencies, which could see budget reductions of up to 60 percent.

According to Idaho Education Association President Sherri Wood, the challenge in any state school funding cut is that Idaho schools already operate on very lean budgets. Idaho class sizes are among the highest in the nation, while the amounts spent per student, and on teachers' salaries, rank among the lowest.

"Reducing school budgets is not about trimming fat; it's about really cutting to the bone and affecting the lives of children."

Taryn Magrini, public policy director for the Idaho Women's Network, weighs in with the thought the state needs more balance as it considers what to cut and what to keep.

"It seems that there's real priority in investing in road infrastructure, but there's a need to invest in human infrastructure, too."

She points to Department of Health and Welfare budget cuts that hurt family health care, foster care and services for people with disabilities.

Snake River Alliance Executive Director Andrea Shipley has another perspective on infrastructure. She says energy infrastructure can be supported with realistic policy changes that cost nothing - but will bring money to the state, which could help ease the budget pain.

"Investments in renewables and energy efficiency in homes could be exempt from additional property taxes, something that would not cost the counties, but would also bring new, green investments and jobs."

Shipley claims several such ideas are part of the 2007 Idaho Energy Plan, but have yet to be implemented. Governor Otter is proposing a state budget that is seven percent smaller, overall, than last year.

Deborah Smith/Deb Courson, Public News Service - ID