Boise News

Idaho Politics: Economy

Idaho Gov. Orders Budget Holdbacks

By Jill Kuraitis, 9-26-08

Idaho’s Republican Governor Butch Otter has ordered a one percent state budget holdback.

“We’re all painfully aware of the serious economic downturn,” Otter said at a press conference. “We in Idaho are not amused.  Our tax revenue forecasts are taking a hit.”

“Acting in moderation now is the prudent and fiscally responsible thing to do,” said Otter in his written statement issued after the conference.  “It recognizes economic realities and it may help us avoid more dramatic spending reductions later in the budget year.”

“I also am directing all state agencies to hold an additional 1.5 percent of their appropriated budgets in reserve for now as a hedge against further declines in state revenue in the months to come. We still hope for the best, but we must plan for tough times ahead.”

The state’s chief economist, Mike Ferguson, has forecasted that state revenues may fall $174 million short of last winter’s projections. Two weeks ago, Otter asked state agencies to submit plans for how holdbacks and reserve orders would be handled in their departments, “and I’m pleased to report that all of them responded with realistic plans,” he said at today’s press conference.

Ferguson added, “What we’re seeing is a tremendous amount of turmoil in the financial markets. We’ll update our economic forecast in October which will give us another reading.”

“Some of this is based on hard numbers from July and August, but given the situation, things are moving a lot more rapidly, which requires a lot more vigilance.”

“The state is not upside down, the state is not going in the red, but we need to take action now to avoid action in the future.”

In comments about how Idaho taxpayers could be affected by the holdbacks, Otter said essential services would not be hurt.  He said the grocery tax credit will not be affected, and that in the coming months, “I’m going to try to leave the grocery tax credit in place.” But he did say that state pay raises would probably be subject to budget holdbacks.

Asked why several state programs such as the Millenium Fund would not be used to cover shortfalls, Otter said, “We’re doing this the way households do – they look to see where they are spending money today, and cut spending – they don’t immediately run to their savings.”

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