idaho legislature
Idaho: Bottom of the Recession?
"There is evidence that things have potentially bottomed out."By Sharon Fisher, 1-08-10
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Experts who spoke to the Idaho Legislature’s Economic Outlook and Revenue Assessment Committee (EORAC) this week said, cautiously, that maybe, possibly, the worst of the recession might be over.
The committee has one of the hardest jobs in the Legislature: trying to figure out what state revenue will be as much as 16 months in the future.
Governor C.L. “Butch” Otter’s State of the State speech, scheduled for Monday at 1 pm, will have his own prediction for state revenue growth for fiscal year 2011, which runs from July 1, 2010, to June 30, 2011. The EORAC will make its own estimate, based on the hearings it held this week with economists and representatives from various industries about how they predict the upcoming year will go. The Legislature’s Joint Finance-Appropriations Committee (JFAC) will then make the decision, based on the EORAC’s report, on what revenue figure to use for fiscal 2011—under which, because of Idaho’s balanced budget law, it must stay in determining the state’s budget.
JFAC is not required to use the EORAC figure, nor the Governor’s figure. For example, in January, 2009 Otter laid out a 2010 budget that was 7% lower than that for 2009, but the committee recommended a revenue projection $100 million lower than that. Similarly, in 2008, JFAC used a lower number than the committee recommended—which ended up serving the state well during the 2008 economic downtown.
“There is evidence that things have potentially bottomed out,” Michael Ferguson, chief economist for the Division of Financial Management (the Governor’s budgeting support organization), told EORAC. In fact, the recovery—if it turns out to be one—is coming a quarter earlier than predicted, he said.
Not that we’re out of the woods yet. “It’s getting worse, but it’s not getting worse as fast,” said Boise State University economist Dr. Don Holley, explaining the second derivative in calculus to the committee members.
Nor is the economy expected to improve enough to help with the 2011 budget. “The Governor has committed to set a budget that does not show growth,” said Cathy Holland-Smith, division manager of budget and policy analysis for the Legislative Services Office. “Every dollar you give to someone, you will have to take a dollar from someone else. There is no new money.”
Plus, before the legislature can even start on 2011, it has to finish up 2010. Due to lower than expected revenues in fiscal year 2010, the Idaho budget is still approximately $50 million out of balance, even after almost $100 million in holdbacks—or, taking money back that had already been budgeted—last fall. About $151 million is left in “rainy day” stabilization funds, said Holland-Smith. However, JFAC will receive a number of supplemental budget requests from agencies that ended up having to spend more money than budgeted, such as Medicaid when its case load grew more than expected, she told the committee.
Otter indicated on Thursday that he would announce his plan for balancing the 2010 budget as part of his speech on Monday, such as additional cuts of up to 2 percent. Holdbacks so late in the fiscal year could be particularly hard-hitting because so much of the budget has already been spent or allocated.
Another big question this week—not only to the EORAC, but at the Governor’s Finance Summit in Boise on Tuesday—was what Idaho needed to get its economic engine working again. There, the answers were all over the board. Several presenters at both events, including Commerce Director Don Dietrich, cited “predictability” as an important factor in attracting new companies with new jobs to Idaho, in that companies would want to know what to expect in terms of taxes and other expenses. In fact, uncertainty over such things on a federal level, including a health care plan and climate change legislation, is what is slowing down corporate investment, Alex LeBeau, director of the business lobbying group Idaho Association of Commerce and Industry, told EORAC.
Suggestions from the finance summit included tax credits for hiring additional employees, reducing or eliminating the capital gains tax, supporting the Small Business Association, improved investment in university research and development, and tax credits to people who make early stage investments in new companies.
However, companies shouldn’t expect tax cuts, such as those proposed by some legislators for this session, Otter told summit presenters, noting that in an election year, cutting the schools budget and also promising to lessen the corporate tax burden wouldn’t go over well.
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Comments
So, if you wonder how the CIA can not keep a single muslim male identified to our embassy by his Nigerian banker father as a suspected terrorist, with an expensive one way ticket and no baggage off an airplane without even a cursory inspection, blame Panetta, the smart guy from California in charge of the CIA. His name should also come up in the suicide bomb deaths of CIA personnel in Afghanistan. It won't.
If you wonder how the banks, with your money, again control ALL the money in the country, look at how the Federal Reserve is set up. It is a private company. It is not a government entity.
The banks got all their money back, and then some, and have paid the US Govt back for their TARP loans. But the other missing $60 Trillion in devalued homes, property, business, is left holding the GoldmanSachs M & M Enterprises, Milo Minderbinder bags of cotton. Goldman and Minderbinder are whole, and nobody else is. If that is strange, sort of out of kilter to the common man's conception of fairness, it is because IT IS out of kilter. It is out of kilter because the Congress, with Barney Frank leading the way, made the investment banking laws MORE LENIENT, this last year. Barney had restrictions REMOVED.
Sen. Cantwell of WA is proposing going back to the implementation of the Glass-Steagal bill, the Depression Era "bank by the numbers" Federal oversight of banking. Yes. Oversight. Like regulation. And the first thing should be that banks cannot be insurance companies, nor can they deal in securities. Not with yours and my tax money guaranteeing the depositors money with FDIC money out of the Treasury. Or, maybe a nice 99% tax on Investment Banking bonus money. Confiscation of the American people's losses by a progressive income tax system.
There is no recovery on the horizon for those outside of investment banking. That is because there is no need for a recovery for investment banks. They are doing quite well using all of our money, and paying themselves well for using our money. If there is some economic benefit, well, serendipity can happen...once in a while. Don't hold your breath.