As the legislative task force looking at how to replace the millions of dollars the Idaho State Police and state parks will lose in a year when their gas tax funding shifts to roads, it started off this morning with a review of where state revenues stand. It's not a pretty picture. Legislative budget director Cathy Holland-Smith told the joint legislative panel that the budget the Legislature set this year anticipated a $57.8 million ending balance at the end of fiscal year 2009 on July 1, largely due to increased federal matching money for Medicaid. But when July 1 rolled around, the actual ending balance for the fiscal year was only $13,400. "What actually occurred is that our revenue number did not hold through June," Holland-Smith told the lawmakers. Instead, state tax revenue for the year fell $95 million short.

Lawmakers had anticipated some revenue declines, and planned for them in SB 1227, which kicked into place, transferring millions from the public school stabilization fund and the state budget stabilization fund to keep the state budget balanced. "Although the revenue did not come in as projected, the state had tools in place in order to balance the budget," Holland-Smith said. In the same bill, lawmakers planned for more transfers as the new fiscal year began amid recession, initially setting the figure at $30 million from the budget stabilization fund to kick off fiscal year 2010. Instead, that transfer had to balloon up also, adding another $50 million from two different funds. There's still about $200 million in state reserves, between the budget stabilization fund, the public school stabilization fund, and the economic recovery reserve fund. All could be needed to balance this year's budget, depending on what happens.

Holland-Smith noted that with the falling revenue in 2009, the budget that lawmakers set for 2010 now shows a 3.4 percent revenue increase from '09 to '10, rather than being flat or showing a decline. "It just doesn't seem to be realistic," she said. Idaho's never had two straight years of falling tax revenues, she noted, but all states are seeing unprecedented revenue drops in the current recession. "It is just a reflection of the times." Even though the recession seems to be lessening, state revenues are budgeted a year out, Holland-Smith said. "We don't recover as quickly in our revenue."

To add to the possible budget pain ahead, Gov. Butch Otter already has said the state Department of Health & Welfare has a $20 million budget shortfall in Medicaid due to rising caseload, and likely will seek a supplemental appropriation from next year's Legislature to cover this year's costs. Corrections costs, budgeted based on no growth in prison populations, also could grow and require supplemental appropriations, though that hasn't happened yet. Overall, Holland-Smith said, "There are some significant challenges right now with the general fund. ... We don't have all the information at this time, it's fairly early." Rep. Maxine Bell, R-Jerome, the co-chair of the task force, said, "When you see your favorite part of government disappear, you heard it here first." Sen. Dean Cameron, R-Rupert, the Senate co-chair, said, "This is the problem that this task force faces."