Idaho gov. calls for $45 million in tax cuts

BOISE - With Idaho’s state budget flush for the first time in years, a cautious Gov. Butch Otter is calling for $45 million in tax cuts next year, a $5 million research initiative aimed at creating jobs, small boosts in education funding and possible one-time pay boosts for teachers and other state workers.

“It is my pleasure to report that Idaho, having been tested by the Great Recession, now is emerging leaner, stronger, more resilient and better prepared to compete, prosper and prevail in the years to come,” Otter told a joint session of the state Legislature in his sixth State of the State and budget address.

His talk kicked off Idaho’s legislative session, which is expected to include a tough fight over Otter’s proposal for a state-run health insurance exchange. The governor downplayed the issue in his speech, saying he and lawmakers will decide together how best to proceed.

Otter laid out a budget proposal for the coming year that’s based on two key assumptions: A drop in forecast revenue growth for the current fiscal year from 6.4 percent to 4.4 percent, and then a forecast for next year’s general-fund tax revenues to grow 5.8 percent. He’s capping overall general-fund spending growth in his proposed budget at 5 percent.

The result: A $2.655 billion general fund budget for next year, up 5 percent from this year.

Lawmakers were generally receptive, but some questioned whether revenues really will be strong enough to support Otter’s plan. “I think all in all it was a good outline,” said Rep. George Eskridge, R-Dover. “I’m just hoping we have the funding and the revenues to support that.”

Otter didn’t lay out specific plans for tax cuts, instead calling on lawmakers to discuss their ideas with him.

He earlier said he favored a small drop in the state’s top income tax rate; that would benefit just 16 percent of Idaho’s income tax filers. Some lawmakers have been floating plans to cut Idaho’s individual and corporate income tax rates.

Sen. Shawn Keough, R-Sandpoint, vice chair of the Legislature’s joint budget committee, said that before considering tax cuts, “I need to see what the numbers look like.”

That process will start this morning, when lawmakers begin going through Otter’s budget in detail in preparation for setting the state’s spending plan for next year.

Otter also called for Idaho to begin refilling its various reserve funds, drained of $381 million over the past four years of economic downturn; he wants to deposit $60 million to boost the depleted funds.

He also unveiled his “IGEM” plan, which stands for Idaho Global Entrepreneurial Mission. It’s a $5 million program that includes permanent state funding for the Center for Advanced Energy Studies, a joint effort of three Idaho universities and the Idaho National Laboratory that hasn’t yet had permanent funding. That proposed funding includes $2 million within the higher education budget; another $2 million for new research initiatives at Idaho universities, also in the higher education budget; and $1 million in the state Commerce Department budget for grants or loans to companies to help bring those research initiatives to market. Professors at the universities would partner with companies in their research, with the idea that the end result will be new “knowledge-based economy jobs.”

Otter called the plan an “extraordinary” thing for the state to be doing, “during this tough time, to put a $5 million bet” on job creation.

House Minority Leader John Rusche, D-Lewiston, said of the governor’s agenda, “It could be worse,” but he questioned cutting taxes without restoring deep cuts to programs such as mental health and substance abuse, which he said are pressuring local governments and communities.