Lt. Gov. Brad Little said his luncheon address to the Associated Taxpayers of Idaho today is on "the good, the bad and the ugly" - it's about the outlook for the upcoming legislative session. "Additional tough choices are going to be required," Little told the group. "We've reduced spending by just a little under 19 percent." Idaho's state retirement system is strong, it's not raised taxes like other states, and the state has handled shortfalls thus far while maintaining a balanced budget, he said. But, he said, "We know when the economy recovers it's going to take 18 months before those dollars start dropping down into the bottom line, so we are going to have tough choices to make this session."

Little said public schools are "always our highest priority," but the state will have to "continue to try to protect quality ... but at the same time lower the cost as best we can." In higher education, there'll have to be continued collaboration with business, he said. The biggest funding problems, though, may be in Health & Welfare and Medicaid, Little said. "That's where the money is."

The federal government funds roughly 80 percent of Health and Welfare in Idaho, and a quarter of public education, Little said. But he said the feds aren't likely to send Idaho more money. "The federal government is broke, and state and local governments will likely at some point be responsible for accepting some of the functions that they're currently providing," Little said, calling that a "cloud that hangs over every state." He warned, "We do need to prepare for the impending federal defunding which I think is going to happen, because if the federal government doesn't come to the conclusion the people that own their bonds will."