Batt Renews Promise Of State Pay Raises From Surplus Governor Says His Optimism About Idaho’s Economy Vindicated

The state’s unobligated cash surplus exceeded $10.1 million at the end of the budget year, and Gov. Phil Batt renewed his commitment to giving state workers the equivalent of the proposed pay hike for the coming year that went unfunded amid economic uncertainty last winter.

“It vindicates my optimism about Idaho’s economy,” the governor said on Wednesday.

Tax collections through June 30 were still only about 2 percent higher than the previous fiscal year. But that anemic growth was primarily due to the dramatic decline in corporate tax payments after the bottom fell out of the international computer chip market. That erased the record profits Micron Technology Inc. was paying taxes on.

“Micron will not be repeated,” the governor pointed out, “so we should meet our growth target for this year.”

That target - $1.45 billion - will require revenue growth of about 4.3 percent, well under the governor’s prediction last January for 5.5 percent.

Although the detailed analysis of June revenues will not be completed for some time, Batt indicated that personal income tax revenues, a key indicator of the economy’s underlying strength and nearly half of all tax receipts, remained much stronger than anticipated.

The year-ending surplus was a marked turnaround from last winter when revenues ran as much as $12 million behind projections. That prompted legislative budget writers, with Batt’s tacit approval, to cut over $10 million from the proposed spending plan for the 1997-1998 fiscal year - saving $8 million of it by declining to finance the governor’s 2 percent state employee pay increase.

The surplus total of $10.1 million already took into account diverting $6.2 million to cover state aid withheld from public schools last fall in an across-the-board budget cut to assure the state remained in the black.

The brighter financial picture also give the overwhelming Republican legislative majority even more maneuvering room in next winter’s election-year session to maintain state operations without confronting a major tax increase until after the 1998 balloting.

Even with the surplus, the governor said actual base salaries for the 16,000 state workers will probably not be increased to reflect the full 2 percent pay hike proposal. But he said bonuses and other methods - including the possibility of a reduction in the pension contribution - will be used to provide the cash equivalent.

“We’re kind of doing it scratch and patch,” Batt said, “but the results will be the same.”

He said some workers have already received their cash equivalents.

Lawmakers came under severe criticism last February when they decided to stiff state employees on the pay raise to assure a revenue cushion against the chance of economic upheaval.