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Idaho's Financial Outlook Improving

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But, warns George from A Seat in the House, don't count your chickens.

The financial condition of Idaho continues to show improvement as indicated by the latest revised General Fund revenue forecast by the Division of Financial Management. On August 11 the Division published a Fiscal Year 2012 (July 1, 2011–June 30, 2012) forecast that was an increase of $146.6 million over the Division’s previous estimate. This is an increase of $175.8 million more than the estimate used by the Joint Finance and Appropriation Committee when we set the Fiscal Year 2012 budget last session.

This new forecast incorporates several changes that have taken place since the legislature adjourned in April. The first is the FY 2011 general fund revenues which came in higher than anticipated. The second was a revised Idaho economic forecast that incorporates new information indicating a better economic outlook for the state over this next year. And third, it takes into account impacts on revenues as a result of changes in law enacted by the legislature this last year. The most notable was the negative impact on revenues as a result of the Governor’s decision not to delay phase four of the grocery tax credit. 

However, even with an expected increase in revenues over this next fiscal year, the Governor, in a speech before the Boise Metro Chamber of Commerce, indicated we could expect budget recommendations from his office to the legislature next session that could still be under the Division’s forecast. Governor Otter was reported as saying during his presentation that, “I find it better to …underestimate a little bit in order to make sure when we tell an agency or a program that they have the money, that they can count on that money and they can plan around that money.”

This conservative approach to budgeting by the Governor (which I believe is also supported by a majority of the legislature, including myself) has proved beneficial to Idaho and is, in my opinion, the largest factor in Idaho actually having a surplus revenue situation at the end of this last fiscal year instead of being in a deficit situation as many other states are experiencing.

The anticipated revenue increase over the estimate used by the legislature (being referred to as a “surplus” by the media) is attracting the interest of many legislators, as evidenced by one legislator who has sent a questionnaire to other legislators asking the following:

If there is a $179 million surplus to work with next session, would you

· Reinstate programs

· Lower taxes

· Stash it away for a rainy day

· Or a combination of the three

My response to the legislator was as follows: “First, I am not convinced that we will have that large a surplus. The unemployment rate in my area is almost 15 percent and there are no signs of the economy improving significantly over the next year. However, having said this, if there is a surplus at the end of this fiscal year my first priority would be to replenish our reserves. Secondly, I believe this would be an excellent opportunity to look at our overall tax structure, especially in the area of tax exemptions that we seem to be unable to address in a responsible manner. Third, I believe that we have to look at our existing programs and the areas that we have cut to see what impact that has had on legitimate government support for some services.”

One thing is certain, we are only in the second month of the new fiscal year and a lot can happen in our state economically in the next 12 months that will influence the direction of our state’s budget next year. In the meantime, let us all remain optimistic for a healthy economic recovery.

Thanks for reading and as always feel free to contact me with issues of importance to you. I can be reached by phone at (208) 265-0123 and by mail at P.O. Box 112, Dover, Idaho 83825. George

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Rep. George Eskridge Rep. George Eskridge the Republican Representative for District 1 in Idaho’s House, George Eskridge can be reached at 208-265-0123 or write PO Box 112, Dover, ID 83825

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