Four years ago, Idahos former chief economist, Mike Ferguson, argued that Gov. Butch Otter and the GOP-dominated Legislature had lowballed revenue estimates and cut programs too deeply.
He wound up being vindicated.
Now director of the Idaho Center for Fiscal Policy, Ferguson is about to show up the governor once more.
This time, Ferguson has no qualms about how much tax money Otter expects the states economy to generate. But he thinks the governor is playing a shell game with it.
By funneling more than $70 million toward six reserve accounts that already have more than $200 million and offering another $30 million in tax relief Otter has handcuffed Idaho to what White-Cloud Analytics CEO Bob Lokken last week dubbed "a death spiral."
Fifteen years ago, Idaho led five states in how much money it allocated to each school student. Since then, Idaho has cut back and it leads just one state Utah in terms of per-pupil expenditures.
Poorly educated Idahoans are trained to work for low pay. Therefore, the state has produced the largest proportion of minimum-wage jobs in the country.
In 2007, Idahos per capita earnings were better than seven states. Today, only Mississippi has a lower per capita income.
Otter says Idaho must scrimp and save again even though it means continuing to give education a smaller slice of Idahos expanding economic pie. At this rate, public education has lost 25 percent of its share of personal income. If the states commitment to public schools had not been tampered with, education would have about $625 million more every year.
And so Otter feeds the cycle.
Disinvestment in education begets unskilled workers who command less money and pay fewer taxes, which leaves fewer resources for education.
Ferguson has a way out of the cycle.
He would stop the corporate tax goodies. Last year, $20 million was sliced from the property taxes due on equipment. The year before that, corporate and wealthy individual income tax rates fell by $35 million. Two years is enough.
Ferguson would also stop putting money on ice. Idaho has a sufficient financial cushion.
If it needs more, Ferguson suggests accepting the Obamacare offer to expand Medicaid coverage to 100,000 working poor adults thereby freeing up more than $40 million the state now spends providing care to that same group of people.
All in all, that would leave about $130 million to spend in the budget year that begins July 1. Heres what Ferguson would do with this money:
- $35 million so the state can double (for a total of $70 million) what Otter has proposed for school funding.
- $21.5 million in pay hikes for public employees.
- $36. 8 million pay hikes for teachers.
- $35 million to restore funding for those suffering with mental illness.
Odds are Otter and the GOP arent going to reverse their priorities. Ferguson will have to settle for bragging rights in a year or two.
He has stripped away the veneer and revealed this much: Idahos leaders are making conscious choices. Nobody is holding a gun to their heads.