The state fiscal year (SFY) 2018 budget, recently presented to the Legislature by Gov. Butch Otter, is unfair to Idaho families. Otter’s budget starts from the premise that the current budget surplus belongs to special interests and state agencies.
The message Idahoans should send to legislators: The surplus belongs to us; restrain Otter’s spending ambitions and give us back our fair share of the surplus.
The governor’s presentation and published reports suggest that general fund spending would increase a mere 5.9 percent over the current budget. What’s not mentioned: $53.7 million is being transferred from general fund revenues to special funds to make the increase look smaller. Also not mentioned is the SFY 2017 comparison starting point, which includes an extra payroll period and other one-time spending, which also help make Otter’s spending spree appear smaller.
The above are significant points. Remove the budget tricks by adding the cash transfer back to the general fund, and use a SFY 2018 base as the starting point — and Otter’s budget increase swells to 9 percent.
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Put into context, the governor’s budget projects revenues to grow 5.4 percent in the current fiscal year and 4.6 percent in fiscal 2018. So, the true spending increase is nearly double the projected revenue increase. But, saved by surpluses, Otter’s budget would balance.
On Jan. 5, Idaho’s chief economist, Derek Santos, spoke to a legislative committee. He projected Idaho’s nominal personal income growth for fiscal 2017 to be 3.9 percent, and in 2018, 4.5 percent. Similarly, Idaho’s wage and salary growth for the same years is projected to increase 5.6 percent and 4.8 percent, respectively.
So, in sum, the governor is pushing to grow state government twice as fast as incomes. Will your annual income go up 9 percent next year?
What is the cost increase to maintain government at its current size, give state employees a cost of living adjustment, maintain their generous benefits, replace assets (automobiles, furniture, etc.), add inflationary adjustments, and maintain full funding for the teachers’ career ladder?
That 4.1 percent is based on agencies’ program maintenance requests. That 4.1 percent is less than half of what Otter wants.
Now you see why Otter has proposed no broad-based tax cuts. He wants to spend everything — and more.
What about the notion that the governor has already cut a cumulative $1 billion in taxes since SFY 2009? For starters, more than 60 percent of that amount is for the expanded grocery tax credit — which came on the heels of the sales tax increase from 5 percent to 6 percent. Let’s put that in perspective for SFY 2017. The expanded grocery credit is worth about $111 million to Idahoans, but the extra one penny in sales tax costs you about $272 million. Never mind the fuel tax and registration fee increase that was imposed in 2015.
It is up to the Legislature to hold the line on Otter’s spending gambit and return some of the surplus to Idaho families — in the form of tax cuts.
Fred Birnbaum is vice president of Idaho Freedom Foundation.