The Idaho Legislature convenes January 9th. In advance of the session, we interviewed several legislative leaders and asked them about Idaho’s economy and what the state could be doing to boost growth and job creation.
Sen. Dean Cameron (R-Rupert) is chairman of the Senate Finance Committee and co-chairman of the Joint Finance Appropriations Committee. JFAC is the committee that shapes the legislature’s version of the state budget. He’s been a lawmaker since 1991.
Q: How will JFAC approach the budgeting process? Do you anticipate further budget cuts?
A: We certainly are seeing some improvement in our revenue stream. And I would remind you, the state’s revenue stream is really a lagging indicator of the state’s economic conditions. That’s always a little frustrating because sometimes the economy feels like its better but the revenue isn’t coming into the state as fast. So the revenue has been lagging behind our economic conditions, but there is some slight improvement. We believe with current forecast, we’re still yet to make a formal recommendation for the upcoming fiscal year. We believe it won’t be as difficult. It still isn’t great. We’re still below 2008 revenues. We still have agencies that are significantly funded below the levels they were in 2008 and 2009. And we don’t have any reserves left because we’ve used all the reserves to mitigate the reductions over the last three years. So, we’re in a little bit more of a precarious situation, but we don’t anticipate revenue further declining.
Q: What is the challenge in putting together budget plans this session?
A: The challenge has shifted. It still will be difficult because we still aren’t meeting the needs of Idahoans and Idaho agencies as they provide services to the public. Unfortunately we didn’t see a lot of change in the functions agencies are required to produce. Agencies are still required to provide all the same services they were going into this downturn. They just have had to try and figure out more efficient ways to do it, maybe not more efficient ways, they’ve just had to deal with the reductions. In some ways it makes our job easier, because we won’t be necessarily looking for further reductions. On the other hand, it will make our job difficult in a different way. We still won’t have enough money to restore everybody back to where they were, and it’s my understanding that’s not what the governor is recommending anyhow. There will be a debate over who and what gets restored, what will be funded. There’s still not enough money to cover the needs or the requests out there. And then there will be a philosophical debate between: how much money should go toward restoration for agencies, how much money should go toward reserves, and how much money should be used for economic development or tax relief or those types of approaches.
Q: Are there particular agencies that have been hit harder? Where should money be prioritized?
A: Sure. There are agencies over the last few years that have been hit very hard, not the least of which would be public health districts and higher education. They’ve probably taken more than their share of the reductions. Those will have to be addressed. The agencies that have taken some of the least reductions are some of the most important, critical core issues the state has to fund. Our mission is to provide for the public education, health and safety of the public. Public education has had some reduction, but comparatively to higher ed, they’ve been held more at bay. Albeit, they haven’t had increases to deal with additional students nor has higher education. I think public ed is the highest priority and will receive more attention, as it always has. Public health, such as Medicaid, a large debate is hugely important, but at the same time it’s growing faster than we can sustain and certainly what our economy is growing at. So, that will continue to be a problem I’m certain. Money will need to be applied there and unfortunately there is just not enough money. So, you’ll be robbing from other places in order to fund Medicaid appropriately, or you’re going to underfund Medicaid to fund others. That’s the rub.
Those two agencies will get the bulk of the attention. The other two agencies that have gotten hit some of the hardest would be public health districts and higher ed. Another one that hasn’t been hit as hard, but we’ve been blessed because we haven’t had a lot of growth, and that’s our corrections department. We’ve been able to manage a pretty flat budget with them, and that’s because we haven’t had a big increase in inmates. That could change at any time.
Q: How do you balance agency needs with tax incentives? Is a new tax incentive or cut feasible?
A: I’m certain it will be discussed. I’m less certain that it will meet muster. I know all of us want to look for ways to assist the economy further. Because, we know that’s the short range plan for building ourselves out of the dilemma. Long range investment in the economy is an investment in education and higher education and community colleges, and we’ll certainly be doing that. Short range investment in the economy requires some form of stimulus, either by tax credit or tax break, or economic development funds. The debate will be difficult. There will be many who will propose tax reductions, more for political purposes than necessary for effectiveness. One of the things we’re going to caution is that if in fact you’re going to do something, you’re going to do something that will be truly effective. From my perspective, and this doesn’t match with political motives, but we are a year away from being able to propose an appropriate tax package, maybe even longer than a year away. We are still well short of the revenue needed, and there are needs that are absolutely necessary. I also believe from a budgeting standpoint, the best economic tools the state can have is a balanced budget and the reserves to retain a balanced budget in the event of a double-dip recession or another downturn. One of the other difficulties is, if you fund some level of tax relief, it may end up being miniscule in nature to the average person or average business. I remember a few years ago when Governor Kempthorne proposed tax relief and he had a dollar amount he was trying to work within, and it was a $50 credit per person. Well, a $50 credit from the state, whether it be to a business or an individual, will not stimulate the economy. Sure, they might go out and spend that $50, but it really won’t do anything. On the other hand, that $50 reinvested in some of the programs in the state will have significant results to the economy in the long run. Particularly if you put that amount in higher ed or community college or economic development programs. That will be part of the debate, the political side: everybody would love to do something and take credit for helping the economy. Then there’s the other side, one has to be realistic.
Q: Can the state be in the business of job creation? What can the state do to help growth?
A: First and foremost is a stable tax environment and a stable budget. A message to businesses that might be looking to locate in Idaho,is that Idaho has got their budget under control. They’re not going to overspend. They’re not going to put us in a situation where we’ve got to come back and ask for tax increases. Secondly, with that comes an educated workforce. A workforce that provides the necessary tools and education to be able to perform these jobs. I’ve painfully listened to businesses say they need to go outside the state or outside the country to find people to fill their needs. Well, that in my opinion is a fault of the state. That’s a weakness of the state of Idaho that we need to address. In my opinion, that should be high on the to-do list. We certainly want less regulation. We obviously want to protect our clean air and clean water. So when I say less regulation, I don’t mean put those things in jeopardy, but I do mean that the government needs to be as cooperative and working with industry as much as possible to make sure they’re complying with the necessary safety features in a positive aspect rather than an adversarial approach. And to the extent possible we have resources, it’s always nice to provide things like grants to help businesses to train their employees, particularly through our community college system. That’s where the College of Western Idaho and College of Southern Idaho have done a great job over the years in providing that level of training. CWI is just getting their feet wet, and I can see them being a great economic boon to businesses that want to locate in the Treasure Valley. So, there are certain approaches than can be taken. The question I think for the legislature is do they want the short term quick approach that may not be as effective or do they want the long-term, longer range economic stimulus.