Bringing the Economy Home

Idaho’s Budget Process Isn’t a Hard Science

Kevin Rank / Flickr

The Idaho State Capitol in Boise

Tuesday afternoon a group of lawmakers will pick a number that could have a big effect on Idahoans.  The Economic Outlook and Revenue Assessment Committee (EORAC) will choose a revenue estimate.  It’s the number that will determine how much money is available for public services.

Sure, it’s hard to work up a lot of enthusiasm about as dry a subject as revenue estimates, but before you move on to different story consider how lawmakers will choose this all-important number.  One state lawmaker referred to the current system as the ‘crystal ball method’, and that’s basically on point.

EORAC’s revenue estimate is essentially a guess.  Each year, the 18-member bipartisan panel meets for two days before the session begins.  They listen to business leaders, economists, state officials and interest group leaders about the current state of the economy.  Some of the information is highly data-driven, like the state’s quarterly tax collections.  Some of the information is more anecdotal.

At the end of that meeting, the lawmakers and economists fill out a spreadsheet with their predictions of future tax revenue for fiscal years 2012, 2013 and 2014.  Based on that, each person writes down their best guess of total state revenue for the next budget year (in this case, fiscal year 2013).  Legislative budget analysts then add up all the estimates and calculate the average and median.  Those numbers will be given to the panel tomorrow, at which point they can either vote to accept either the average or median, or pick an entirely new number.

Lawmakers on the panel had to make their guesses before the governor released his budget proposal (which include revenue estimates).  Legislative budget analyst Keith Bybee said EORAC’s prediction often mirrors the governor’s.

Idaho Senate / Idaho State Legislature

Sen. Keough is serving her eight term in the Idaho Legislature.

Sen. Shawn Keough (R-Sandpoint) has been on the revenue estimating committee for the last few years.  “Whether you’re an economist, governor, administrator or legislator you’re making your best guess,” she says.  In the past, Keough has sponsored legislation to change the system so the legislature would either budget based on tax collections from the previous year.  She says it would have helped get away from the system of informed guessing. That bill died in committee.

EORAC’s process used to be more informational.  Basically, lawmakers on the committee held hearings in order to determine whether the executive estimate was reasonable, says economist Mike Ferguson.  They weren’t actually creating their own forecast.  “This thing has morphed into something that is, in a way, sort of odd,” he says.

Once the Economic Outlook and Revenue Assessment Committee votes on its revenue estimate the number moves to the Joint Finance Appropriations Committee where lawmakers can either accept the prediction or, you guessed it, pick their own.


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