[Vision2020] Spring Revenues Surge to Historic Levels

[Tom Trail]

Visionaires:

A newsletter from Idaho Legislative Services has a brief summary of the
financial situation in the state which you might find of interest.  The
Idaho Legislative Perspective reports spring revenues surge to historic highs.
Fueled by unprecedented strength in revenue growth for the spring 
months, the year end balance for the current fiscal year is expected 
to top $200 million, twice the amount estimated just three months ago 
during the legislative session.  With one month to go in the fiscal 
year, the General Fund is $100.3 million ahead of projection through 
May, which effectively doubles the anticipated year-end balance. 
Through 11 months, FY 2005 base revenues are an astonishing 15 
percent over the previous year.

Rolling those numbers through to fiscal year 2006 will change the 
estimate from a slight deficit of $5.6 million to a positive year end 
balance of $160.8 million.  However, there is a ling way to go before 
fiscal year 2006 completely unfolds.  There is some cautionary 
speculation that the surge in revenues has been fueled to a 
significant degree by the constructon industry, much like the late 
90s were fueled by the high tech boom, whose subsequent crash was 
sudden and deep.  At this time, however, the state budget situation 
is the best it has been for three years, and the budget decision to 
be addressed during the
2006 legislative session could be much less problematic than 
originally anticipated.

More important to the big picture is the distinct possibility that 
the state's so called structural deficity (the inability to support 
ongoing expenditures with ongoing revenues ) is actually 
disappearing.  Of course, the design all along was to keep a tight 
lid on expenditure growth, and hope that economic
performance would replace the need for one time revenues."

In the short term this is good economic news for the State; however, one should
take a cautionary view in terms of what we went through four years ago with the
high tech collapse.  I hope that in the short term we could address the issue
of state employee compensation.   Rep. Ringo has indicated she might introduce
a negative supplemental to increase salaries by 2%.  I certainly would be
supportive of this approach.  The good economic news should not negate the
need to look at tax restructuring which would include all of the issues
relating to a fairer property tax.

Rep. Tom Trail
-- 
Dr. Tom Trail
International Trails
1375 Mt. View Rd.
Moscow, Id. 83843
Tel:  (208) 882-6077
Fax:  (208) 882-0896
e mail ttrail at moscow.com