[Vision2020] Spring Revenues Surge to Historic Levels

[Mark Solomon]

Tom,

If the structural deficit "disappearing"  means we may have just 
enough funds to continue starving our state employees, short-changing 
our children's educations and waiting to build prisons to relieve 
overcrowding (forced largely by out-of-touch mandatory sentencing 
laws) until federal judges force us to, then maybe we're on to 
something.

Has there been a projection done that estimates where state revenues 
would be if the 2001 tax cut had not been enacted? While I'm 
certainly glad to hear that revenues are up, the structural deficit 
is far from diminished as we have been unable to invest in both human 
and physical infrastructure costs for the past five years. Just 
yesterday, Idaho Prisons Director Tom Beauclair told members of JFAC 
that he needs $160 million right now to build three new prisons to 
alleviate existing overcrowded Idaho jails.

I share your concern that we may be riding a housing bubble. I've 
heard no other explanation for the revenue increases.

Mark Solomon


At 12:26 PM -0700 6/17/05, Tom Trail wrote:
>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