JFAC finally gets down to the nitty-gritty
Legislative panel will begin setting agency budgets

                    By Ken Miller
                    The Idaho Statesman

                    Legislative
                    budget-writers will begin the most serious work of the
                    2002 session today -- writing the state´s budget for the
                    coming year and slicing Idaho´s shrinking revenue pie.

                    Members of the Joint Finance-Appropriations
                    Committee are looking at a $2 billion budget. Odds are,
                    they won´t have enough money to pay for it.

                    First, JFAC must wrestle with the wreckage of this
                    year´s budget. Lawmakers have approved a revised
                    budget that includes not only Gov. Dirk Kempthorne´s
                    $55 million in cuts to adjust for declining tax collections,
                    but also chopping out an additional $8.3 million for the
                    current year. Government agencies have been directed
                    to tell JFAC how they plan to make the additional cuts,
                    but, as of Friday, not all of them had.

                    Budget-writers expect to know today how the
                    departments will deal with the latest budget cuts and will
                    send a budget revision to the House and Senate this
                    week.

                    Which leads to the 2003 budget year, beginning in July.
                    Here´s a look at how Kempthorne and lawmakers will
                    deal with the tough budget year ahead:

                    Question: Who writes the state´s budget, and what is it
                    based on?

                    Answer: The governor submits a proposed budget after
                    the Legislature convenes in early January. The
                    governor´s office spends the fall scooping up budget
                    requests from all state agencies, crunches the numbers
                    and balances them against key programs. Some
                    agencies will see their requests survive; others will face
                    reductions, as happened this year.

                    Q: Then what?

                    A: The governor´s budget is essentially a
                    recommendation to the Legislature, which has the final
                    say on budgets for all agencies. The JFAC will soon
                    start kicking budgets for all agencies, from the huge
                    Department of Health and Welfare to the Department of
                    Fish and Game and the State Lottery, to the House and
                    Senate for final approval and on to the governor for his
                    approval. It´s rare for the governor to kill an agency
                    spending bill, but it has happened.

                    Q: We hear about all of these budget cuts in 2002, but
                    most of the action seems aimed at the 2003 budget.
                    What´s the difference?

                    A: When the Legislature adjourned last spring, it set
                    the budget for fiscal 2002, which runs through this
                    June. Lawmakers left Boise last spring thinking the
                    budget was in great shape, and they left $64 million
                    unspent to take care of any unexpected expenses. But
                    then the economy went south, and that $64 million
                    disappeared. Then things got even worse. The
                    revenues the state expected to receive from such
                    things as personal and corporate income taxes and
                    sales taxes didn´t come in as predicted. So as the
                    budget year began, the state´s budget began to
                    unravel.

                    Q: Budget year?

                    A: Idaho´s fiscal year runs from July through June. So
                    the budget set by lawmakers last year is for the 2002
                    budget year, which began last July and runs through
                    this June. This is important, because the big budget
                    debates that will begin today in JFAC deal with the
                    budget year that will begin this July. JFAC will spend the
                    rest of this month setting the 2003 budget.

                    Q: What´s the big budget issue this year?

                    A: There are two major issues. The first will come up
                    Wednesday, when JFAC takes up funding for public
                    schools support and for college and university
                    spending, which accounts for more than 57 percent of
                    the state´s spending. Other education spending
                    requests will come up later this month, around Feb. 21,
                    but public education spending is so big it will set much
                    of the landscape for the rest of the state´s budget.
                    After education, the biggest item will be the Department
                    of Health and Welfare and its Medicaid program, which
                    will command about $240 million in state taxpayer
                    dollars.

                    Q: Where does all this money come from?

                    A: Almost half of all state general fund money -- about
                    $1 billion, or 48 percent -- comes from individual
                    income tax collections. The rest comes from sales taxes
                    ($696 million, or 33 percent of the total); followed by
                    $293 million in other tax collections (or 14 percent), and
                    $110 million (5.2 percent) in corporate income tax
                    collections.

                    Q: Will lawmakers take back my income tax cut?

                    A: No. Democrats in the Legislature say the big tax cut
                    is part of the state´s budget problem, but Republicans,
                    who hold all but 12 of the 105 legislative seats, are
                    nearly unanimous in opposing any erosion of the
                    tax-cut approved last year. While Democrats say the
                    tax cuts are largely to blame for the budget crisis,
                    Republicans say those same cuts have helped fuel
                    economic growth.