Idaho’s budget chief Alex Adams on Thursday hailed Gov. Brad Little’s push to relieve over $455 million in taxes for individuals and businesses while boosting infrastructure projects.
The proposals Adams touted at the Idaho Falls City Club’s weekly talk focus on how to use hundreds of millions of state tax revenue that analysts, himself included, didn’t predict the state would have.
“We’re fortunate to be in this position,” Adams said. “I compliment Gov. Little every day when I see him for his leadership through difficult times.”
Idaho’s fiscal outlook is the product of what Adams described as “one of the most unique budget years,” when economic activity hit the brakes last spring, as the novel coronavirus crept into the state, prompting Little to issue a monthslong stay-home order and causing unemployment levels to rise by 10 percentage points.
Projections for a nearly $400 million budget shortfall during the pandemic, produced by Little’s Division of Financial Management, which Adams directs, proved false.
Federal aid for small businesses, local governments and struggling workers helped tide states over. Adams said Idaho leveraged its $1.2 billion in aid especially well. “That accounts for some” of Idaho’s good financial outlook, “but not all,” said Adams, who served as chairman of the committee that advised Little on how to spend the federal aid, which the U.S. Treasury Dept. said could not be used to directly offset revenue losses.
“Our approach, in using those funds, was getting as much of it (as possible) into the economy,” Adams said.
Adams argued that trimming spending at state agencies by holding back funds, halting most hiring and other “tough actions” resulted in the state’s pocketbooks weathering the budget blows. Adams referenced a graphic from The New York Times on Dec. 18 that said Idaho saw the sharpest rise in tax revenue of all states between March and October 2020.
Opening the legislative session with his State of the State on Jan. 11, Little called for restoring the cuts he imposed on the state budget at the start of the fiscal year out of concern for the pandemic’s impact on state revenues; and a $206 million investment into transportation projects, including a $126 million one-time appropriation and $80 million in annual funding, according to the Idaho Press.
Accompanying that, Little hopes to cushion the state’s rainy day fund used during poor economic bouts by siphoning $500 million into it over two years. The fund now sits at $600 million, which Adams called far from “chump change.”
“My budget leaves a prudent surplus, bolsters rainy-day funds, and reflects my continued priority on education, including our valuable teachers,” Little said during his State of the State.“Out of times of great difficulty often comes opportunity,” Adams said Thursday, “and this has given us some opportunity to do some really big things, things that the state needs.”
What to do with Idaho’s big budget surplus will be a focal point during a busy 2021 legislative session, when lawmakers will devise the state’s balanced budget, as mandated by the state Constitution.
In a brief, one-page analysis published Wednesday, the nonprofit think tank Idaho Center for Fiscal Policy argued that the budget surplus would be $277 million if the state let agencies spend all the money that lawmakers had allocated them last spring for Fiscal Year 2021, which began last July and ends this June, by restoring the $248 million in funds that Little halted from being spent in early spring.
“These unexpected dollars represent uncommitted funds that could be used to invest in transportation, education, and other areas that support long-term economic growth,” the analysis concluded.
Asked about that, Adams said “that’s the easy decision, but we didn’t think it was the right decision.” All told, with federal funds injected to relieve strains and boost new projects, Adams said K-12 schools ended up having $3 billion total this fiscal year, $0.3 billion more funds than they were allocated.
“We said, ‘How do we get the best bang for our buck? How do Idahoans get the best bang for our buck,’” Adams rhetorically asked, soon answering: By “reinvesting it” into new projects and restoring agency budgets next year.
Editor's note: This story has been updated to correct information about state agency appropriations for the 2021 Fiscal Year.