BOISE — Despite some misgivings by a few, the Legislature’s joint budget committee voted unanimously Friday to back the governor’s recommendation to increase the cap on the state’s main rainy-day savings account from 10% of general fund revenues to 15%, and to transfer $20 million from the state general fund into the savings account.
Backers of the move said it will help the state prepare for the next recession, whenever that comes.
Gov. Brad Little is proposing a big deposit into rainy-day funds over the next year: This $20 million to the Budget Stabilization Fund this year, and $50 million in the next fiscal year that starts July 1; plus $32 million to fully refill the Public Education Stabilization Fund after transfers had to be made from it this year due to growth in Idaho’s public school student population. That adds up to a total recommendation of $102 million to be transferred to the state’s main savings funds.
“I’d like to thank the governor for his foresight to look ahead,” said Sen. C. Scott Grow, R-Eagle, who made the motion in the Joint Finance-Appropriations Committee on Friday morning. “He knows the time to prepare for the bad times is in the good times.”
“We’re not saying there’s a recession in the next six months or whatever, but we’re saying we know the economy cycles,” Grow said. “At some point we will have another recession.”
Rep. Britt Raybould, R-Rexburg, seconded Grow’s motion, which both introduced the bill and sent it directly to the 2nd reading calendar with a recommendation that it “do pass.” To become law, the bill still needs approval from the full House and Senate and the governor’s signature.
“I’m really struggling,” said Rep. Melissa Wintrow, D-Boise. “We’ve heard that we’re in a time of plenty and good times, but for the last three weeks I’ve heard that we’re in a time of bad times, and the revenues are down. … The deep tax cut ... of 2018, that’s the backdrop to what we’re doing today. I’m struggling with the philosophy of our state in that we are tightening … and we are struggling, instead of seeing when we are in plenty, how we share.”
“Seeing higher ed today with a deep cut, and the cap on tuition, is really a struggle,” Wintrow said. “I don’t think my stomach has ever been so in knots.”
She added, “There is a bill floating around that would take more money out of the rainy day fund … to transportation … competing with higher ed and education” and said, “I am struggling with what is left to happen, and what will happen to that rainy-day fund.”
Wintrow said she was struggling with the vote, and paused before finally voting yes. The vote was unanimous in the joint committee, 18-0.
Sen. Janie Ward-Engelking, D-Boise, said, “I’m still very concerned about some of the cuts we’ve seen in agencies, but I think it’s a good idea to raise this cap.” Ward-Engelking said she also supported the $20 million transfer to the savings fund this year, but is “not sure” she’ll support the governor’s additional $50 million transfer proposal.
Under current law, the state makes automatic deposits to the Budget Stabilization Fund whenever state revenues grow by more than 4% from one year to the next. That fifth percentage point of growth and up gets automatically transferred into the stabilization fund, until it reaches its cap.
Alex Adams, Little’s budget director, said the governor’s recommendation would get Idaho to about 14.9% of the state general fund in reserves, or $617 million, by the end of fiscal year 2021; that’s the state fiscal year that starts July 1, 2020.
In recent years, the Legislature had temporarily enacted “surplus-eliminator” legislation that allowed additional budget surpluses at the end of each fiscal year to be split between transportation projects and the stabilization fund, essentially replacing the cap. That legislation expired last year and wasn’t extended, so at the end of the year, when the Budget Stabilization Fund had exceeded its 10% cap, the state controller automatically transferred $40 million out of it and back into the state general fund.
The balance in the stabilization fund is about $373 million, legislative budget analyst Keith Bybee told JFAC a day earlier. Prior to the $40 million transfer, the fund grew last year to $413 million, exceeding the cap.