Idaho and the Federal Stimulus Package
By Senator Brent Hill
People are lining up across the country for the free money promised by the American Recovery and Reinvestment Act. This federal stimulus package promises to rescue us from poor decisions made by governments, businesses, and individuals over past decades. Bad investments will be made good, poorly-run companies will be subsidized, and, if all goes well, consumer confidence will once again propel us into spending beyond our means. Of course, those who have eyes to see beyond tomorrow understand that this money isn’t free at all—we and our children will pay dearly for it.
Should we take the money?
Governor Otter and the Idaho Legislature have requested $1.2 billion in stimulus funds to mitigate revenue shortfalls caused by the current economic recession. Acquiring these funds permits Idaho citizens to recover a portion of the federal taxes and other burdens they will bear as a result of the massive federal spending program.
Does the stimulus money come with strings attached?
Some of the funds offered to Idaho would require us to create new state programs or expand existing programs. That would grow government and, when this one-time money is gone, Idaho taxpayers would be left to fund those ongoing programs. We have rejected federal funds that come with such strings attached.
Does the stimulus money eliminate the need to raise transportation taxes?
Cities, counties and the State of Idaho will receive a total of $200.3 million for building roads, bridges and highways. This one-time money that must be used for specific projects does little to alleviate the growing backlog of maintenance and repair of the state’s highway system. At best, the stimulus funds postponed the need to raise fuel taxes, registration fees or other funding sources for a year or two.
Will the stimulus funds prevent cuts to public education?
Idaho will receive $260.4 million for K-12 public education over the next three years. In addition, our schools will realize savings in other areas such as energy efficiency programs financed by the stimulus funding—freeing up school moneys for other purposes, but this is far short of the funds needed to hold public schools harmless.
What about Idaho’s “rainy-day” funds?
One of the big decisions facing the Legislature this year is how much of our rainy-day funds to use. Everyone agrees that it’s raining, but no one knows how long the storm will last. We are currently projecting that over 90% of the $321.8 million in our rainy-day accounts will be spent over the next three years to ease cuts to public education and other vital state services. We hope the economy will improve in time to spare us using all of the funds, but there is no indication of that yet.
With the stimulus money and rainy-day funds, can we avoid cuts?
Even using the rainy-day accounts and all of the stimulus money, we still face significant shortages over the next couple of years based on current economic forecasts. That means trimming some government programs and eliminating others. It means school teachers and state employees will face some job cuts and decreasing wages, but, thanks to those rainy-day funds, not to the extent of most other states.
Are we going to make it?
These are very tough economic times. Those who have lost their jobs, their homes or their retirement funds struggle to find hope amid despair. The road ahead will not be easy, but we will travel it together. Idaho’s economy is one of the best in the nation, thanks to the prudence and foresight of its people, and our economic recovery will be among the earliest and strongest. Our national leaders could learn a lot from Idaho’s people. I hope they figure that out soon.