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Gov. Brad Little Orders $200 Million Cut Over Idaho's Coronavirus Fallout

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While Idaho appears to have closed out its most recent fiscal year in the black, Gov. Brad Little is wasting no time in preemptively cutting $200 million from state budgets in the face of falling revenue.

Little issued an executive order last week directing state agencies to cut 5% from their budgets for fiscal year 2021, which began July 1. Those cuts are on top of a 2% reduction approved by legislators earlier this year

Agencies will have to turn in their revised budgets by July 15.

Total revenues for the state could plunge between $349 million and $585 million, according to Paul Headlee, the director of the legislature’s budget division. That’s respectively 8.6% and 14.4% less than what had been anticipated.

Much of that is due to expected drops in taxes.

The Idaho Tax Commission is forecasting a $345 million hit to personal income tax collections as state residents struggle to find a job or claw themselves back to full-time hours. Sales tax revenue is expected to decline by $160 million, while the corporate income tax could bring in $70 million less than last year.

Moody’s Analytics, a financial services firm that models the fiscal health of states, among other economic tracking, said revenues for all 50 states aren’t expected to return to 2019 levels for a while. The report didn’t think it’d even happen by 2024.

While Idaho’s economy has historically been more volatile than the rest of the country, that doesn’t necessarily mean it’ll take longer for the state to recover, Moody’s reported. That’s due to the state’s comparatively low amount of fixed costs, like pension obligations and retiree health care, as well as a sizable chunk of money left in reserves.

Idaho’s various rainy day accounts totaled $635.7 million as of July 1.

Little’s administration hopes to spread out the spending of that money over a period of years to cushion the economic blow from the coronavirus.

“That doesn’t make the cuts any less painful, but in the annals of relativity, we will get through this better than most states,” Alex Adams, the governor’s budget chief, said during a recent meeting with Idaho lawmakers.

Speaking with fellow budget officers from around the country, Adams said other states are facing much more severe hits to their revenue – in one case a 40% drop.

For fiscal year 2020, which just ended June 30, there appears to be a bright spot.

Idaho had expected a $56 million surplus, but a spokeswoman for the governor’s office said that total will be higher. Final figures are expected to be released on Friday.

Follow James Dawson on Twitter @RadioDawson for more local news.

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