Budget and revenue forecasters for the state of Idaho projected a decline of as much as $585 million to the state budget due to the effects of COVID-19.
Tom Harris with the Idaho Tax Commission presented updated forecasts Wednesday to state lawmakers on the Economic Outlook and Revenue Assessment Committee. That projection shows a 14.6% decline in state revenue, about $575 million.
"We take taxpayer history and kind of roll it forward," Harris told the committee during the meeting, which was broadcast and archived by Idaho Public Television's 'Idaho In Session.' "But we’ve had some pretty big disruptions, so comparative ability year-to-year is going to get much more difficult.”
In other words, it's hard to predict something like income tax revenue when Idahoans' income is changing so dramatically. Not to mention continued changes as the pandemic and its fallout continue. Add to that the potential of additional federal stimulus aid — which is not taxable by Idaho — and predictions get very "squishy," an adjective used several times to explain how unstable the projections are.
Tax revenue forecasts for FY21, which starts July 1, showed drops of 28% in corporate taxes, nearly 19% fewer personal income tax revenue and almost 10% fewer sales taxes collected. One sector bucking the downward trend: alcohol. The Tax Commission is predicting a slight increase in tax revenue from alcohol sales.
Legislative Services Manager of Budget and Policy Analysis Paul Headlee told the committee that, for budgeting purposes, lawmakers should plan for between $349 million and $585 million fewer dollars in state coffers next year.
“I think with a combination of austerity, reserves and maybe some federal funding, this should be manageable,” he said.
Governor Brad Little has said he’ll mandate a 5% budget cut across state agencies for the coming fiscal year. That could make up about $200 million of the projected shortfall. The coming 5% budget cut, which cannot be mandated until the start of the next fiscal year, comes on top of a 1% holdback in the current fiscal year and 2% holdback previously planned for FY21.
Idaho reported nearly $600 million spread across five different reserve funds, but lawmakers likely want to stretch those reserves out as long as possible.
Some positive news from the presentation: Idaho should end its current fiscal year June 30 close to original tax revenue projections despite the COVID-19 pandemic. Forecasters say revenue is expected to be within 3% of projections.
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