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Idaho Governor Butch Otter ordered a 1 percent cut in the state’s budget on Sept. 27 for the fiscal year starting July 1.
This cut resulted in a $2.8 million loss of funding for public universities and colleges and another $14.2 million cut for public school systems.
In an interview with the Spokesman Review, Otter said there was a need for the state to make budget cuts early in the fiscal year.
“Acting in moderation now is the prudent and fiscally responsible thing to do,” Otter said.
In addition to the 1 percent cut, Otter also ordered public institutions to hold another 1.5 percent of their budget in reserve in case a worsening economy prompts more budget cuts later in the year.
For the University of Idaho, the 1 percent budget cut and 1.5 percent spending freeze equates to a $900,000 loss of funding with another $1.4 million to be held in reserve.
This means if the economy continues to worsen, another $1.4 million could be cut from the university.
Lloyd Mues, UI vice president for finance and administration, estimates the cut will have minimal impact on the University of Idaho.
“Before the (cut), we had already started on our realignment process, we had a hiring pause for new employees,” Mues said. “As we are moving forward we anticipate that the 1 percent will be made up from cost avoidance, the hiring freeze, and a reduction in travel among other things.”
The state of Idaho has three savings funds set up to protect against cuts in public spending. The $115 million education fund was set aside to make up for cuts in funding to public education. The state department has already decided to replace the $14.2 million taken from public schools with money from this fund.
If the state decides to cut the additional money held in reserve, it could drain the education fund by $35 million or 30 percent.
Tom Trail, a state representative from Moscow, said he is concerned about the impact on the education fund and public education should be Idaho’s main concern.
“Back in 2003, when we had a 10 percent holdback, the legislation had a bipartisan agreement saying that the highest priority is public education,” Trail said. “The decision was reached to protect education, while everyone else took the 10 percent hit.”
Trail said the same precedent should be followed again to maintain public education.
“We have to place a higher priority on education again this time in order to protect vital programs,” he said.
If Idaho decides to use money from its savings programs to make up for shortfalls in the state budget, Trail said he wants the money first used for public education.
“Obviously if we have to tap these reserve funds, I will be right in line to fund higher education with it,” Trail said.
“Higher education should be top priority. Those funds are there to protect higher education, and therefore it should be used to support and sustain vital programs.”
The legislature is discussing other options to provide revenue for the state budget. One idea would install an income tax surcharge on homeowners.
Currently, farmers who own large plots of land pay more in property taxes than other citizens with potentially higher incomes who just own a home, Trail said. The surcharge would make up for the disproportionate property taxes levied against farm owners.
Trail said that raising taxes during periods of economic uncertainty would be difficult.
“I doubt the legislature would support any proposal for a tax increase,” he said. “I would have to see the details on it, but it if supported higher education I would certainly consider it.”
Idaho has received some recent help from the federal government. The $700 billion bailout bill contained an earmark of $14 million for Idaho that directly benefits schools in areas with large amounts of federal timberland that receive less funding from property taxes.
Despite the budget cuts, Trail said there are other concerns the University of Idaho needs to focus on.
“I feel the biggest challenge at the University of Idaho right now is selecting another president,” Trail said.
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