In January of 2008, Governor C.L. “Butch” Otter submitted his budget for Fiscal
Year (FY) 2009. At that time, Idaho’s budget skies seemed sunny, and its seas, calm. The
governor expected adequate revenues to fund major priorities. One month later, as state
lawmakers began to decide on appropriations, the budget skies clouded up, and the
waters got choppy. Otter learned that General Fund revenues would be less than the
earlier estimate. Storm clouds appeared on the horizon, formed by the effects of the
nation’s economic problems.
Our paper is an initial analysis of the governor’s budget for FY 2009 and
important events affecting it. We examine the economic and revenue contexts for state
budgeting, contents of the budget, and recent developments. We must wait until after the
legislative session before we can offer a more complete analysis of how successful the
governor was in navigating his budget through these waters.
SUNNY SKIES AND CALM WATERS
In January of 2008, revenue forecasters in Idaho’s Division of Financial
Management (DFM), located in the Office of the Governor, expected Idaho non-farm
employment to grow by 1.6% in 2008 and 2.1% in 2009 and personal income, by 5.7%
and 5.8%, respectively (Division of Financial Management 2008b, 21). These rates were
better than those for the nation as a whole. The prospects for specific sectors varied. Job
growth in the goods producing sector was to drop by 3.5% in 2008 and 1.1% in 2009,
declines which were more than the estimates for the United States overall. Employment
in non-goods producing was to increase by 2.8% in each year and do better than the
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