Shortfall in May tax revenues could affect schools
The Idaho state government collected $8 million less in taxes than it expected in May, though it still has a $66 million surplus going into the final month of the fiscal year. Most of any surplus left would go to public schools, though one lawmaker in charge of the budget said schools should hold off on spending that money right away.
“We’ve tried to encourage districts that have talked to us to not count on it and budget it,” said Sen. Dean Cameron, R-Rupert.
The added money for schools is part of a law passed during the legislative session to meet the requirements of the 2009 federal stimulus package that gave Idaho more than $100 million for public schools. State schools chief Tom Luna said last month that schools could be looking at an extra $50 million, but with the May tax report below expectations, that amount is less likely.
Cameron said school districts would need to treat the money as a one-time windfall, not part of their ongoing yearly budgets. He said they might want to hang onto it in case there are any more spending cuts from the state. Those cuts include the drop in salary-based apportionment for teachers and staff scheduled to start in the next school year, as part of the education reforms backed by Luna but opposed by Cameron.
Luna’s spokeswoman Melissa McGrath said the Department of Education will wait to see how much money schools would receive before making a recommendation to local districts. Some districts, including those in Coeur d’Alene and New Plymouth, have already decided how any extra money they receive from the state will be spent, including going toward staff salaries or reducing furloughs.
Cameron and Gov. Butch Otter’s budget chief Wayne Hammon said it’s too early to tell whether the current $66 million budget surplus will grow, shrink or hold through June, which is one of the larger tax collection months in the state.
“It would be unwise to draw any conclusions about where the State will finish the fiscal year before we see the results from the current month,” Hammon said in an e-mail to lawmakers. Idaho’s fiscal year ends on June 30.
The biggest shortfall in May tax collections was in the personal income tax. Hammon said that was due to the state paying out more refunds for 2010 taxes than expected. Corporate income tax collections were above predictions, while sales tax revenues were slightly less than expected.
“We’re still in this cycle of mixed messages on the economy,” Cameron said about the May tax numbers. He also expressed concern when Idaho collected $14 million more than expected in April. “It’s disappointing, but it’s along the same lines as we thought. It’s part of the reason that we’ve been preaching caution.”
The state has collected tax revenues below expectations only one other month during the current year, in December. Lawmakers set their budget with an expectation of 4.2 percent growth in tax collections, and by extension in most economic activity, for the current fiscal year, and 3 percent growth for the next 12 months.
Read more about May tax collections at Idaho Outlook, published monthly by the Division of Financial Management.