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Governor asks state agencies to reduce budgets
1 percent, keep another 1.5 percent in reserve

Note: The following announcement was provided by Gov. C.L. "Butch Otter's office Friday afternoon. It calls for Idaho agencies that receive general funds to reduce their FY09 budgets by 1 percent and hold another 1.5 percent in reserve in case additional reductions are necessary.

ITD is not a general fund agency, and therefore, is not affected by the governor's request. The transportation department derives its funds from dedicated funds -- primarily fuel taxes and licenses and fees. In response to changing economics, ITD already adjusted its FY09 budget before the governor's holdback notice. The department continues to monitor transportation revenues and expenditures, and will consider forecast revisions as necessary.

The ITD Budget Council will keep the divisions and broader department apprised of its fiscal status and any changes in planned spending or budgets that may occur. More details will be provided in Friday's Transporter.

Governor's announcement

Gov.C.L. “Butch” Otter ordered a 1-percent state budget holdback today (Sept. 26), directing state agencies to reduce their spending immediately – just three months into the new fiscal year – in response to forecasts indicating revenue may fall more than $174 million below what was projected last winter.

“Acting in moderation now is the prudent and fiscally responsible thing to do. It recognizes economic realities, and it may help us avoid more dramatic spending reductions later in the budget year,” Gov. Otter said.

“I also am directing all state agencies to hold an additional 1.5 percent of their appropriated budgets in reserve for now as a hedge against further declines in state revenue in the months to come. We still hope for the best, but we must plan for tough times ahead.”

A table accompanying this release details how much each state agency is reducing its spending under the 1-percent holdback. Another document provides answers about the process and logistics of the holdback.

Last week the governor directed all state agencies to submit plans for implementing holdbacks of 1 percent, 2 percent and 2.5 percent. He reviewed those plans and determined that spending cuts now were necessary given the continuing economic downturn and projections that it will continue and may worsen throughout and beyond the budget year that began July 1.

Otter advised agency directors and administrators to use their best judgment in determining how to pare spending in order to continue fulfilling their constitutional and statutory duties and to help position the state for recovery.

“I certainly believe that the action taken today by the governor is a wise step towards ensuring that we as a state weather this current economic storm,” said state Sen. Dean Cameron, co-chair of the Legislature’s budget-setting Joint Finance-Appropriations Committee (JFAC). “In this troubled time, we are fortunate to have a partner like Governor Otter who is willing to make tough decisions when called upon.”

Sen. Cameron’s JFAC co-chair, Representative Maxine Bell, echoed his remarks.

“We are honored to stand by the governor as we face these tough times,” she said. “We’ve experienced similar hardships in the pas, and I strongly believe it is a prudent step to order a 1-percent holdback now and put all of state government on notice to set aside additional money in case the situation worsens.”