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ITD budget exempt from governor's holdback request;
review of transportation revenue a constant process

Budget holdbacks announced last week by Idaho Gov. C.L. “Butch” Otter will not directly impact the transportation department because its revenue is not derived from the state’s general fund.

But the economic conditions that prompted Otter to ask most state agencies to reduce their budget 1 percent similarly affect ITD. In contrast to their colleagues at other state agencies, however, ITD’s budget team monitors revenue on a monthly basis, or even more frequently, and recommends adjustments as needed throughout the fiscal year.

ITD’s revenue comes from dedicated funds – primarily fuel tax receipts and fees for vehicle registrations, titles and drivers’ licenses. Revenue is deposited into the State Highway Account and State Aeronautics Fund.

“As a dedicated-fund agency, ITD is usually exempt from governor holdback actions aimed at offsetting general fund shortfalls,” explains department budget officer Joel Drake.

“This does not mean that fiscal management and oversight is less stringent at ITD. In fact, the process of managing and monitoring finances at ITD is more demanding than for most general-fund agencies.”

While most state agencies obtain legislative appropriations for both spending authority and the cash to fund it, ITD only receives spending authority from its appropriation. No funds are provided with ITD's appropriation from state taxes – income, sales or property taxes.

For dedicated-fund agencies, the ability to fund spending authority depends on actual receipts, Drake explains. “This means ITD must deal with continuous, dual fiscal control – where spending is limited to the lower of: spending authority provided by the appropriation or available funding.

“Although one may be higher than the other, the lower of the two always represents the ultimate control on spending for dedicated-fund agencies. If state revenues exceed those carried in the appropriation, ITD must get legislative approval to spend the additional funds.”

ITD’s dual controls include monitoring of expenditures to ensure they are within the spending authority caps set by the Legislature and continuously comparing actual receipts to revenue forecasts.

“As a dedicated-fund agency, ITD must carry out many steps to manage department finances and ensure prudent fiscal management,” Drake says. “The better we understand our projects and financial resources, the better we can respond to changes in the business environment, especially during times of economic uncertainty.”

Of the 62 departments or state agencies listed in a report on general-fund holdback impacts this week, nine are exempt. In addition to ITD, others not covered by the holdback include Building Safety, Finance, Fish and Game, Independent Boards and Commissions, Liquor Dispensary, Lottery Commission, PERSI, and Public Utilities Commission.

The holdback represents a budget reduction target of $27.2 million. The governor also asked state agencies/departments to hold back another $54.5 million as a reserve in the event that revenues continue to fall behind budget appropriations.

See Questions & Answers, provided by the Division of Financial Management