Balancing The Budget In Idaho

by Pia K. Hansen


Washington is not the only state in the nation struggling to balance its budget. Though Idaho's budget shortfall is by no means as big as Washington's, it still sits at a hefty $200 million.


Last week, Governor Dirk Kempthorne proposed to increase the state sales tax from 5 percent to 6.5 percent to cover the shortfall. If this proposal passes, it will be the highest sales tax increase since the mid-1960s. The increase would be effective as of May 1, and it would raise an estimated $240 million a year. But it wouldn't be permanent: It would expire on June 30, 2006. Kempthorne also proposed to raise the cigarette tax from 28 to 62 cents a pack, starting this summer.


As a part of Kempthorne's plan, the state's reserve funds would be replenished, public schools would receive an extra 2.5 percent of funding and some of the higher education building projects that have been put on hold would be funded as well.


That's good news for North Idaho College, which is hoping to get $11 million in 20-year state bonds to finance a new nursing and science building.


The deal is by no means, done, however, as Republican legislators are recoiling at the thought of voting for a tax increase. Still, as in Washington, there are no easy answers, so the legislature will have its work cut out if it wants to overrule the governor's plan.


State Sen. Shawn Keough (R-Sandpoint) told the Coeur d'Alene Press that she wants to investigate ways to make state government leaner.


"So far, people at home are saying no to the sales tax increase. They want me to look further to make sure we have cut all the fat," Keough said after listening to the governor's speech last week.


"I'm not convinced that [the sales tax increase] is the way we need to go."