The Death Spiral (or, why is this man smiling?)

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It didn’t occur to me until I happened to watch Idaho Governor Clement Leroy “Butch” Otter delivered a speech with the audio off. Suddenly it became crystal clear that Otter had the look and all the mannerisms of the televangelist, or one of those marketing/motivational gurus like Tony Robbins who want to convince you that success is all about having a positive attitude.

The resemblance is more than just looks.  Otter is a classic snake oil salesman trying to sell Idaho’s citizens that, thanks to his administration, the Idaho economy is in good shape.

Here are the facts:  Governor Otter has presided over the tanking of the economy in Idaho. The state is currently 50th – dead last – in wages and personal income. Idaho is tied for last with Utah in educational investment. The state does lead the nation in one area, however, minimum wage jobs. Yes, after 20 years of uninterrupted GOP rule Idaho’s families earn less than in any other state, 50th, the bottom.

The unwillingness to adequately fund education has put Idaho into what Bob Lokken, CEO of WhiteCloud Analytics, calls a “Death Spiral“.

“I would contend that puts us in a little bit of a death spiral,” said Lokken, whose company specializes in health-care software. He spoke at the Boise Metro Chamber of Commerce’s annual luncheon for legislators.

Idaho ranks at the bottom of the states in per-capita income and leads the nation in the percentage of its workforce earning the minimum wage.

“This is the death spiral: I am trying to grow a knowledge-era business in the state of Idaho, and I can’t find the critical knowledge workers I need,” he said.

Fortunately, there are other voices willing to counter Otter’s “bubble boy” budget with some realism that would put a check on the Death Spiral. Idaho Center for Fiscal Policy Director Michael Ferguson has released a counter, alternative budget that comes closer to adequately funding education, although it doesn’t get the state back to pre-recession figures. Ferguson, who served as the chief economist for the state of Idaho for twenty five years, until 2011, Ferguson outlined

an alternative budget to Gov. C.L. “Butch” Otter’s executive budget that would put more funding into the public school system and restore $35 million in cuts to the state’s Department of Health and Welfare budget.

According to Ferguson,

It is intended to show that Idaho does have the resources in fiscal year 2015 to provide meaningful funding increases to Idaho’s public schools, to restore significant cuts that were made to health and human services … and to provide a long overdue boost to employee compensation for thousands of hard working state and school district employees.

 
The alternative budget:
 

– Does not transfer $71 million to the state’s “rainy day” stabilization funds, as outlined in Otter’s budget. Under this scenario, more money could fund state services while Idaho would still have about $291 million in reserve funds, Ferguson said. Otter said in his State of the State address that money is needed in reserves to prepare for future economic downturns.

– Removes $30 million in unspecified tax relief as proposed in Otter’s budget.

– Gives a 4 percent increase in employee compensation. Otter’s budget marks the sixth consecutive year without proposed raise for state employees from the governor, Ferguson said. That increase would cost $21.5 million for state employees and $36.8 million for school employees.

– Restores the $34.5 million in one-time spending for public schools for teacher pay and operational costs from Fiscal Year 2014 and makes that money a permanent allocation.

– Expands Medicaid for a net savings of $42.4 million to the state’s general fund. That figure does not include an additional savings of $34.7 million to at the county level, Ferguson said.

Anyone familiar with Idaho politics understands that the likelihood of Ferguson’s budget actually begin enacted into law by the intransigent Republican dominated Idaho legislature is slim-to-none. But, hope springs eternal.

 
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