BOISE, Idaho — A doom-and-gloom economic outlook persuaded a legislative committee Friday to scale back Gov. C.L. “Butch” Otter’s $78 million state employee pay-raise package.
Under a new plan now being pushed by the 12-member panel that helps set state worker compensation, Idaho’s roughly 20,000 workers would get 3 percent raises distributed by merit in fiscal year 2009. Including benefits, the plan would cost taxpayers about $61 million more in the coming year.
Otter had originally wanted a 5 percent pay increase, mirroring the merit raises approved by the 2007 Legislature.
Aides to the governor appear to have conceded there’s not enough money to give workers more than 3 percent, given the new tax revenue forecasts. Between the current fiscal year and the year due to begin July 1, Idaho economists expect a sputtering economy to produce $120 million less in tax revenue than had been forecast one month ago.
“It would not be wise for us to establish budgets that we can’t sustain,” Sen. Dean Cameron, R-Rupert and head of the Joint Finance-Appropriations Committee, told the 12-member Change in Employee Compensation Committee.
Lawmakers in the House and Senate still must vote to approve the recommendation. Separately, lawmakers and Otter also are discussing possible changes to benefits for part-time state workers, including a proposal from Otter to slash insurance coverage for workers who average just 20 hours per week.
As part of the plan, state workers could face a 29 percent increase in their monthly medical premiums.
Otter’s financial staff said that by giving ground on employee pay raises, they are making room in the shrinking budget for some of the governor’s other priorities, including $50 million he’s seeking for the Opportunity Scholarship for low-income Idaho students to attend state colleges and universities.
“If we go to 3 percent raises, there’s plenty of room for the Opportunity Scholarship,” said Wayne Hammon, Division of Financial Management administrator.
Before the 3 percent raises passed the Republican-dominated committee, members voted 10-2 against an alternative from Sen. Kate Kelly, D-Boise, that called for a 4 percent increase, with the possibility of going higher if the economy rebounds. She cited a 2-year-old report that shows Idaho must pay state workers 5.8 percent more in each of the next 10 years to erase a more than 15 percent pay deficit compared to similar private-sector jobs.
“We are becoming dangerously close to actually backsliding,” Kelly said.
“It would be fiscally irresponsible right now to” do more than 3 percent, Sen. John McGee, R-Caldwell, told her.
State worker groups were disappointed over likely not getting the increase Otter originally recommended.
“It’s going to be a tough year for state employees,” said Don Brennan, who represents the Idaho Public Employee Association.
Brennan, the retired Idaho vocational education director, said the pay proposal approved Friday doesn’t resolve questions surrounding more than 3,000 retired state employees who currently receive state medical benefits. Earlier this year, Mike Gwartney, Otter’s Department of Administration director, introduced a plan to cap premium payments for retirees who are between 55 and 65 years old at about $1,800 annually per person.
Under that plan, retired workers would no longer be eligible for state medical benefits after age 65, once they qualify for Medicare. The proposal also would end all retiree medical benefits for employees hired after July.
By raising medical benefit costs for Idaho retirees, Otter aims to cut the state’s $442 million unfunded medical liability. Under the existing system, the liability was set to rise to $800 million by 2016, Gwartney has said.
Sen. Chuck Coiner, R-Twin Falls, is working with Gwartney to revamp that proposal, including developing a program for the more than 2,000 state retirees older than 65 to use their bargaining power to get supplemental Medicare insurance that’s cheaper than the roughly $390 in monthly payments they make now.
Coiner said Idaho’s unfunded liability would drop to about $120 million over the next eight years, under his plan.
“It’s a win-win situation,” he said.
/AP