Filed by Michael Cross in Feature, Local News, News, Politics.
February 3, 2010

Right after his State of the State Address on Monday, Governor Henry issued an outline of his suggested budget for the 2011 fiscal year starting in July.

The Governor’s budget looks at how to spend nearly $5.3 billion, a shortfall on $1.3 billion from this year.

The Governor is calling on lawmakers to be careful in cutting parts of state government saying the downturn in the economy is temporary.

To help deal with the shortfall, the Governor is asking for a moratorium on or elimination of tax credits.

State Treasurer Scott Meacham says the only credits affected are ones which aren’t working.

“Credits ought to be doing what they’re designed to do. The design is they create economic activity in this state that at least off sets the cost of what you’re giving up in tax revenue. I think there’s been some legitimate questions raised about some of our credits whether they in fact do that.”

Credits on the Governor’s chopping block include a rural small business capital credit and a credit for electric cars.

Senate President Pro Tem Glenn Coffee likes the idea of eliminating the credit for electric cars which along with federal tax incentives basically made the vehicle free.

But, he’d have to look into the rest of the credits.

“Any of the others that we discussed, certainly, we’re willing to look at them. That’s why I’ve carried the office of accountability and innovation bill. I think we should review those. And, if they’re creating jobs that’s one thing, but if they’re not then we ought to consider whether we use them on a going forward basis.”

The Governor suggests using $485 million from the Rainy Day Fund for the rest of the 2010 year, and $60.7 million for 2011, leaving a balance of $43 million.

The remaining nearly $700 million of stimulus funds would be split into $460 million for state Medicaid and $236 million for education.

The Governor also suggests consolidating 16 different agencies which he says provide similar or overlapping duties.

The rest of the agencies will see $130 million in cuts.

Most will see 3% cuts, but only a .5% for all levels of education as well as the Departments of Health, Mental Health, Human Services, Rehabilitative Services, Corrections and Public Safety.

Two controversial parts of the budget come from compliance initiatives.

Meacham says one initiative utilizes a national database to check license plates to see if a vehicle is uninsured.

“We’ve been very concerned about uninsured motorist in this state. I’m sure you all well know that uninsured motorists when they cause accidents just drive up the cost of insurance for everyone else.”

It’s estimated it could bring $95 million to the state.

But, Republican Representative Randy Terrill believes this would lead to cameras capturing license plates and issuing tickets without a human intermediary.

“I’m sure that an automated enforcement mechanism whereby you have fixed position cameras that take a picture of your license plate and send you a ticket in the mail, I’m sure that’s something that will evoke a lot of controversy, a lot of discussion, and there will be a lot of people who would be opposed to that proposal.”

Treasurer Meacham says another initiative which could net another $95 million allows for the tax commission to collect sales tax on products sold over the Internet.

“The bad thing about the Amazon.coms, the Overstock.coms of the world, they’re sort of like leaches that suck the economic viability out of a state.”

But, Representative Terrill finds this initiative suspicious.

“The governor is proposing an expansion of the sales tax to all internet sales, so I think it’s very arguable whether or not the governor has at this point broken his no new tax pledge.”

Meacham, however, says this isn’t a new tax, just one which has never been enforced.

Before the 2011 budget gets ironed out lawmakers first have to deal with the rest of 2010.

Over the next few weeks a series of supplemental bills will make its way through the capitol to shore up the costs for the next five months.

While there’s agreement on where the money will go, the funding mechanism to pay for the current shortfall remains up for debate.