Tax revenues are currently $66 million over the state budget’s expectations with one important month of taxes yet to be collected. If that amount holds, public schools would get $50.7 million and community colleges would get $5.5 million. That money is required to go to schools because Idaho accepted hundreds of millions from the federal government for schools in the 2009 stimulus plan, as well as additional millions for educators’ salaries last year.

That money is supposed to be for the current school year, though the money won’t be paid out until at least July. Once local districts get that money, they’re free to spend or save the money as they choose, though some districts have already accounted for that money in contracts with teachers.

“They can do whatever they need to do,” said Sen. Dean Cameron, R-Rupert, though he added that he’s encouraged districts to be cautious, because future years may hold more funding cuts for education.

Cameron is one of the leaders of the Joint Finance-Appropriations Committee (JFAC), which met Wednesday to discuss issues in education funding. Cameron and his co-leader, Rep. Maxine Bell, R-Jerome, both cautioned that districts shouldn’t be counting on additional money from the state.

“You know what? June isn’t here yet,” Bell said. June is the fourth-largest month for tax revenues. Cameron said Idaho’s sales tax and personal income tax collections have been slacking behind otherwise good tax collection numbers.

If the money holds, it would offset the $42 million spending cut JFAC approved for public schools for the next school year.

The money would give each classroom in the state approximately $24,000 in discretionary funds, which legislative budget officials said is close to an all-time high. However, Sen. Nicole LeFavour, D-Boise, said that money now has to cover programs including textbooks and talented and gifted programs that previously had a separate line in the state budget.

“There’s a long list of things that we threw into discretionary,” LeFavour said.

Lawmakers also received an update on the $51 million in federal funds Idaho received last year for educators’ salaries. So far $13.7 million of that money has been spent, which could grow to $15 million by the end of the month, which also marks the end of Idaho’s fiscal year. That money must be spent by the end of September 2013.

Read IdahoReporter.com‘s previous story on districts’ decisions on spending that federal money here.

Republicans who worked on the state budget say the revenue numbers are good news. “That’s last year’s taxes, and last year was not a good year, so I’m pleased with that,” said Rep. Maxine Bell, R-Jerome, one of the leaders of the Joint Finance-Appropriations Committee (JFAC), which sets the budget.

The extra money for schools comes as part of legislation approved by lawmakers this year and required by the 2009 federal stimulus package. Idaho took more than $100 million in stimulus dollars, promising to hold off on large reductions to schools.

For every $5 million in tax revenues beyond the current budget target, $3.1 million will go to public schools, according to the legislation. That money would be distributed as discretionary funds sent to local districts. If the current surplus holds, districts would get approximately $46 million. That could offset the $47 million reduction to schools approved by lawmakers earlier this year.

“I think we can all agree this is a positive sign for our economy and good news for our schools today and in the future,” Superintendent of Public Instruction Tom Luna said on his blog.

Districts likely won’t receive that extra funding until July, once the state figures out how much it received in tax revenues for the budget year.

The rest of the revenue surplus would stay in the state general fund. Bell said, depending on what happens the next several months, it could be spent on some state agencies, including state prisons and public health districts.

“Corrections is right on the edge,” Bell said, adding that an increase in the state’s prison population would require more funds. She said health districts have a tight budget. “It’s not a big budget but a little bit makes a lot of difference.”April is Idaho’s biggest month for tax revenues, as most individuals and businesses file their income taxes. The state collected $377 million in income, sales and other taxes last month. Only one other month has collected two-thirds that amount.

Individual income taxes were more than $7 million below predictions, but corporate income taxes were $11.6 million more than expected. A report from the Division of Financial Management (DFM) said income tax witholdings on individuals’ paychecks was better than anticipated. “This strength suggests employment growth is more robust than was previously thought,” according to the monthly report, written by state economist Derek Santos.

Sen. Dean Cameron, R-Rupert, who leads JFAC with Bell, said on Twitter that he wished the sales tax and individual income tax revenues had been better, calling them a better reflection of the state economy.

“Both March and April still show weakness in sales tax collection, which is a reflection of weakness in the current economy,” Cameron said. “We still have to be cautious.” He said topping projections is good, but there are other economic mixed messages, including Idaho’s persistent high unemployment rate.

DFM administrator Wayne Hammon called the new revenue numbers good news, but said the state budget year isn’t over. “It confirms the wisdom of Governor Otter’s conservative approach to budgeting in collaboration with legislative Republicans,” Hammon said in an e-mail to reporters “If these strong returns continue through the end of the fiscal year, we should have some extra money for education.”

One of the Democrats on JFAC, Sen. Nicole LeFavour, D-Boise, said lawmakers set a budget revenue target for the current and next year that was irresponsibly low and influenced by politics.

“All these jobs that we eliminate do depress the economy,” she said. “We have a responsibility as policymakers. There are a lot of lives in our hands. When we cut services and eliminate jobs, people face very dire impacts.” She said cuts to Medicaid and mental health programs could have a powerful impact on Idaho families.

Bell said lawmakers were right to set a more fiscally conservative budget, since tax collections have fallen short of budget numbers for several years. “Lawmakers have had about three or four years of the most difficult budget setting that we’ve ever had,” she said. “Had we not been conservative, we’d have ended up in August with the governor making another holdback.”

While April is the biggest tax month, June is in the top three, so revenue totals could change. Tax revenues have only dipped below expectations once during the current budget year, in December.

A panel of lawmakers also asked OPE to look into the state lottery, the potential for an efficiency commission, and a state-funded program for renal disease. Other investigative topics that were rejected were how urban renewal districts operate and how well charter schools fare compared to traditional public schools.

The college funding study was recommended by Sen. John Goedde, R-Coeur d’Alene, who said the state method for funding Idaho’s four four-year institutions of higher learning is based on a 2003 plan that hasn’t been adjusted as universities’ enrollments and workload have changed over the years.

“This is a very political issue,” Goedde told lawmakers deciding which OPE projects to recommend. “OPE in its unbiased role would be a great institution to study what we have before us.”

In a separate report, OPE will also try to identify barriers to raising college graduation rates as well as ideas to overcome them. That topic was recommended by House Minority Leader John Rusche, D-Lewiston, and Rep. Shirley Ringo, D-Moscow.

OPE will also look at efficiency commissions, which are boards created by governors or lawmakers tasked with finding savings and unneeded programs. The Council of State Government reported that 17 states, including Utah, Nevada and Oregon, have set up such commissions, but with mixed results.

“There’s a lot of hype going on right now about efficiency commissions,” said Rep. Maxine Bell, R-Jerome, who suggested the study along with Sen. Dean Cameron, R-Rupert. “We just kind of wanted to know if this really is working.”

The investigation of the lottery commission was recommended by Sens. Dean Mortimer, R-Idaho Falls, and Michelle Stennett, D-Ketchum. In a letter on the request, the senators said that other states pay out less in prizes for their lottery and that the state may be requiring too much information from charity lotteries and bingo games it regulates.

A group of four lawmakers asked for the review of the Renal Disease Program, which is run by the Division of Vocational Rehabilitation. The program, which gets $504,000 in state funding and offers kidney dialysis and transplants, may overlap with services provided by the Department of Health and Welfare. In the budget for Vocational Rehabilitation, lawmakers asked the division to put together a similar study on potential duplication of services.

OPE releases several reports each year, usually during the legislative session. It won national awards for a recent study on the Idaho Transportation Department, which also led to changes in the department. It also recently released a study on the potential costs to Idaho of the new Medicaid processing and payment system.

OPE Director Rakesh Mohan had originally asked lawmakers for a slightly smaller workload for the next year, but he said his staff will tackle the five requested studies. “We’ll be busy and we’ll do our best,” Mohan said.

The bill was pulled back from the floor into committee last Friday by Rep. Maxine Bell, R-Jerome, one of the co-chairs of the panel.  Bell told IdahoReporter.com that she felt she didn’t have enough votes in the House to pass the legislation.

Several members of the House believed that the state shouldn’t accept federal money because it might come with strings attached.  The new bill still calls for research of health insurance exchanges, but $500,000 in dedicated funds will be used for the project.

The vote on the measure came immediately after lawmakers approved a bill to prevent the state from implementing discretionary provisions of the 2010 Patient Protection and Affordable Care Act (PPACA).  House Minority Leader John Rusche, D-Lewiston, said it is odd that the House would stand against the PPACA in one vote and support a part of the act in another.  “It just doesn’t make any sense to me to do that,” said Rusche.

Rep. Brian Cronin, D-Boise, said not taking federal money to develop the exchanges is “utterly foolish.”

The measure passed 53-15.  GOP Reps. Tom Trail of Moscow and Dick Hardwood of St. Maries joined all 13 House Democrats in opposition to the measure.

The Joint Finance-Appropriations Committee (JFAC) approved a new budget for the Department of Insurance that includes spending $500,000 from insurance fees on efforts to help the department protect Idaho against the federal government from regulating the state’s insurance industry.

“It’s a firewall for us,” Rep. Maxine Bell, R-Jerome, said about the additional money. Bell, one of the co-chairs of JFAC, pulled the old version of the Insurance budget that included the federal reform money.

That $2.5 million would have let the Department of Insurance research health insurance exchanges, which are government-run marketplaces that help individuals and small businesses compare and purchase insurance. Under the federal health care reform plan, states need approved exchanges by the beginning of 2013, or else a federal exchange will be created. Gov. Butch Otter and the Department of Insurance both requested the federal money.

“What’s at risk here is state regulation of our own industry,” said Sen. Dean Cameron, R-Rupert, the other co-chair of JFAC. Cameron also owns an insurance company. “You’ll put a lot of people out of business that way.”

Department of Insurance Director Bill Deal wouldn’t comment on how his department would use the $500,000 to protect state regulation. That $500,000 in fees would otherwise revert to the state general fund.

The new $8 million budget for the Department of Insurance now needs House and Senate approval.

The federal money is from the Patient Protection and Affordable Care Act (PPACA), a health care reform measure passed by the U.S. Congress in March of 2010.  The funds would have gone to develop a state-based health insurance exchange, which could still happen without the money, or so says JFAC co-chair Rep. Maxine Bell, R-Jerome.

Bell, who asked to bring the appropriation back to committee, said that lawmakers aren’t necessarily opposed to the idea of forming health exchanges, but many are uncomfortable with using federal money to create them. “I don’t think we are against this activity, I think we are trying to find a different path to it,” said Bell, who said that the Department of Insurance likely has funding available somewhere within its budget to fund creation of exchanges.

House Minority Leader John Rusche, D-Lewiston, objected to the move, saying that Idaho should take the money to set up an exchange that would be tailored to the needs of Gem State citizens.  Rusche said that by voting to send the bill back to committee shows that legislators are “willing to throw away a method of asserting Idaho individuality.”

If Idaho doesn’t take the money and set up its own exchange, the minority leader argued, the federal government will step in and impose its will on the state.  “We will have no say,” said Rusche.

House Minority Caucus Chair Brian Cronin, D-Boise, issued the same warning as Rusche.  “We run the risk … of having a solution that would be developed at the federal level and imposed upon us a few years down the road,” said Cronin.

He also disputed Bell’s claim that the state can fund creation of its own exchange.  “We can turn over every rock and it’s not going to be there,” Cronin argued.  “This is a good expense.”

The floor sponsor of the appropriation, Rep. Fred Wood, R-Burley, told IdahoReporter.com that it’s likely the measure would have failed on the floor if given a vote.  “There’s not the votes to take the Obamacare money,” said Wood, using a common term for the PPACA. “It’s as simple as that.”

Wood and Bell have confirmed that JFAC will take up the bill Monday.

The money and the exchanges come from the 2010 Patient Protection and Affordable Care Act (PPACA).

Three members of the Joint Finance-Appropriations Committee (JFAC), Rep. Maxine Bell, R-Jerome, Rep. Fred Wood, R-Burley, and Rep. Marv Hagedorn, R-Meridian, have confirmed that the appropriation will head back to the panel for additional consideration and likely removal of the federal money.

Bell, co-chair of JFAC, said she’ll pull back the agency’s budget Friday.  ”I simply don’t have the votes,” Bell said, adding that she didn’t want a budget bill to be voted down on the House floor.  Bell said she supported spending the federal money on the exchanges.  ”It was putting up a firewall for the state,” she said.

The House sponsor of the bill, Wood, also confirmed that the measure would head back to JFAC Friday.  “There’s not the votes to take the Obamacare money,” said Wood, using a common term for the PPACA. “It’s as simple as that.”

Once the bill is back in JFAC, Wood explained, it will take a two-thirds vote of panel members to re-open the budget, which might prove to be a difficult process.  “That may be problematic, it may not,” said Wood.  “We’ll have to wait and see.” If the budget is successfully re-opened, the federal money will be removed and the measure will be sent back to the House floor.

If the budget cannot be re-opened or the attempt to remove the federal money fails, Wood says there would need to be negotiations between JFAC and other House members to figure out a final solution.  “I think there would be some reasonable people brought in for consultation,” said Wood, who feels that the federal money will not be a part of the agency’s appropriation when the bill comes out of committee.

Hagedorn attempted to gut the appropriation of the federal money during its original hearing in JFAC, a move that failed.  The appropriation faced a fight on the Senate floor, passing there 20-15.  Hagedorn says the same fight would have occurred in the House, with different results.  “I think because the House is more conservative than the Senate, it was very likely the bill would have died in the House,” said Hagedorn.

Another member of JFAC, Rep. Wendy Jaquet, D-Ketchum, supports the use of the federal money and will oppose the move to remove it from the budget.  Jaquet told IdahoReporter.com that the move could lead to the federal government creating a health exchange for Idaho, instead of working with the state to develop one.  “Why would we want to let the federal government set these up for us?” asked Jaquet. “Don’t we want an Idaho solution?”

Gov. Butch Otter has supported efforts to block implementation of the PPACA, but supports use of the federal money to create an Idaho exchange for the reason laid out by Jaquet.  “Unless the law is changed, currently as it’s written, if we don’t go ahead and do this, the feds can go ahead and do it for us,” Jon Hanian, the governor’s spokesman, told IdahoReporter.com Thursday.

Otter signed the Idaho Health Freedom Act last year, a law that authorized the state’s attorney general to sue over a part of the PPACA that requires citizens buy health insurance or pay a penalty to the federal government.  Idaho and the 20 other participants in the case won the first round in court, with a federal judge ruling that the PPACA is wholly unconstitutional, but the administration of President Barack Obama has plans to appeal the judgment.

Jaquet says Idaho should use the funds to move forward with exchange implementation while the court battle is sorted out.  “We can’t walk away from this and think that it will go away while we litigate,” said Jaquet.  “Litigation takes time.”

The Joint Finance-Appropriations Committee (JFAC) agreed to shift $21 million from the Millennium Fund, which is funded by payments from tobacco companies, $8 million from the state liquor division, and $7 million from the Permanent Building Fund, which helps repair state buildings and facilities.

“This money is necessary for us to balance the budget,” said Sen. Dean Cameron, R-Rupert, one of the leaders of JFAC.

JFAC found an additional $16 million in funds from the Division of Veterans Services, Industrial Commission and Department of Insurance. Cameron said those shifts are off the table. House Republicans have opposed those transfers, saying it would be better to avoid one-time spending and shifting and make cuts.

The fund transfers were approved on an 18-2 vote. Democratic Rep. Shirley Ringo of Moscow and Sen. Diane Bilyeu of Pocatello voted no because they opposed tapping the Permanent Building Fund. Bilyeu said there are many needs around the state that won’t see construction work.

Rep. Maxine Bell, R-Jerome, said many of the construction projects are coming in under budget and that as the state economy improves, more money will likely need to be spent on infrastructure needs. “I think probably when this economy finally turns around, we’ll find we’re behind in commitments to many parts of government,” Bell said.

Lawmakers are tapping the Millennium Fund for other needs this year, including $50 million for Medicaid and $3 million for the Catastrophic Health Care Fund, which covers hospital bills for people who can’t afford to pay and are not on Medicaid. The fund was established after the 1998 settlement with tobacco companies. In addition to the fund shifts, every year several million of the earnings from the fund pay for anti-drug and substance abuse programs and tobacco prevention efforts.

The fund shifts, like all budget actions set by JFAC, must be approved by both the Idaho House and Senate.

“One of the things we say in the lottery business is bus drivers drive buses, golfers drive golf balls, and jackpots drive sales on jackpot games,” Anderson said. “Some players don’t think that $75 million is enough to spend $1 on to win. As jackpots rise, sales rise.” Anderson said $100 million is the threshold when more people start buying tickets, and that jackpots have been below that mark more than usual this year.

The lottery will make its projected distribution to the state thanks to an increase in the unclaimed prize fund, driven by a $1 million Powerball ticket sold in east Idaho that went unclaimed. Almost 60 percent of the sales from lottery tickets goes into prizes. A quarter of sales goes to the dividend to schools and state buildings, while the rest pays for lottery operations.

Idaho will also get $9.3 million in income taxes from the $190 million winning Powerball ticket sold to Holly Lahti of Rathdrum earlier this year. That money won’t go to the traditional distribution of the lottery, but instead to a fund to help stop tobacco use.

Idaho’s lottery has been around for more than 20 years, and has given more than $450 million back to the state. Rep. Maxine Bell, R-Jerome, said there’s a contingent of lawmakers that oppose a state-backed lottery, but she said state laws and regulations keep it operating properly. “It’s a very tightly, well-run agency,” Bell said.

Anderson also said he’s not concerned over a recent report by Wired of a statistician cracking the pattern of a scratch lottery program in Canada. The statistician was able to improve his odds on some more involved extended-play scratch games, saying that the randomness of the lottery’s scratch games is a facade. He notified the provincial lottery, which pulled the games.

Idaho used to have contracts with Pollard Banknote, which made the scratch tickets in the Wired story, but currently has a different vendor. Anderson said that shouldn’t be an issue in Idaho, in part because the distribution of larger jackpot scratch tickets is random. “I don’t think that’s possible—we have a number of security procedures in place,” Anderson said. He also said that anyone who has cracked a state-backed game of chance should contact the state lottery. “They should call me. I want to know about it.”

CORRECTION: The original version of the story said the Idaho Lottery had contracts with Pollard Banknote. The state used to have contracts with the company, but currently has a contract for scratch games with Scientific Games, Inc.

The state is looking to take $8 million from a state liquor division fund, $7 million from the Permanent Building Fund, which pays for repairs on state property, and almost $22 million from the Millennium Fund, which was started with money from the 1998 settlement with tobacco companies.

Both the money from the liquor division and the building fund was offered up by the men in charge of that money.

“As an ongoing enterprise, we did not need to retain that much cash,” said Jeff Anderson, the director of the liquor division. “With the transfer we can still responsibly operate the enterprise, meet our obligations, and assist the state in this time of great need.”

The liquor division typically pays out more of its revenue to cities and counties than the state, but Gov. Butch Otter’s budget chief, Wayne Hammon, said the budget situation led to the change. “We thought given the pressures of the state budget that this excess money should come to the general fund,” he said. The liquor division is on track to pay out more than the projected $48 million to state and local governments.

“Since it’s unanticipated money, and the need to the general fund is so significant, we decided it was best to put it there,” Hammon said.

The fund shift hasn’t raised red flags with the Idaho Association of Counties. “If this is a way we can help the state out–we see the need for it,” said Seth Grigg, a policy analyst for the association.

Shifting the money from the Permanent Building Fund means new projects won’t get funding during the next 18 months. Tim Mason, the administrator of the Division of Public Works, said the $7 million transfer would come from a contingency fund, as well as money that would have gone to projects at Boise State University, Idaho State University, Lewis-Clark State College, and the Capitol Annex in Boise.

The governor’s original budget included a $10 million transfer from the building fund. “I would’ve had to cancel $3 million of alterations and repair,” Mason said.

Rep. Maxine Bell, R-Jerome, said lawmakers discussed the building fund shift with Mason, Hammon and others before settling on the lower transfer. “I don’t want the roof to fall in,” Bell said. “That deterioration continues and the need would just build. We need to find that $3 million another way.”

Bell said lawmakers tasked with writing the budget are considering other state agencies funds to take money from. “We have yet to find any more money, but we are still looking,” she said.

According to the controller’s office, there are more than 200 dedicated funds controlled by state agencies, though many of them have small balances, and some are funded by fees used by agencies. The Idaho Department of Transportation and the Idaho Department of Fish and Game, for example, are two agencies that don’t use state sales or income taxes to pay for their operations.

“There are other dedicated sources of funds that, push come to shove, you could go after to balance the budget,” said Sen. Dean Cameron, R-Rupert, who, like Bell, helps balance the budget. “By doing that, you postpone the inevitable and push off some of the harder decisions. The Legislature may choose to face some of those harder decisions this year rather than wait to face them in an election year.”