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.

The four pieces of legislation are called trailer bills because they trail a bill that had already been approved. They adjust several portions of Luna’s “Students Come First” plan, which increases technology spending in classrooms while reducing money for educators’ salaries, create pay-for-performance bonuses for teachers and administrators and reduce teachers’ unions ability to negotiate contracts with school districts.

Several of the new bills include an emergency clause, making the legislation retroactively to start this January. Sen. John Goedde, R-Coeur d’Alene, said that would prevent a court injunction, though critics including Sen. Nicole LeFavour, D-Boise, say it could thwart citizens’ rights to have a referendum on the reform plan. Goedde said there’s still the chance for a petition for a referendum.

One piece of legislation approved restores for one year the average daily attendance protection for districts with declining attendance. If attendance next year drops by more than 3 percent, districts would still get 97 percent of the past year’s funding. Under Luna’s reforms, the 99 percent protection was completely eliminated.

The trailer bills made other changes. One prevents what Goedde called a “switcheroo,” in which school boards could not be bargaining in good faith. It also increases the exemption to the “use it or lose it” requirement, which increases districts’ ability to hire fewer staff while still receiving full state funding.

LeFavour said that expansion could be bad for teachers and some students. “This is the part where class sizes get larger,” she said.

The package also allows school boards to set up their own criteria for awarding teacher bonuses and eliminates some double counting of teacher union members, which Goedde said would benefit the unions. The reform plan requires unions to prove they represent at least half of the teachers in a district.

The Senate also approved education legislation that gets rid of requirement that districts spend a certain amount on building maintenance. Similar relief was given the past two years. It also allowed districts to continue to ask voters to convert building levies to supplemental spending on other parts of education whenever the state lowers its funding for public schools.

All the trailer bills to the reform plan now head to Gov. Butch Otter for his consideration.

Public school spending takes up close to half of Idaho’s general fund budget, which is funded by state tax dollars. The reductions follow a $128.5 million reduction last year. State tax dollars for public schools actually increases by less than 1 percent, though federal and dedicated funds for public schools face decreases.

The public school budget also reflects some of the spending priorities in state schools superintendent Tom Luna’s reform efforts, including targeted money for school technology.

Sen. Dean Cameron, R-Rupert, a co-chair on the budget committee, said the school budget is bittersweet, because it includes more money that expected, but is still a drop from the current school year’s budget. He said he was thrilled that the budget includes as much funding as it does.

“We wish we could get more,” Cameron said. “We have done our best with the resources we were given to allocate as much money as possible for public schools.”

Sen. Nicole LeFavour, D-Boise, opposed the budget due to the funding cuts, and identified one potential outcome of the reductions. “This budget is one of the reasons why we will have larger class sizes,” LeFavour said. The budget doesn’t mandate larger classes, though districts could choose to lay off teachers and raise class sizes to make ends meet.

LeFavour also said that budget writers were held hostage by the Idaho House, which didn’t consider raising taxes or other revenues to prevent cuts to school funding. “In my gut, in my soul, this budget is really painful,” LeFavour said.

The Senate also approved a plan that would add money to the school budget if state tax revenues exceed current projections. That potential increased spending is needed so that Idaho isn’t in danger of having to return federal stimulus dollars that were used to prop up the public school budget.

The public school budget must still be approved by the House.

Also on Tuesday, the Senate also approved legislation expanding the state’s special gang enforcement law that can tack on extra years to an offenders’ sentence if they are a gang member. Under the plan, 11 more crimes could be considered gang activity, which could add up to five years in prison for a convicted gang member.

The Idaho Senate approved the budget on a 33-2 vote Tuesday and the legislation now heads to Gov. Butch Otter’s desk. Besides sponsor Sen. Bert Brackett, R-Rogerson, only Sen. Nicole LeFavour, D-Boise, spoke about the budget plan.

LeFavour offered some praise for the department’s priorities. “Our state has done an impressive job of increasing its focus of education and treatment of inmates.” However, she was critical of the increases in funding for private prisons and privately-run medical services for offenders, which are required by contract. LeFavour said those private sector programs put prisoners’ lives at risk.

“There have been problems and lawsuits in both areas as a result of low-bidder inadequacies,” LeFavour said.

The added state funding for IDOC would replace some funding from the federal stimulus program. The increase won’t be enough to end furloughs for IDOC workers, including guards at state prisons.

The gang activity legislation was only opposed by one senator, Curt McKenzie, R-Nampa. He said he opposes increasing criminal sentences due to an offender’s association or thoughts. “We should base our punishment on the conduct itself,” McKenzie said.

Sen. Patti Anne Lodge, R-Huston, mentioned the recent arrest of 30 members of the “Brown Magic Clica” gang. She also said the provisions to punish gang activity in schools helps keep schools safer. Lodge, a former teacher, said she saw kindergartners engaged in gang activities, such as wearing certain colored clothes.

Sen. John McGee, R-Caldwell, said the stiffer penalties, which have been used four times, are an exceptional law enforcement tool. “Since the original gang legislation has been in place, gang crime in [Canyon] County has gone down,” McGee said.

Both the gang enforcement legislation and the budget for IDOC now head to Gov. Butch Otter for his consideration.

When Idahoans file their taxes, they receive $50 for the grocery tax credit, though low-income filers receive $70 and people over 65 receive an extra $20 on top of those numbers.  The expansion of the tax credit is scheduled to increase each amount by $10, but a resolution approved by lawmakers would delay that for a year. All amounts will stay flat when Idahoans file their income taxes next year.

The Senate approved the plan on a 29-5 vote, which asks for Gov. Butch Otter to sign an executive order to delay the increase in the credit. The delay was recommended by the governor in his budget.

“This is not a tax increase, this is simply a one-year delay in the implementation of the credit,” said Sen. Russ Fulcher, R-Meridian.

Two of Boise’s Democratic senaors, Les Bock and Elliot Werk, spoke out against the measure. “We all know we need more revenue and we have other choices,” Bock said. “This is simply not the way to do it— raising revenue on the backs of the people that are most vulnerable.”

Werk said he doesn’t think there should be a tax on food and that lawmakers should look elsewhere for revenue, including getting rid of some sales tax exemptions.

Another Boise Democrat, Sen. Nicole LeFavour, supported delaying the tax credit. “I feel this is an appropriate place to raise revenue this year,” she said, adding that the $15 million could go to the budgets for Medicaid and public schools. LeFavour has called for rolling back the entire grocery tax credit, which would shift $27 million from taxpayers to the state general fund.

Sen. John Goedde, R-Coeur d’Alene, who sponsored the legislation, said the reform effort is needed given the drop in school funding. “If we want education to improve, we have to be willing to do things differently,” Goedde said. “If we only cut more and hope our students do well, we have failed them. Hope is not strategy, action is.”

The legislation is a policy plan, but it affects funding for public schools. It would target $13 million a year for classroom technology and training for teachers and roll out a program to give all high school students laptops or similar computing devices by the fall of 2015. That spending would be paid for by salary reductions in state funding for teachers and other school staff that would be set for the next five years.

The bill also would give school districts more flexibility to reduce staff by easing the “use it or lose it” provision that requires districts to hire a certain number of teachers to get all its state funding. It would also create a 27-member task force to study online classes for high school students and other technology issues.

Senate Majority Leader Bart Davis, R-Idaho Falls, was the most prominent lawmakers to switch sides, opposing the legislation after backing the first two parts of Luna’s plan. Davis said there’s a lot to like, but opposed funding the reforms by reducing the pool of money for educators’ salaries. He said lawmakers should find other sources of money than salaries to fund the proposed new programs.

The salary-based apportionment for staff would go down by an increasing percentage over the next few years. Goedde said that’s necessary to make sure there’s funding for technology, though lawmakers would get to write a new budget for public schools every year.

“We’re committing a very fundamental part of our funding for this plan, and it needs to be a part of our policy,” Goedde said.

Some of the most pointed criticism came from Sen. Dean Cameron, R-Rupert, who is one of the leaders of legislative budget writers. Cameron listed nine reasons why he opposed the plan, including provisions that could tie the hands of lawmakers writing the budget and creating new entitlements that would obligate state money to high school students.

“I believe this is the wrong product, the wrong approach,” Cameron said. “It’s wrong for Idaho and it’s wrong for the taxpayer. It’s wrong for education and, most importantly, it’s wrong for our children.”

Cameron also said the legislation could lead to consolidation of school districts, saying it’s not part of the bill but it is part of the plan. Luna’s spokeswoman, Melissa McGrath, said the superintendent has made it clear for months that consolidating districts isn’t part of the legislative package.

The bill, Senate Bill 1184, replaces an earlier version of the plan, Senate Bill 1113. Supporters say the new version includes changes suggested by critics, scrapping a requirement to take online classes and a provision that would raise class sizes and eliminate teaching jobs. Lawmakers opposing the plan say those ideas could still come to pass.

Sen. Shawn Keough, R-Sandpoint, alleged that those who challenged the basic concepts of the reform package weren’t invited back to discuss altering the legislation. Sen. John Tippets, R-Montpelier, rejected Keough’s claim. He voted against the first two parts of Luna’s reforms, but, after discussions, ended up supporting the plan.

All seven Senate Democrats opposed the plan. Sen. Nicole LeFavour, D-Boise, said the reduction in salaries would be used to pay for merit pay bonuses for educators in another part of Luna’s reform plan, which didn’t make sense. LeFavour also wrote on her blog that she plans to collect signatures to repeal the legislation, if they become law.

In addition to the teaching bonuses, Luna’s Students Come First plan also changes labor relations between teachers’ unions and districts, reducing unions’ bargaining powers.

Senate Bill 1184 now heads to the House for consideration. Now that it has passed the Senate, Cameron and other budget writers can set spending for public schools, which makes up more than half of the state’s general fund budget. Rep. Maxine Bell, R-Jerome, who co-chairs the Joint Finance-Appropriations Committee with Cameron, said the committee is planning to meet on Monday, March 28.

The legislation passed the committee on a 6-3 vote. “We cannot live with the system we have one more year, in my opinion,” said Sen. Dean Mortimer, R-Idaho Falls, who backed the plan. In February, the committee approved similar legislation on a 5-4 vote. This time around, Sen. Mitch Toryanski, R-Boise, supported the plan, after previously opposing it. He said during the hearing that he had been concerned with the plan’s requirements for online classes and increased classes, both of which have been changed in the new legislation.

“There have been many meetings and many rewrites and it seems to me that my concerns and the concerns of many of my constituents were heard and were acted upon,” Toryanski said. He said the old plan put the cart before the horse, but the plan heading for a full Senate vote puts the horse where it belongs and lets local school officials decide on many of the details of the plan.

The legislation touches on a wide range of public school spending issues. It would lock-in millions in state funding for classroom technology and training for teachers and roll out a program to give all high school students laptops or similar computing devices by the fall of 2015. That spending would be paid for by salary reductions in state funding for teachers and other school staff that would be set for the next five years. It also would give school districts an increasing amount of leeway to reduce staff by lessening the “use it or lose it” provision that requires districts to hire a certain number of teachers to get its full share of state funding. It would also create a 27-member task force to study online learning and other technology issues.

The legislation comes as lawmakers are still waiting to set spending for public schools, which makes up more than half of the state general fund budget. The $1.2 billion budget likely faces cuts in the tens of millions as the state’s school population is expected to grow. Lawmakers on the education committee said there’s no will in the Capitol to raise taxes to support schools.

“If we do nothing, they’re still faced with the same problems; there’s less money,” said Sen. Chuck Winder, R-Boise.

Both Democrats on the committee as well as Republican Sen. John Andreason of Boise voted against the plan. Sen. Nicole LeFavour, D-Boise, said she was concerned with the long-term spending implications of the plan. “We have a huge commitment on a grand scale to an experiment that we haven’t tested,” she said. LeFavour also said there’s been more opposition to the education reform plans than any other issue since she became a state lawmaker.

Lawmakers supporting the plan say the revised version of the plan reflects the large amount of public input on the earlier version of the plan, but leaders of state education groups said they still had concerns with the new version.

Karen Echeverria, the executive director of the Idaho School Boards Association, called the multi-year reductions in the salary funding formula unprecedented. She said local districts are more than willing to make the necessary cuts, if the Legislature would pass them down to the local level. Phil Homer with the Idaho Association of School Administrators had similar concerns.

Sherri Wood, president of the Idaho Education Association, which represents teachers, said the legislation could lead to hundreds if not thousands of teaching jobs disappearing, as well as increased class sizes, pay reductions, and furlough days at schools.

“This legislation trades teachers for technology,” Wood said. “It seems likes it’s unwise policy if we’re in a hole to implement new policy.” She also said that if she had a magic wand to wave away all of the reform efforts pushed by Luna and move funding cuts straight to local school districts, educators would be happy.

Luna said he’s comfortable with the new legislation, though he would have liked more money for technology. The current plan would require $13 million in the next school year, while his original legislation had more than $10 million more.

Luna also said he’s happy with the progress of the legislation. “Each step is more important than the previous one, and this was a very, very big one,” Luna said.

The two other parts of Luna’s reform efforts, which create a pay for performance bonuses for educators and reduce the bargaining abilities of teachers, were signed by Gov. Butch Otter last week.

The budget approved by the Joint Finance-Appropriations Committee (JFAC) actually increases state tax dollars going to Medicaid by $137 million, a 46 percent jump. That’s due to a decrease in the share of Medicaid paid by the federal government, which had been boosted due to the federal stimulus program.

Medicaid offers medical services, primarily to low-income children and adults, with the federal government still contributing 65 percent of the proposed $1.8 billion in spending for the next budget year, which starts in July. The reductions approved by the House could lead to a total reduction of $108 million, given the federal match.

The four Democrats on JFAC opposed the Medicaid budget. All House Democrats also opposed the $34.6 million in reductions that passed the House.

Medicaid is part of the Idaho Department of Health and Welfare (DHW). On Friday, JFAC also approved most of DHW’s budget, which includes money for state-run substance abuse treatment programs, mental health programs, food stamps, and psychiatric hospitals. Almost all of the budget followed the recommendations from Gov. Butch Otter.

Substance abuse funding would see a total $2.5 million increase, due largely to an increased federal grant for the Access to Recovery program, which offers treatment for adults who have committed misdemeanors, at-risk youth, and National Guard members who served in Iraq.

Rep. Fred Wood, R-Burley, who worked on the DHW budgets as well as the program reductions that passed the House, said there aren’t other sizable changes to other DHW programs. “There is nothing fancy or strange or different about any of the other budgets,” Wood said. The state-funded welfare programs also include a $1.3 million reduction to the Aid to the Aged, Blind and Disabled program that’s been approved by lawmakers.

Sen. Nicole LeFavour, D-Boise, tried to add $2.2 million to mental health spending for people dropped from state-backed treatment who could be a danger to themselves or others. That extra money would come from the Idaho Millennium Fund, which is funded by money from a national tobacco settlement. Millennium Fund dollars are paying for other parts of the DHW budget.

LeFavour said the money would prevent suicides by people who lost services, as well as violent incidents like the shooting of Ryan Mitchell of Pocatello by a man thought to be mentally ill.  She offered information from DHW saying that 452 people were transferred off DHW services from mid-2008 to mid-2010.  Nine of them have been incarcerated, 48 have been hospitalized at least once, and two have committed suicide.

“We would have something ensure that we have a back up so that we do prevent harm to them and harm to others,” LeFavour said.

That effort failed on a party-line vote, with the 16 Republicans on JFAC opposing it. Wood said lawmakers are planning to fund mental health services at the level requested by DHW. He also said the extra money would be an end-around circumventing the reductions approved by the House.

Wood also said the added money may not be able to stop incidents like the Pocatello shooting. “To date we haven’t figured out a perfect system to prevent all of those horrible mishaps to our citizens,” he said.

Health and welfare makes up the second-largest item in Idaho’s $2.5 billion state budget. Budget writers on JFAC have yet to act on the public schools budget, which would likely take up half of the general fund budget.

Some committee members equated the move to increasing taxes on Gem State residents. Rep. Grant Burgoyne, D-Boise, said the measure is a tax hike of the “worst kind.”  Burgoyne, Rep. John Rusche, D-Lewiston, and Rep. Dick Harwood, R-St. Maries, voted against the bill.

Rep. Lenore Barrett, R-Challis, defended the plan, saying that tough decisions must be made and that the legislation qualifies as one of those.

When Idahoans file their yearly taxes, they typically receive $50 per filer, though low-income folks receive $70 and those over 65 receive an extra $20 on top of those numbers.  The expansion would have increased each amount by $10. All amounts will stay flat when Idahoans file their 2011 income taxes next year.

The bill’s sponsor, Rep. Cliff Bayer, R-Boise, said he is not necessarily excited about the plan, but that he sees the necessity of it.

Though some lawmakers believe the move is a step in the right direction, – at least temporarily – one state senator is calling for a further reduction in the tax rebate to fund education in Idaho.

Sen. Nicole LeFavour, D-Boise, authored a blog post last week in which she called on members of the House Revenue and Taxation Committee to cut the rebate program to 2007 levels, which would free up $27 million in tax revenue for the state.

LeFavour said that money could be used to stave off looming cuts to public schools and that the move would be temporary.  ”We would encourage a return to full funding and full structure of the credit following this fiscal year,” wrote LeFavour.

Members of the House Revenue and Taxation Committee did not discuss LeFavour’s proposal at the meeting Tuesday.

“We’re sort of at a halt,” said Sen. Dean Cameron, R-Rupert, one of the leaders of the Joint Finance-Appropriations Committee (JFAC). “After today’s work, we will be down to essentially the two major budgets.” The budgets for public school spending and the Department of Health and Welfare make up approximately 70 percent of the JFAC’s targeted general fund budget.

Cameron said JFAC is waiting for action from other lawmakers before wrapping up the state budget. Budget writers need to see what happens with the proposed $39 million reduction in state funding to Medicaid, which is currently in a House committee. They also are waiting for recommendations from House and Senate education committees on the public schools budget. The Senate committee is set to make recommendations Thursday, but the House committee will wait until next week.

The Medicaid reduction could be pared down slightly. Cameron said JFAC could set the budget with a $34.5 million reduction. Medicaid, which is funding mostly by the federal government but also receives state funding, offers medical services to low-income children and adults in Idaho.

Cameron said the public schools budget could be affected by a new version of the third part of Luna’s school overhaul, which increases spending on technology and would lead to a drop in teaching jobs across the state. Cameron said he received a new version of the plan Wednesday night, which he is still analyzing.

“I have some philosophical concerns, but I also have some budgetary concerns,” said Cameron. He voted against the two other pieces of legislation backed by Luna, which create pay-for-performance bonuses for educators and limit teachers’ power to negotiate contracts. Cameron wouldn’t reveal all the details of the new version of the the third bill, but said it gives school districts the ability to eliminate teaching jobs or lower salaries to meet their budgets. It also would include more money set aside for buying technology.

House Education Committee Chairman Bob Nonini, R-Coeur d’Alene, said he’s waiting to see if the Senate acts on the new plan, and said his committee will discuss the schools budget next week. He said the key to the discussion will be whether to give local districts more control over state dollars by putting it into discretionary funding or to funnel spending into targeted areas like technology, online classes or new math and science graduation requirements.

Nonini’s Senate counterpart, Sen. John Goedde, R-Coeur d’Alene, said his committee is debating the same issue. His committee has been working on a draft budget that could reduce the state funding for schools, which includes dedicated funds and some federal funding, by $36 million, which would be a 2.3 percent reduction.

Sen. Nicole LeFavour, D-Boise, who serves on both Goedde’s committee and JFAC, said the education budget makes her nervous, because funding would drop as the state expects to add 170 new classrooms of students.

Another issue on hold is the potential sweeping of funds from state agencies’ accounts into the general fund. Gov. Butch Otter recommended more than $10 million in fund shifts, while JFAC identified another $18.5 million that could be moved to balance the budget.

“It’s on the table, but it’s still sort of in flux,” Cameron said. House Republicans have balked at sweeping some of those funds.

Budget writers were first scheduled to finish setting state spending on March 14, but the delays could push that back by a few days. The budgets approved by JFAC need to be approved by both the House and Senate before legislators can wrap up their business. The original target date for the end of the legislative session was March 25.

“We realize we all want to get home soon,” Nonini said.