BOISE, Idaho-- Gov. C.L. Butch Otter recommends cutting more than $35 million in spending from state agencies to help balance Idaho's budget next year, with a bulk of the cuts falling to adult Medicaid services.

The Republican gave his State of the State speech Monday to open the 2011 Legislature.

Otter refrained from recommending further cuts to public schools, which took a $128 million hit this year, and ruled out tax increases to boost Idaho revenue in his recommended budget for the next fiscal year.

While lawmakers were expected to address a $340 million shortfall this session while budgeting for next year, Otter's budget chief reported that bigger-than-expected state revenue helped shrink the deficit.

Division of Financial Management administrator Wayne Hammon says the shortfall is still about $50 million.

Otter recommends cutting $25 million from Medicaid, another $10 million in cuts to other state agencies and a one-year delay in implementation of a grocery tax credit for Idaho families, to fill in the gap.

Otter and lawmakers say they are encouraged by a slight increase in state revenue. So far this fiscal year, revenues are about $30 million ahead of targets.

But the early message from Republican leaders is more cuts to programs may be unavoidable.

In a special meeting held Monday morning, Wayne Hammon, Governor Otter's budget director, discussed the budget recommendations Otter will be proposing for fiscal year 2012.

The Division of Financial Management projects Idaho's revenue growth will be 6.9 percent. Even so, the governor is making his 2012 budget recommendations based on a 3 percent revenue growth prediction, which amounts to an estimated $91 million difference.

Otter is also recommending that no state employees be given raises, and many agencies will be taking budget cuts with the highest being a 4.13 percent cut to the Department of Health and Welfare.

If you didn't get a chance to watch the State of the State address,you can see it on 24/7.

A replay will air Monday at 7 p.m. and Tuesday at 10 a.m., 1 p.m. and 7 p.m.

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