Idaho Gov. Dirk Kempthorne: Handouts don’t work-State needs flexibility from federal government

To get through the current fiscal crisis, states need flexibility from the federal government more than they need handouts, Idaho Gov. Dirk Kempthorne told business, government and academic leaders Thursday at Harvard University.

Betsy Z. Russell
Staff writer Spokesman Review

"I don’t think anyone expects charity from the federal government to fill the potential gaps in our state budgets," Kempthorne told a conference on states’ fiscal problems at Harvard’s John F. Kennedy School of Government.

"I certainly don’t want the federal government to expand the scope of their influence beyond their constitutional obligations by supplanting state funds with a deluge of federal handouts."

Kempthorne’s remarks came just a day after President Bush signed into law a tax-cut package that also gives $20 billion in aid to hard-hit state governments over the next two years, with half of that going to the fast-growing Medicaid program.

U.S. Sen. Mike Crapo, R-Idaho, and state Controller Keith Johnson, also a Republican, held a press conference on the steps of the state Capitol on Thursday morning to welcome that money. Of the total, Idaho will get $85 million, with the first installment due in about 45 days.

"That was a difficult issue for us in Washington," Crapo said. As fiscal conservatives, he said, "Many of us … did not want to see the states become more and more dependent on the federal government."

Yet federally mandated programs, such as Medicaid, are among the factors driving up state costs at the same time that state tax revenues have fallen in the national recession, he noted.

Johnson said, "The state budget is in a tough situation. … We are very appreciative." He called the federal money "a significant shot in the arm for our own state budget," but noted that it will arrive after the July 1 start of Idaho’s new fiscal year, which means it may not be able to help with the $45 million shortfall in the current year’s state budget.

Idaho may have to delay paying some bills until after the start of the new fiscal year to get through the crunch, he said.

Idaho’s budget crunch has been so severe that Kempthorne, a Republican, reluctantly persuaded lawmakers this year to raise Idaho’s sales tax from 5 percent to 6 percent, while also boosting cigarette taxes and trimming budgets. It took the longest legislative session in state history for Kempthorne to persuade a Legislature dominated by his own party to go along.

"I found myself with a serious dilemma: Raise taxes, or seriously cut education," Kempthorne told the Harvard audience, according to a copy of his speech. "Raise taxes, or release inmates. Raise taxes, or cut thousands of senior citizens, veterans, pregnant women, children and disabled Idahoans from receiving the health care they need."

He added, "I’ve been criticized, but no one can accuse me of lacking courage in my convictions, because I believe I did what was right, even though I knew it would be unpopular."

Kempthorne has been criticized again in the past week for giving raises to three staffers in his office this spring, while state employees are going a second year in a row without any funding for raises. But his administration continued to defend the moves, saying they actually saved the state money by eliminating two other staff positions and reassigning their duties to two advisers who got big pay boosts.

"They’re not raises," said Mark Snider, Kempthorne’s press secretary. "He reclassified jobs and eliminated two positions from the governor’s office. It saved $61,000."

Two policy advisers and the governor’s attorney received the pay increases.

Although the Legislature provided no funding for state employee raises either this year or in the coming year, it did allow agencies that find savings within their existing budgets to boost workers’ pay.

Kempthorne said what states need most from the federal government is flexibility. For example, he said, "For every three dollars I save in Medicaid, I have to send two back to the federal government, and I get to keep the headlines for the impacts of the cuts I made. What if the federal government gave me the flexibility to keep those dollars and let me invest them in Medicaid where I know that we can do significant things?"

He also said federal grants for economic development programs in states are important and can help further state efforts.

"Do I consider that a handout? Absolutely not — that’s a job, that’s an investment," Kempthorne said.

He praised federal welfare reform efforts, which gave states block grants that allowed more state-by-state flexibility on how to restructure programs.

Kempthorne told the group, "The states must take the initiative and make the tough decisions in these economic times. The federal government has a role, but we need them as a partner and not a patron."

Robert Behn, a faculty member with the Kennedy School and chairman of the conference, said the school decided to invite Kempthorne to join a list of speakers that also included Massachusetts Gov. Mitt Romney, Harvard University President Lawrence H. Summers, Kaiser Family Foundation CEO Drew Altman and more, because of Kempthorne’s unique approach.

"He appears to be a very interesting person in terms of his approach to this problem," Behn said. "He approaches it, I would think, a little bit more innovatively and a little more creatively."

Behn said the group was looking for "somebody who would spark the conference rather than tell you things that you’d already heard before. He was our first choice."

Though Kempthorne is governor of a relatively small state by population, he is the vice chairman of the National Governors Association and will become the group’s next chairman.

After his talk, Behn said, "Any academic audience is a hard audience to talk to. A Harvard audience is particularly hard to talk to. And Gov. Kempthorne, I think people generally agreed, was both thoughtful and inspiring today."

•Betsy Z. Russell can be reached toll-free at (866) 336-2854 or by e-mail at [email protected].

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