Writings and observations

Interview: Mike Ferguson

Former Idaho state economist Mike Ferguson probably was best known, among Idaho news junkies at least, for his state revenue estimates – a task which was part of the job, and which also brought him into bumping heads with Governor C.L. “Butch” Otter. He retired 11 months ago and has maintained a low profile since.

That will change shortly. Ferguson is becoming the head of the new Idaho Center for Fiscal Policy (web site coming in the fall), an entity set up at the at the Mountain States Group in Boise, which has worked till now on health, refugee, and welfare-related issues. Ferguson will not be working (much at leat) on reveue projections, but rather on other parts of what used to be his job – tax policy, how budgets are set, and more.

The Center’s main purpose, Ferguson said, “is to provide fact-based information with clarity, that can help people make more informed decisions about appropriate public policy.” He said he’ll focus on the revenue side initially, at “basic principles” – a tax system that is efficient, adequate and stable.

That’s actually a way of looking at taxes and budgets quite different from how most legislators do. The usual approach and focus (and Idaho is part of the norm in this) is: Estimate the amount current state taxes will bring in for the next fiscal year; apportion that money among the usual recipients; and maybe, on rare occasions, consider increasing the income if trouble seems to loom otherwise.

Three problems with that method.

One is that it bypasses a key point, that the exact amount of tax money coming in a little arbitrary, and logically depends on how much is needed – how much needs to be spent to pay for whatever the legislature decides (and constitution requires) the state should do. That may be less than the current level of tax revenue, or it may be more, but the revenue-first approach takes things backward.

Another is, “one of the thigns that happens during the legislative session when the greatest focus on budget occurs is an enormous amount of attention given to the general fund, as if the general fund were the budget.” The general fund, which is the part funded by state taxes, in fact makes up only about half of the money the state spends. Federal funds, fees and other sources provide a big chunk of the income.

The third is the de-emphasis on the budget itself – what the money is actually spent on, and how it impacts the state. The narrow focus on the general fund, Ferguson said, means legislators and others miss the overall breadth of effect Idaho state government has on the people in the state. Analyzing that effect, he said, is part of what he hopes to be doing. “One of the things I’m going to try to do, is to show tht the budget has a pretty big impact on the economy,” he said.

Budget primers and tax analysis will be another part of the work. And he does plan to provide some critical analysis of the tax structure as well.

The effect of changes in the sales tax on property taxes, for example. In Idaho’s economy, as elsewhere, there’s been a gradual shift away from goods and toward services – formerly more money associated with the former, recently more associated with the latter. Idaho’s sales tax, with a few exceptions, goes after goods but not services, which means income from it has been strained. A lot of the pressure has been gradually shifted toward the property tax, especially where schools are concerned. The revenue structure, he said, has proven volatile.

“We’ll be carving out specific kinds of issues,” Ferguson said, “trying to lay it out in clear concise ad objective terms.”

The valuer of an independent organization “that is not part of the execuive brach of government or the legislative branch of government, is that it is a bit more free to raise issues that are of concern, that may be somewhat uncomfortable for people in the political world.”

The reports and analysis will be aimed at the public too. But the response at the Statehouse ought to be especially enlightening.

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