In delivering a warning to his department heads, Gov. Butch Otter is also giving a heads-up to lawmakers.

Don’t expect an unabated flow of federal dollars into state government.

Otter is asking his agency directors to come up with a contingency plan for absorbing a 20 percent cut in federal dollars. They’re supposed to report back by Aug. 1.

I don’t have any problem with this exercise, even if a 20 percent cut is an unlikely worst-case scenario.

By asking state agencies how they would go without help from Uncle Sam, Otter is shedding a little light on a conveniently forgotten reality of budgeting: Idaho depends on federal dollars more than its fed-bashing citizen lawmakers ever care to admit.

The numbers are startling and far-reaching. A few examples:

   Idaho’s Medicaid budget is $1.91 billion, with nearly $1.24 billion coming from the federal government.

   The Idaho Transportation Department gets $265 million of its $532 million budget from Uncle Sam.

   The Department of Fish and Game gets $47 million of its $93 million budget from the feds.

When lawmakers and reporters fixate on the state budgeting process, the debate usually centers on the “general fund,” money derived mostly from state sales and income tax collections. But the general fund for 2012-13 will come in at about $2.7 billion, and federal dollars account for $2.3 billion. In the case of ITD and Fish and Game, federal dollars help these agencies function without any general fund dollars.

That’s the dirty little secret of the Idaho budget. The state depends on federal dollars to bankroll many programs. And Idaho, ultimately, has very little control over what actually rolls in.

So, if Idaho were to suddenly lose 20 percent of federal funding — a number a little south of $500 million — what can the agencies do without, and what should legislators replace through other funding sources?

It’s good that the conversation is beginning, at least at the agency level. But it should be a bigger part of the legislative budgeting discussion, too.

Read more here: http://www.idahostatesman.com/2012/06/23/2165493/otter-shines-a-light-on-a-dirty.html#storylink=cpy