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Dan Popkey reports: Gov. Butch Otter is rejecting the notion that a projected $162 million in surprise revenue means the 2014 Legislature should boost spending growth.

Otter said he’s “bound and determined that the government is not going to grow back at the same rate that the economy grows” and said the lessons of the Great Recession prove that government can do with less by exercising fiscal discipline, co-locating agencies andengaging in partnerships outside of government.

“That all suggests to me that there’s no reason to go back to the old way of doing things – because we got a little extra money, let’s spend it,” Otter said in a Tuesday meeting with the Idaho Statesman editorial board.

Last week, Otter’s retired chief economist, Mike Ferguson, produced the $162 million figure as an estimate from fiscal 2013 – which ends June 30 – and fiscal 2014. Ferguson, an advocate of increased investment in public education and other infrastructure, said the new money has “profound implications for fiscal decisions that will be made in the next legislative session.”

Ferguson, an economist for six governors, now heads the Idaho Center for Fiscal Policy.

For the first 10 months of the 2013 budget year, revenue was $79 million above projections, according to Otter’s chief economist, Derek Santos, Ferguson’s former subordinate. April revenue alone was up $56 million in a $2.7 billion budget.

The Legislature’s budget office, however, notes that $86 million is already committed because existing law requires transfer of the money to the state Budget Stabilization Fund by June 2014 as insurance against a future downturn. An estimated $59 million will come from fiscal 2013 surplus and $27.3 million from fiscal 2014.

Otter acknowledged he will have more leeway in proposing a 2015 budget to lawmakers in January than he has had since the economy faltered in 2008. But maintaining a robust savings account is central to keeping state operations stable, the governor said. He noted that he trimmed spending by about 26 percent during the downturn.

“Remember, in 2007 I had $400 million in accumulated savings, plus the surplus that year, that we refused to spend,” Otter said. “So I don’t see that $80 million is going to put us over the threshold” of prudent savings.

Otter said he doesn’t want to risk midyear holdbacks in spending, which he said he’s experienced 10 times in his 14 years as lieutenant governor and six-plus years as governor. “Nothing is more dysfunctional,” he said.

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