Gov. Butch Otter told members of the Idaho press on Thursday that three main issues would define the upcoming 2012 legislative session: the state budget, health care and taxes.
"I don't know a lot of other issues that will take on a big picture and a lot of time in the Legislature," he said.
Otter and a panel of legislative leaders agreed Thursday morning that the budget would be more difficult than anticipated, as state sales tax revenues are down once more.
"Revenues have not responded to the extent we projected they would," Otter said.
State revenues are down almost 16 percent from their peak before the downturn, and Otter said the continued decline may kill discussions on tax relief for either individuals or corporations.
However, Otter said he would attempt to lower personal income tax to 7.6 percent to match corporate tax rates.
One tax that may be raised is the tax on cigarettes, legislators said. The state charges 57 cents on each pack of cigarettes sold, which could be raised to $1.82 per pack this year. The change would bring about $50 million in revenue to the state.
Rep. Wendy Jaquet, D-Ketchum, said last year that the intent is to use the money to offset the cost of smoking-related illnesses to the state Medicaid program, but at least one legislator sees another benefit.
"Increasing the cost of cigarettes is the single best way to decrease youth use," said Rep. John Rusche, D-Lewiston.
Otter was careful not to reveal the degree of his support for an increased tobacco tax, but was particular about the revenue going toward a dedicated cause.
"If there is any consideration of [the tax], and I'm not saying I'm for it, I would definitely want to see a particular revenue stream going to the cause of the problem we're taxing for," he told reporters.
Legislators and state residents looking for last year's Medicaid cuts to be reversed may be disappointed. When asked whether $39 million in state funding could be restored to the program, Otter responded in the negative.
"I believe [what we did last session] is working well," he said.
State cuts resulted in a total loss of $108 million to the program, when lost federal matching funds were added to the mix. Far from restoring this funding, Otter said that if Idaho does not create a state health insurance exchange as required by President Obama's health care plan, the state could lose more than $300 million in federal funds.
"We feel there is a constant threat under the Affordable Health Care Act," Otter said. "We could see the federal-state participation [in Medicaid funding] go to 50-50 instead of 70-30."
But no matter how state residents feel about the rest of his speech, Wood River Valley residents can likely agree with at least one sentiment that Otter uttered in response to a question about recharging the Snake River Aquifer.
"I'm hopeful that we'll get some snow," he said.
Katherine Wutz: email@example.com