BOISE - Idaho ended its fiscal year about $8 million in the hole, a shortfall that could have been much worse had state lawmakers not made the cuts they did during the 2010 session, Gov. Butch Otter said.

After dipping into permanent building funds, Otter and the state controller's office closed the books on the most recent fiscal year Tuesday with a zero balance. The fiscal year ended June 30, but balancing and certifying the state's final budget numbers and accounts took several weeks.

The state was facing a $16.5 million budget hole after finishing the year with about $2.63 billion in revenue. But state agencies halved that hole by returning money they had been given for the year but didn't spend.

Otter then dipped into permanent building funds set aside by state lawmakers to plug the remaining $8.26 million deficit.

"I can tell you that the 8.26 million-dollar figure could have been a whole lot more if we hadn't gone out to the state agencies earlier and said: 'If you don't absolutely have to spend the money, don't spend it,"' Otter said.

Idaho is unique, compared with other states, in having enough funds to transfer and cover the shortfall so the books were closed with a zero balance, said chief deputy state controller Dan Goicoechea.

"All of us can thank God that we live in Idaho," Goicoechea said. "There is a balanced budget."

The governor praised legislative leadership for holding the line and making sure that "when we did balance the budget, we did not do harm to the potential of our economic recovery, because we did that without raising taxes."

Sen. Shawn Keough, a North Idaho Republican on the Legislature's budget committee, echoed the governor's message that the shortfall could have been worse had lawmakers not taken the steps they did during the 2010 session.

The cuts included an education budget that spends about $128 million less on K-12 public schools next year and, according to lawmakers, slashes total spending on public education for the first time in Idaho history.

"The Legislature and the governor took a lot of criticism for their, what is now seen to be prudent, approach to budgeting," Keough said.

The state has cleared the most recent fiscal year and appears to be in recovery mode, with unemployment hopefully bottoming out, the governor said. But he also cautioned that was no reason to believe there weren't tough times ahead.

Otter, asked whether he was considering finding new revenues or would support tax increases next year should the economy worsen, said he would look to Idaho lawmakers and the state tax commission for direction.

"We've looked for, and continue to look for, all the efficiencies which will lead to more money in the general fund. Obviously the Legislature is going to have an opportunity to look for additional revenues," Otter said.

"I will tell you, once again, that we've got to be very cautious about doing that because as we look at those things, we've got to make sure that we do no harm to the recovery that we've got going forward."