Here's to a happy new year.

Maybe that's easy for me to say; I'm not among the people who thought the world was coming to an end on Dec. 21.

If you're surprised to still be here, or that mankind still inhabits a spinning little blue ball in space, maybe your outlook on life isn't as good as mine. Or maybe you're just worried about the impact of the "fiscal cliff" and the looming tax increases and spending cuts that will impact everyone everywhere.

I'm worried, too, but I'm optimistic because we have the leadership in the state that can act to offset some of the federal government's irresponsibility and set Idaho on a path to prosperity while other state economies struggle.

Yes, our fortunes are directly tied to Washington, D.C.'s inability to act. But state lawmakers and our governor have a role to play, too.

The state government should do everything possible to decrease our reliance on federal money.

It is an inescapable truth: Our country is broke. We're operating on trillions of dollars in borrowed money.

State lawmakers must realize this and be proactive. Don't wait until we're forced to act. Gov. Otter already has an inventory of federally-subsidized programs, many of which the state operates only because the federal government has offered us money, not because they're rooted in good public policy.

Some programs are larger, so the state's extraction from them will be difficult immediately. Where programs can be fixed, they should be.

For example, Idaho has an opportunity to implement Florida-style Medicaid reforms that have been shown to reduce costs and improve patient outcomes. Such pro-taxpayer, pro-patient reforms save federal and state taxpayer dollars, reducing pressure on federal coffers and freeing up significant amounts of money for legislative budget writers looking to address other areas of concern or cut taxes.

State lawmakers and the governor should do everything possible to keep money in the economy. Significantly reducing taxes would help offset the failure of Congress and the president to reach agreement.

The simple step of the state ending its economic planning through our tax code would go a long way to help. Did you know the state puts a sales tax on groceries, only to give $126 million back via the grocery tax credit on Idaho income tax forms? A better approach would be to leave the money in the economy in the first place, where the cash could be spent on goods and services. Requiring Idahoans to pay a tax and then file paperwork to get their money back has never made a lot of sense.

Finally, Idaho lawmakers should aggressively look to reduce barriers to the free market, barriers that slow down job and business creation or increase the cost of doing business. Every regulation, every license and every bureaucratic process merely inhibits the ability of companies to provide their goods and services to a waiting marketplace. This suffocates the economic engine that drives the state. Removing those restrictions would at least offset the economic troubles that face the rest of our country.

Every state begins 2013 precariously positioned at the edge of a fiscal abyss. But Idaho can stand apart if our elected officials summon the political will and resourcefulness to make our state a beacon for opportunity and prosperity — and make tough but important decisions in the weeks to come.

I know they can do it. That's why I have such a cheery outlook for 2013. Here's to that happy new year.

* Wayne Hoffman is the executive director of the Idaho Freedom Foundation. Email him at wayne@idahofreedom.net.