In its last regular session, the Idaho Legislature passed an income tax cut amounting to $253 million, a successor to other tax cuts in previous recent sessions. The state is on track to receive hundreds of millions of dollars less in revenue than it would have been under the mostly long-standing tax approach, which in Idaho never has been terribly aggressive.
It also has been in effect pushing a good deal of discretionary money out the door, as when the state also kicked in $50 million to replace local property taxes and another $50 million for school vouchers (which is structured as a tax benefit).
The core message from the legislature was, in the area of budgets and spending, no problem. Idaho’s tax revenues had been growing solidly for years. What, me worry?
In this new session about to convene, legislators will be confronting the consequences of those decisions.
Those consequences are bounded by an absolute requirement that most legislators will quickly note: They are required, by the Idaho Constitution, to produce a balanced budget, one that provides for no more spending than there is income. Constitutions require most of the states similarly to balance their budgets, varying only in details.
Idaho’s economy is stable, for now, but it is not exploding fast enough to make up for the budget decisions from last session. Last fall, Governor Brad Little had to order spending holdbacks for state agencies (an approach often used by governors when the money runs short).
That hasn’t been enough. The deficit for this fiscal year now is estimated at about $40 million, and if you bet on it increasing significantly in coming months you probably wouldn’t lose your wager.
And the Idaho Capital Sun reported this: “It is important to note that the projected budget deficit is not a hiccup limited to the current year. State budget officials have projected a much larger budget deficit of $555.2 million for next year’s budget, fiscal year 2027. The state’s top budget official, Idaho Division of Financial Management Administrator Lori Wolff told the Idaho Capital Sun the state may need to come up with an additional $600 million to $1 billion for the 2027 budget if the state wants to conform with federal tax changes championed by President Donald Trump and also leave an ending cash balance to serve as a budget cushion to guard against additional budget uncertainty.”
Legislatures often engage in “supplemental” or “reverse supplemental” budgeting for the current year when the revenue stream slackens, and that should be expected this year.
The list of targets are many. A number of them have been suggested by the semi-formal Idaho DOGE group, which met in past months and came up with a number of budget cut recommendations, though most of them are tiny specks of money in the context of billion-dollar budgets. The possible elimination of Medicaid expansion, which many Republican legislators favor even absent finance concerns, would be a larger chunk but - in addition to the massive immiseration of many Idahoans it would cause - might also create whole new cost centers.
Remember, however, that balancing the budget can be done in more than one way. Cutting budgets is one way. Another is increasing revenue.
If, for example, some of those massive tax cuts (which few outside the legislature were really crying out for) were scaled back, that could go a long way to solving the balancing problem.
This happens to be an election year session, with candidate filing coming even before the session is likely to adjourn, and a primary election only weeks afterward. Just how much appetite for major service cuts do Idaho legislators have under these conditions?
Or maybe they figure their seats are secure, that Idaho voters would never consider unseating them.
Maybe. But one day, this year or later, they might.