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Editor’s note: This was published in Idaho Education News Thursday, Nov. 6.
Idaho lawmakers may need to cut $555.2 million from agency spending requests or tap reserves to balance next fiscal year’s budget — if state revenue doesn’t rebound from lagging tax collections.
That’s according to a budget scenario presented to the Joint Finance-Appropriations Committee Tuesday. The Legislature’s budget- setting committee is meeting this week in Boise to hear updates on the revenue outlook and to preview agency budget proposals ahead of next year’s legislative session.
JFAC members already knew about a projected $49.3 million deficit at the end of the current fiscal year, caused by dawdling sales tax collections and recently enacted tax cuts. But on Tuesday, Keith Bybee, Budget and Policy Division manager for the Legislative Services Office, teased the potential impact of revenue shortages for the next budget year, which begins July 1.
In a scenario where state revenue doesn’t rebound, he said, there would be a $555.2 million gap between what the state collects and what agencies have proposed in their 2026-27 budgets. This scenario is an “academic” exercise that’s only “on paper right now,” Bybee told JFAC.
Still, it offers a glimpse into the dilemma that lawmakers will face when they reconvene in January. They might have to choose between dipping well into reserves or making major cuts to agency spending requests to balance the budgets.
“We have a lot of decisions to make,” Bybee said.
Breaking down the $555.2 million
JFAC will have to balance the books on two annual budgets next legislative session: FY 2026, the current fiscal year, which ends June 30, and FY 2027, next fiscal year, which starts July 1.
In addition to potential clawbacks on the FY 2026 budget — which the Legislature finalized during the 2025 legislative session — JFAC may have to significantly tighten its belt in FY 2027, if tax collections don’t bounce back.
According to the latest projection from budget analysts, the state could collect $489.1 million less than previously forecast by the end of FY 2026, resulting in the $49.3 million projected deficit. This accounts for the money saved from Gov. Brad Little’s 3% budget cuts, and it factors for an unappropriated fund balance that would cover most — but not all — of the deficit.
The problem could compound in FY 2027. State agencies altogether have asked for $6.24 billion next fiscal year, according to Bybee’s budget scenario. This includes: $5.76 billion in bare bones “maintenance” budgets.
$191.1 million in “forecast adjustments,” which account for population growth.
$339 million in budget “enhancements,” line-item requests for new spending.
The latter category includes state superintendent Debbie Critchfield’s proposal to spend an additional $50 million on special education block grants.
Bybee’s scenario assumes the state will have $5.68 billion to cover these budget proposals — a 2.3% increase from this fiscal year’s revenue projection — with no carryover balance from FY 2026.
This is where the $555.2 million gap comes from: It’s the distance between $6.24 billion in budget requests and $5.68 billion projected revenue.
To plug the hole, the Legislature could reject agency spending requests or lean on savings — or a combination of both.
Budget leaders weigh options
JFAC co-chair Sen. C. Scott Grow emphasized Tuesday that the $6.24 billion in budget requests are exactly what they sound like.
“Those are requests,” said Grow, R-Eagle. “Part of our responsibility in JFAC is to deal with requests. Whether or not each or all requests are granted is up to you.”
Bybee, meanwhile, assured JFAC members that the “revenue challenges” they’ll face next session are “all solvable.” And he applauded the Legislature for bolstering “rainy-day funds” in recent years. The state had $1.3 billion in savings heading into the current fiscal year.
“You’ve done a good job of giving yourself options,” Bybee said. “Savings accounts are full. There’s lots of cash balances available.”
Rep. Wendy Horman, also a co-chair of the budget committee, said JFAC members will need to alter their mindsets when they consider spending next session. Long gone are the surplus days of just a few years ago, with revenue “inflated” by one-time COVID-19 relief aid, said Horman, R-Idaho Falls.
“We are not in that position this time,” she said. “Instead of deciding how much we’re going to add to budgets, by and large, we will be deciding how much we will trim.”
Co-chairs downplay potential deficit
At the same time, JFAC’s co-chairs cast doubt on whether significant cuts will be necessary, and chided critics who have labeled the deficit a “crisis.”
When Senate Minority Leader Melissa Wintrow, D-Boise, used that word while asking a question Tuesday, Grow responded, “We’re not really in a budget crisis. It’s a matter of how we’re going to deal with it in the session.”
Horman added that revenue projections are best guesses and “hypothetical” numbers. They indicate “what we think might happen,” she said. “They’re never right.”
SENIOR REPORTER RYAN SUPPE COVERS EDUCATION POLICY, FOCUSING ON K-12 SCHOOLS. HE PREVIOUSLY REPORTED ON STATE POLITICS, LOCAL GOVERNMENT AND BUSINESS FOR NEWSPAPERS IN THE TREASURE VALLEY AND EASTERN IDAHO. A NEVADA NATIVE, RYAN ENJOYS GOLF, SKIING AND MOVIES. FOLLOW HIM ON @RYANSUPPE. BSKY.SOCIAL. CONTACT HIM AT [email protected].
