Gov. Brad Little is ordering all state agencies except for K-12 education to cut their budgets by 3% as projected revenues came in $40 million short last month.
“Idaho’s economy is the strongest in the nation, and we continue to move in the right direction," Gov. Brad Little said in a statement announcing the action. "It’s in our DNA here in Idaho to balance the budget, cut taxes, and right-size government so we can continue to make public schools our top priority."
The news comes in the face of consistently falling tax revenue after Little and Republican legislative leaders passed $450 million in tax cuts earlier this year.
The latest revenue report from the Division of Financial Management for July shows collections for both personal and corporate income tax dropped by 5.3% and 50.3% respectively compared to predictions, largely contributing to the overall 10% drop below what state officials forecasted.
"The Governor’s executive order today further reinforces our strong track record of living within the people’s means and making government as efficient as possible so we can continue to prioritize education," said Senate Pro Tem Kelly Anthon (R-Burley).
"Idaho’s commonsense approach to budgeting means we aren’t growing government beyond Idahoans’ ability to pay for it," added both co-chairs of the legislature's budget committee, Sen. Scott Grow (R-Eagle) and Rep. Wendy Horman (R-Idaho Falls).
The governor proposed $100 million for tax cuts in his January budget proposal. Lawmakers more than quadrupled that, to which Little told reporters in February, “If I would’ve thought we could do [$450 million], I would’ve proposed [$450 million].”
Little’s budget chief, Lori Wolff, sent a memo to state agencies in May telling them to draw up contingency plans in case of budget holdbacks up to 6%.
Each agency determined what could be cut from its own budget and will vary in strategy. Those documents weren’t immediately available Friday.
Idaho closed out its fiscal year at the end of June with a $345 million surplus to cushion any potential revenue shortfalls. Still, tax collections fell 1.7% below projections.
Little's executive order also directs state agencies to cut full-time positions that have been vacant for more than six months and consolidate services where possible.
Constitutional offices, like the secretary of state, attorney general, state controller, state treasurer and the courts systems are also unaffected by the cuts, though he invited them to consider whether they could voluntarily trim their spending.
Gov. Little most recently issued cuts in midyear spending during the first wave of the coronavirus in 2020. That 5% cut across state government penciled out to $200 million.
The Idaho Democratic Party called on the governor to repeal a piece of the tax package – a $50 million tax credit that pays for a student’s private school tuition.
“Idaho Democrats are ready right now to repeal the $50 million voucher scheme, an essential first step toward fiscal responsibility," said Idaho Democratic Party Chair Lauren Necochea.
"“These holdbacks are the bill coming due for reckless Republican rule," said Necochea. "Idaho Democrats opposed giveaways to the wealthy and costly voucher schemes because we knew they would blow a hole in the budget and do nothing for working families."
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