Gov. Brad Little said he wants the state to fully conform to federal tax changes made this past summer, which would add more than $435 million to Idaho’s projected deficit.
At a press conference Thursday morning, Little said fully adopting the changes would save small businesses headaches during tax season.
“Taxes are already complicated. They don’t need to be [further complicated] that when you calculate your adjusted gross income the [federal amount] is over here and the state’s a totally different number,” he said.
Those changes include foregoing income taxes on overtime wages, tips and the additional $6,000 income tax deduction for seniors. Businesses could also get tens of millions of dollars worth of deductions for research and development costs.
All those taken together are estimated by the nonpartisan Idaho Center for Fiscal Policy to total more than $284 million.
If Idaho were to fully conform to the law, it would have to shoulder an additional $151 million hit to its revenues by adopting equipment and property depreciation rules, which legislators previously declined to do.
Little did distance himself from many lawmakers in his party by saying he would not consider eliminating the state's voter-approved Medicaid expansion program in order to balance the budget. The legislative DOGE Task Force recommended such a repeal late last month, led by Rep. Josh Tanner (R-Eagle), the budget committee's new co-chair.
The latest forecast by the Idaho Legislative Services Office estimates the state will end the fiscal year $40.3 million in the red, which does not account for potential changes lawmakers might make this session.
House Democratic Leader Ilana Rubel (D-Boise) said Thursday she’s not optimistic about Idaho’s economic outlook.
“We already have serious problems and fallout from the cuts we’ve already made and those cuts are going to get a lot more drastic given the severe revenue shortfalls we’re looking at,” Rubel said.
She said she receives daily calls from people being affected by the 3% budget cuts implemented by Little last year, from those receiving caregiving services to law enforcement raising concerns about cuts to mental health treatment.
House Speaker Mike Moyle (R-Star) downplayed those concerns.
“The state of Idaho is in good shape. It’s going to be good. We’re all going to do well,” said Moyle. “We’ll do our best to protect education and those important budgets, but at the same time we’ll make those needed adjustments to balance the budget.”
While Little wants to fully conform to those federal tax changes, Moyle said the legislature might pick and choose to avoid a significant revenue hit.
Lawmakers officially resume business in Boise on Monday when Little will deliver his state of the state address.
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