Idaho tax collections are on the upswing after a bountiful return last month, but at least one key lawmaker wants to forge ahead with more budget cuts.
The latest report from the Division of Financial Management shows revenue came in nearly 20% higher than predicted – entirely due to a resurgence in corporate income tax.
Idaho has now collected about $100 million more in taxes than expected, relieving pressure of what had been a projected budget deficit.
“We try really hard not to be too reactive to one or two months of revenue,” said DFM Administrator Lori Wolff.
Wolff told the Joint Finance and Appropriations Committee Tuesday that her office’s economists are predicting collections will come in later than originally planned as companies adjust to new federal and state tax cuts.
Gov. Brad Little’s administration and Republican legislative leaders have been saying for months that by many measures, Idaho’s economy is strong.
“Our unemployment rate is among the lowest in the nation. We lead in personal income growth, and our economic activity continues to outpace most states, reflecting a diverse and resilient economy,” Little said in his state of the state address Monday.
Soon, they said, Idaho’s tax collections will be buoyed by the continuous growth in the state despite several years of back-to-back personal and corporate income tax cuts.
“We’re not seeing dips in revenue. We’re just seeing some stabilization and some normal growth patterns,” Wolff said Tuesday.
Rep. Josh Tanner (R-Eagle), the new co-chair of JFAC, agreed with the administration on the strength of the state’s economy.
However, during Tuesday’s meeting, he pushed back on the governor’s proposed spending plan saying it’s not balanced.
“It relies on one-time gimmicks, spends more than the state takes in on an ongoing basis, and leaves Idaho with the lowest ending fund balances in nearly a decade,” Tanner said in a statement released after the meeting.
Much of Little’s proposal does rely on one-time cuts to local transportation and clean water projects, along with redirecting interest income for several government funding accounts to the general fund.
The fiscal year 2027 budget is expected to end the year with $25.5 million left over in reserves when that figure has typically been in the hundreds of millions of dollars in recent years.
“I don’t want to be back here in July,” to have to restructure budgets, Tanner said, if there’s any downturn in revenue or upswing in program costs.
The Little administration estimates fully conforming to federal tax changes would cost $155 million in the upcoming fiscal year, which Wolff said is in the middle of predictions released by the state’s tax commission.
Tanner said the state should plan for the higher side of those estimates, nearing $200 million, and cut the budget further to err on the side of caution.
“We should plan accordingly to a recession and I don’t think this budget actually went into some of the areas, in a way, to actually make sure that we were protecting ourselves if that’s where we are actually going.”
Wolff said she believes the governor’s budget proposal is balanced and additional spending cuts after a certain point are counterproductive.
“If we start cutting too deep into these budgets, we will not have the opportunity for continued growth and meeting some of the needs that we have around the state,” she said.
JFAC will begin diving into the budget beginning Wednesday.
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