Idaho state government is going to have to keep its belt tightened for another year according to a budget memo sent to agency directors late last month.
Lori Wolff, who heads the Division of Financial Management, wrote that Idaho’s economy “continues to demonstrate underlying strength” in employment and in “key sectors.”
However, Wolff wrote “agencies should continue operating with a focus on efficiency and prioritization” after state lawmakers slashed spending for fiscal year 2027 by 5% totalling $143 million.
She directed state entities to submit “maintenance budgets” that keep expenses flat unless departments received prior approval for additional spending.
Any revenue growth, Wolff said, would be put toward the first state employee pay raise in two years, rising healthcare costs, fire suppression and education.
She doesn’t expect Gov. Brad Little to implement another round of budget holdbacks as he did last summer amid faltering tax collections.
“Maintaining disciplined maintenance budgets will help preserve Idaho’s ability to respond to future economic changes, continued population growth, and emerging statewide priorities,” Wolff wrote.
Senate Democratic Leader Melissa Wintrow (D-Boise), who serves on the state’s budget committee, said she wasn’t surprised to learn about the memo during an interview Tuesday.
Another year of flat spending, Wintrow said, will further erode essential government services.
“While the legislature has been cutting income taxes so drastically, it’s just left the very basics that we need and rely on in the lurch,” she said.
Legislative Republicans cut income taxes five years in a row beginning in 2021, forgoing $4 billion in revenue over that time according to the Idaho Center for Fiscal Policy.
Personal income tax revenue in May faltered once again with overall collections down nearly 5.5%, or $21 million.
If revenues meet expectations this month, Idaho should close out fiscal year 2026 with $72.4 million left on the bottom line, according to an analysis by the nonpartisan Legislative Services Office.
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