A Little gaslighting over the state budget

What the governor isn't saying about his 3% holdback

** update 8/18/2026 … the state's new economic forecast is out which validates the statements below. Additionally, the state tax collections in July were off by $39 million, so the budget deficit is closer to $250 million-ish now). **

Over the last few decades, I’ve seen Idaho governors need to make mid-year spending cuts, and usually, whether you agree or disagree, you can at least say they communicated with honesty and integrity what’s going on so that the people who pay the bills — the taxpayers — can understand.

A picture of something government never seems to have enough of

This is not one of those times. When Gov. Brad Little announced Friday that he’s ordered agencies to reduce spending by 3% in the current fiscal year, he made it sound like the step is merely an exercise in finding efficiency and to “make room” for the tax cuts Congress passed and President Trump signed in the One Big Beautiful Bill.

I consider Little to be gaslighting Idahoans. Little’s so-called “Idaho Act” — this governor has a habit of inaccurately labeling executive orders “acts” — avoids telling Idahoans the reality of the state’s budget situation, which is this:

• The Legislature and Little authorized too much spending last session, relative to expected revenue. More on this in a moment.

• President Trump’s tax cuts, if fully adopted by Idaho, will likely cost the state government between $140-$200 million, based on different estimates I’ve gotten.

• This month, Little’s economists will release a new revenue growth projection. If the current budget year comes close to the performance of the budget year that ended June 30 (an increase of about 2.9% over the prior year), the state could be faced with a shortfall of $230 million or more in just 10 months. This says nothing of FY 2027, which starts July 1, 2026.

• Lawmakers could be facing other impacts of congressional action, for example, restrictions on the authority to levy a bed tax on hospitals; the decision to defund the Corporation for Public Broadcasting; and added expenses for running the food stamp program. In these cases or others, lawmakers may try ask state taxpayers to pony up more money.

• Little’s 3% holdback (which excludes K-12 education) totals around $70 million. This probably won’t be enough, on its own, to close the budget gap, which is why Little also called for agencies to reduce travel and look at other ways to find efficiencies. Little also appears to be trying to position himself as the governor who makes state government more efficient, getting out ahead of the Legislature’s Department of Government Efficiencies taskforce.

All of this presents an interesting set up for the 2026 legislative session.

• Lawmakers are not bound to Little’s 3% holdback. The Legislature will have to vote on it; they may choose to cut spending by more or by less. Naturally, some will argue that deeper cuts are needed, while others will argue that agencies and programs “need” the money that was allocated earlier this year. If the argument is that the Legislature spent too much, the decision on holdbacks will be where the rubber will meet the road.

• There will be a vote on whether to incorporate the Trump tax law changes into Idaho’s tax code. This is an annual process in which lawmakers vote to “conform” to the federal tax law changes. It’s not automatic that Idaho’s tax laws will mirror the federal government. Though rare, sometimes the Legislature chooses to not adopt federal tax code changes. Not conforming would save the state some money, but it would deny taxpayers the full extent of President Trump’s tax breaks and make record keeping more difficult, e.g., lawmakers could decide that businesses that want to take advantage of 100% asset depreciation could do so federally but not as it applies to state taxes.

• Idaho has about $1.3 billion in “savings” in different accounts. Lawmakers and the governor may wrestle over whether to allocate money from savings in order to prevent additional cuts in state government. Taking money from savings won’t resolve the growing structural problem in the state budget — spending that overtakes revenue — but it would delay the issue until 2027, after the gubernatorial and legislative elections.

All of this could have easily been explained by Little when he made his holdback announcement Friday. Instead, he painted a very different picture of what awaits lawmakers when they come to Boise in January. This is of no service to anyone but Little, who is positioning himself for a reelection bid next year.

I tend to think that politicians should be honest with taxpayers, instead of delivering to the people clever marketing gimmicks and half truths, which is exactly what Little gave Idahoans.

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