I’ve been saying for months that Idaho’s budget picture is looking problematic. The latest report from the governor’s budget office continues to validate my suspicions. It shows that tax collections for September came in just shy of $71 million less than the state economists’ already lowered expectations for the month.
Coupled with weaker than expected tax collections in July and August, the Legislature’s budget office now forecasts Idaho will end the fiscal year on June 30 with a budget deficit of about $56.6 million, even after Gov. Brad Little’s call for a 3% budget holdback in the current year. But that number doesn’t tell the whole picture.
The deficit is actually quite a bit larger because the $56.6 million figure doesn’t take into account a couple of important things: First, state agencies — in particular, the Department of Health and Welfare and the Department of Correction — have asked for $104 million in emergency spending, money that is needed prior to June 30.
The Department of Health and Welfare wants more money to cover unexpected costs in the Medicaid program, and the Department of Correction is asking for funding to cover the costs of placing inmates in county jails around Idaho and prisons around the country.
And if Idahoans expect to enjoy the tax benefits associated with the One Big Beautiful Bill — such as accelerated depression for qualifying business purchases, no taxes on overtime and tips, and deductible car interest — that’ll cost around $167 to $200 million, according to different estimates.
All told, the deficit could be somewhere north of $300 million, even if taxes collections do not continue to disappoint state policymakers.
Now, to be clear, the state has plenty of money in reserves to close the gap without needing to do additional holdbacks or other cuts right now. (More cuts should be imposed but if not, it is still very unlikely the state will end the fiscal year on June 30 with an unconstitutional budget deficit).
But the budget problem is a structural one. The state spends too much money, and shoveling rainy day money into the budget hole may make for a temporary solution, yet it won’t fix the problem in the long run.
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