By: Clark Corbin
November 25, 2025
 
The state of Idaho may need to come up with an additional $600 million to $1 billion for the upcoming fiscal year 2027 state budget, Idaho’s top budget official and a legislative lobbyist said.
 
Due to revenue shortfalls, Idaho is already facing a projected state budget deficit of $58.3 million for the current fiscal year 2026 budget, the Idaho Capital Sun previously reported.
 
The projected state budget deficit could increase by more than 10 times that amount for the next budget year, fiscal year 2027 — depending on how state revenues come in and whether the Idaho Legislature chooses to conform with all of the tax changes from the federal One Big Beautiful Bill Act that President Donald Trump signed into law this summer.
 
In an interview with the Idaho Capital Sun on Monday, Idaho Division of Financial Management Administrator Lori Wolff confirmed that Idaho may need to come up with somewhere in the range of $600 million to $1 billion for the fiscal year 2027 state budget.
 
“We try to keep $200 million on the bottom line when we budget, so you can quickly get to a billion dollars in terms of what we need to do to account for revenue projections coming in for FY 27,” Wolff said Monday.
 
 
Challenges the Idaho state budget may face
 
That total includes a couple of assumptions and layers to get to the $600 million to $1 billion range. Here’s the breakdown Wolff provided using the latest state numbers and projections: 

• $555.2 million: the projected fiscal year 2027 budget deficit that the nonpartisan Legislative Services Office presented to the Idaho Legislature’s Joint Finance-Appropriations Committee on Nov. 4. That projected deficit includes the 3% holdbacks Gov. Brad Little implemented this summer and then permanently extended. All state agencies, aside from the K-12 public school system, are subject to the holdbacks.
• $200 million to $284.4 million: the estimated cost of complying with all of the tax changes from the One Big Beautiful Bill Act championed by Trump. The Idaho Legislature still has to decide whether to comply with Trump’s tax changes, some of which include no tax on workers’ tips, no tax on workers’ overtime pay, no tax on borrower’s car loan interest and an expanded deduction for senior citizens.
• $200 million: the estimated goal state officials have to leave a positive cash balance, or budget cushion, on the bottom line at the end of the fiscal year 2027 budget to guard against additional budget uncertainty. 

State budget officials said they expect to release a new revenue projection when the 2026 legislative session begins in January.
 
“We will get updated revenue projections right before we submit the governor’s budget, so that will be included in his State of the State address, and we’ll be publishing those in January,” Wolff said. “So we’ll have a little bit better idea of what we’re expecting, but we’re probably looking at anywhere between probably $600 million and $1 billion that we have to account for, and that’s going to include what’s been submitted in budgets, and that’s going to include revenue and revenue projections.”
 
For context, the total fiscal year 2026 general fund portion of the state budget passed by the Idaho Legislature during the 2025 legislative session was about $5.6 billion, according to the Sine Die report published by the Idaho Legislative Services Office.
 
 
Why is Idaho facing a projected budget deficit?
 
There are many factors and layers that affect systems as complicated as the state budget.
 
In simple terms, Idaho is facing projected budget deficits because expenses are forecasted to exceed revenues. Revenue is the amount of money the state takes in. The largest sources of state revenues are taxes — specifically the individual income tax, the corporate income tax and the sales tax.
 
The projected budget deficits are occurring after the Idaho Legislature and Little have passed a series of income tax cuts over the past five years. The tax cuts reduce the amount of money Idahoans and Idaho businesses pay in taxes. But to pay for the tax cuts, the state has reduced its revenue.
 
A new report released this month by the nonpartisan, nonprofit Boise-based Idaho Center for Fiscal Policy indicates that the Idaho Legislature has reduced state revenue by a total of $4 billion over the past five years, the Sun previously reported. The Idaho Center for Fiscal Policy reported that those income tax cuts have benefitted the wealthiest 1% of Idahoans making more than $738,300 annually the most and benefited the lowest-income families the least.
 
Wolff, the administrator for the Idaho Division of Financial Management, told the Sun on Monday her division’s calculations show the tax cuts accounted for about $900 million in revenue per year and about $3.2 billion cumulatively since 2019.
 
During the 2025 legislative session alone, the Idaho Legislature reduced state revenue by more than $450 million to pay for this year’s tax cuts and a new refundable tax credit that reimburses Idaho families for education expenses including tuition at private, religious schools, the Sun previously reported.
 
Lobbyist Patrick Sullivan told the Greater Boise Auditorium District’s board on Thursday several times that part of the problem is the revenue projections set by the Idaho Legislature were way too high.
 
“The Legislature projected too much, too high,” Sullivan said.
 
In an interview Monday, Wolff said Idaho’s economy remains healthy, the state is not in a recession and unemployment remains low.
 
 
Idaho Legislature’s top budget writer says there will be no budget deficit

Rep. Wendy Horman, the Idaho Falls Republican who co-chairs the Idaho Legislature’s Joint Finance-Appropriations Committee, or JFAC, emphasized that the budget deficit is only a projection at this point and the Idaho Legislature has options.
 
In an interview Tuesday, Horman said the Idaho Legislature’s decision on whether and how to comply with the tax changes from the One Big Beautiful Bill is a huge variable in the overall budget picture.
 
“This year conformity could have a very high price tag,” Horman told the Sun on Tuesday.
“Normally we just conform with the federal policies. This year will be different because of the Big Beautiful Bill — there is no tax on tips, there is no tax on overtime, but there are also substantial tax cuts for business. In my opinion, it makes no sense to set a revenue number (for the budget) until we know what the conformity policy is going to look like. As you know, JFAC does not set revenue policy – the tax committees set the policies that will determine the amount of eligible revenue to appropriate. So this is a unique year in that conformity could have a price tag in the hundreds of millions of dollars and there will be important policy decisions that need to be made outside of JFAC before we will really know how much revenue will be on the table for appropriation.”
 
Earlier this month Horman vowed that the Idaho Legislature will intervene, and Idaho’s state budget will not end in a deficit.
 
“We will set a balanced budget,” Horman told the Sun in an interview earlier this month. “The constitution requires it. I am personally committed to it. And I anticipate we will leave as large of a cash balance as we can to carry over into next year to guard against unforeseen circumstances.”
 
It is possible that state revenues could rebound and come in higher than expected before either the fiscal year 2026 or fiscal year 2027 end.
 
Even if revenues do not rebound, the state has other options to avoid a budget shortfall. Because the Republican supermajority in the Idaho Legislature has been committed to cutting taxes, not increasing taxes, the most likely options to address the projected state budget shortfall include additional cuts to state programs and/or dipping into some of the $1.7 billion in state savings accounts and cash reserves Idaho has accumulated.
 
JFAC is a powerful legislative committee that sets all of the state budgets for every state agency and department.
 
During meetings earlier this month at the Idaho State Capitol in Boise, Horman said JFAC is preparing to enter a new era of budgeting where the budget committee will focus less on approving spending requests and more on cutting budgets, the Sun previously reported.
 
 
Why does Idaho’s project budget deficit matter?
 
The budget situation is important for several reasons.
 
The state budget is how Idaho pays for all the programs and services the state provides — from paying for the statewide K-12 public school system, to providing public safety through Idaho State Police, addressing infrastructure needs like aging bridges and water supply issues, to fighting wildfires through the Idaho Department of Lands to funding Medicaid programs to providing pay and benefits for thousands of state employees.
 
If there is less money available for the budget or additional budget cuts are needed, there will be less money for programs.
 
House Minority Leader Ilana Rubel, D-Boise, told the Idaho Capital Sun this month the budget situation keeps her up at night and she is bracing for “catastrophic” budget cuts, on top of the 3% holdbacks that she said are already having a negative impact on Idaho’s most financially vulnerable families, seniors and people facing serious medical conditions.
 
Additionally, the Idaho Constitution requires the state to pass a balanced budget where expenses do not exceed revenues.
 
Sullivan, a legislative lobbyist, told the Greater Boise Auditorium District’s board of directors on Thursday that Idaho could be facing a $1 billion budget deficit for fiscal year 2027.
 
“They’re going to have to look really hard at fiscal (year) 2027, because the budget director told me this morning that she believes it’s going to be a billion-dollar shortfall – a billion dollars in a $5.9 billion budget,” Sullivan said.
 
During the briefing, Sullivan told Greater Boise Auditorium District board members that the budget situation and the 2026 election (when all statewide elected officials and all 105 legislators are up for election) will be the dominant issues next year. 
 
“I guess to put it very concisely, it’s going to be all about the budget,” Sullivan added. “It’s going to be all about cuts, and at the end of the day, they’re going to reach into that rainy day fund and pull it out for this year. But as they start looking into next year, they’re going to have to make some really draconian cuts, I think, to be able to meet the constitutional mandate that they have.”
 
Sullivan said he is concerned about budget cuts because there are only four members out of 70 from the Idaho House of Representatives who were serving in the Idaho Legislature when the last major state budget cuts were approved in response to the 2008 Great Recession.
 
“So we have a brand-new Legislature that’s never cut (funding) and I don’t think they understand what that all means – I really don’t,” Sullivan said during Thursday’s meeting. “That’s going to be very difficult for them to kind of transform themselves into budget cutters.”
 
“Now there’ll be that hard-right group of the Legislature (that will) say, ‘Oh, fine, we cut it down to zero and go home,’” Sullivan continued. “But there’s still government services that need to be performed, and so there’s going to be that rift going on.”
 
Sullivan is the founder and owner partner of the Boise-based firm Sullivan & Reberger. Sullivan has amassed more than 35 years of experience providing strategic counseling to elected officials and businesses, according to the firm’s website.
 
 
Idaho’s recent financial history
 
A recent report from the Idaho Center for Fiscal Policy noted that it has been difficult for the state to bounce back from budget cuts approved in response to budget hardships. The report found that although funding has recovered from the 2008 recession, per-pupil K-12 public school spending levels have still not caught up with levels reached prior to the 2001 recession, once inflation is factored in.
 
Any projected budget deficit is a huge change for Idaho. A little over three years ago, Idaho ended fiscal year 2022 with a record budget surplus estimated at $2 billion.
 
Idaho runs on a fiscal year calendar that begins July 1 and ends June 30. That means fiscal year 2027 does not end until June 30, 2027, and there is still time for revenues to rebound or the Idaho Legislature or Gov. Brad Little to take steps to avoid a budget deficit.
 
Although fiscal year 2027 does not begin until July 1, 2026, the Idaho Legislature will set the fiscal year 2027 budget during the upcoming 2026 legislative session, which begins Jan. 12 — in less than two months.
 
It is also important to note that Idaho is not alone in facing state revenue shortfalls. The Colorado Legislature called a special legislative session in August to address a nearly $800 million hole in the state budget, Colorado Newsline reported. 
 
In a report published Monday, Pew Charitable Trusts reported the states of Arizona and New Mexico are projecting at least $100 million in general fund reductions across multiple fiscal years due to federal tax changes that reduce revenue for states.
 
In September, the Maryland Comptroller’s Office estimated the changes from the One Big Beautiful Bill Act would reduce state revenues there by an estimated $189.3 million between fiscal year 2026 and fiscal year 2027.