Idaho State Budget FY2027 Analysis

Idaho spent — across all funds in FY2027, or — per resident. All-funds spending counts the general fund, federal grants, and dedicated state funds together — the fairest basis for comparing states, since they differ widely in how much they route outside the general fund.

Reserves in the rainy day fund stood at $1.2 billion. Because nearly every state is constitutionally required to balance its operating budget, reserves rather than borrowing are how states absorb revenue shortfalls in a downturn.

Idaho's FY2027 budget is an austerity exercise after years of aggressive tax cutting. The Legislature's 2026 session — 81 contentious days ending April 2 — produced $5.62 billion in general fund appropriations, 0.0% growth over FY2026. Most agencies absorbed a combined 5% base reduction (Gov. Brad Little's 3% holdback ordered in August 2025 plus 2% added by the Joint Finance-Appropriations Committee), with K-12 public schools, Medicaid, corrections and state police exempted. The pressure is largely self-imposed and structural: roughly $4 billion in cumulative income tax cuts over five legislative years — including more than $450 million in 2025 for rate cuts and a refundable education tax credit — plus a $155 million FY2026 revenue hit from conforming to federal tax changes (HB 559). FY2026 itself required mid-year surgery: 4% across-the-board cuts worth $131.3 million, followed by March 2026 cash and interest transfers to close a projected $44.1 million deficit. For FY2027 the state projects a $95 million ending balance, and combined reserves of $1.231 billion (21.8% of general fund revenues) remain a genuine buffer; budget-writers targeted a $150 million cash cushion to stay clear of a constitutional deficit. Legislators in both parties criticized the opacity of the bottom-line budget bills. Whether receipts stabilize after February's $89.5 million shortfall against forecast will decide if FY2028 brings a third consecutive round of holdbacks.