AUGUST REPORT
Welcome to September and the change of season. Autumn in Idaho is a splendid time of year as triple-digit temperature days give way to cooler climes, hunting season ramps up, and the rhythms of state government accelerate as the Governor’s staff and agency leadership begin sorting out budget, spending, and policy recommendations for the upcoming legislative session.
This year, however, there is a greater sense of urgency around that planning process. That’s because Idaho’s budget and revenue status is the talk of the town right now. For those outside the downtown bubble, the state is on track to end fiscal year 2026 with an estimated budget deficit of $80 million. Yes, it’s still very early for a fiscal year that ends June 30th, 2026, but the revenue data two months in is already bringing consequences.
Gov. Brad Little issued an executive order two weeks ago requiring all state agencies to cut spending, the first so-called holdback since 2020. While public schools are not subject to the spending reductions, the EO requires state agencies to reduce general fund spending by 3 percent, lower travel expenses, and identify cost savings in existing contracts. In addition, newly appointed Health and Welfare Director Juliet Charron issued a similar mandate effective September 1, 2025, that all Idaho Medicaid provider rates will be reduced by four percent.
How did we get here? It’s not like the state, or nation, is managing a pandemic – like we had in 2020 – or an economic recession, like the one that rocked Idaho’s economy from 2009 through 2011. There are two main factors at play. One is the multi-year historic tax cuts approved by the Legislature – and signed by Little – earlier this year. Those scoring at home will recall the Legislature taking a pass on $450 million in would-be revenue to deliver historic tax cuts and tax credits. At this point, lawmakers are split on how to manage the new revenue reality. Some want to cut more funding and programs to deliver more tax cuts in advance of next year’s elections. Others fear that more harm to the safety net and welfare programs could cause real problems back home. It’s a fascinating conundrum not unlike what we saw play out in Washington D.C. this summer.
Speaking of D.C., the second factor driving Little’s decision is the perceived tax and revenue implications from President Trump’s “One Big Beautiful Bill” proposes a range of tax changes that will impact state revenue streams. Changes from the OBBB include no tax on tips, car loan interest or overtime pay as well as higher tax deductions for seniors. While there is no official state estimate yet, Little and Republican leadership are expecting the state to conform with the new federal tax laws early during the 2026 session, setting the stage for debate on reduced spending, limits on supplementals, and other priority fights.
There is plenty of other activity to share from August. Our team has monitored interim committee action, including the second gathering of the DOGE Task Force, which seems even more motivated to manage the revenue shortfall by identifying more cuts in state government. They’ve set sights on travel and association participation by state employees and some deep dives into agency spending on bonus pay and dual roles and titles by state employees.
We are also in the final days of the state’s BEAD broadband development plan being submitted to the federal government for final approval. Idaho’s share of $583M will soon be doled out to providers across the state to close the digital divide and enhance connectivity in some of Idaho’s hard-to-reach locations. Despite some national hiccups in the process, which caused confusion and delays, the Idaho Office of Broadband is weeks away from publishing its final plan after years of work. We have worked hard to see this to fruition and are eager to see positive outcomes for communities across Idaho.
Idaho Sportsmen, along with BB&A, hosted the annual Claybuster shooting event on Aug. 21. It was a good turnout, with nearly 50 shooters competing. Thanks to CCI Speer for donating the ammunition for the event. The Claybuster featured opening remarks from Sen. Mike Crapo, state legislators, including House Speaker Mike Moyle, and officials from the Department of Lands, Fish and Game and Species Conservation. Senator Crapo spoke about ongoing legislation for suppressors and the recent effort in the Big Beautiful Bill to remove the tax burden on purchases. He encouraged sportsmen to stay vigilant on this issue as Congress continues to take the next important step in this policy.
