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Idaho legislative committee adopts revenue projection – weeks after it first began passing budgets • Idaho Capital Sun [1]
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Date: 2025-03-05
The Idaho Legislature’s Joint Finance-Appropriations Committee approved a revenue projection Wednesday – 59 days after the 2025 legislative session began and weeks after legislators first began passing budgets and proposing tax cuts.
The Joint Finance-Appropriations Committee, or JFAC for short, voted 16-2 to set the revenue projection for fiscal year 2026 at $6.4 billion, a 6.8% increase above the level in the current fiscal year 2025 budget.
JFAC is a powerful committee that generally meets daily and sets all the budgets for every state agency or department.
On Wednesday, JFAC approved the same $6.4 billion revenue projection that the Idaho Legislature’s Economic Outlook and Revenue Assessment Committee recommended in a Jan. 9 letter to JFAC members.
JFAC adopted the revenue target on Wednesday, less than 24 hours after the Idaho Senate passed a major income tax cut bill, House Bill 40, that reduced state revenue by $253 million. The income tax cut represented the largest reduction of state general fund revenue of any bill introduced during the 2025 legislative session, according to the daily “legislation with general fund fiscal impact” tracking sheet provided to JFAC members. Republican legislative leaders also described House Bill 40 as the largest income tax cut in state history.
“This revenue number allows us to maintain essential and necessary services of government while returning as much of the taxpayers money as possible to them,” said Rep. Wendy Horman, an Idaho Falls Republican who serves as co-chair of JFAC.
Why does the revenue projection matter when setting the state budgets?
The revenue target is important because it shows legislators and the public at large how much money the Idaho Legislature has available to build the state’s fiscal year 2026 budget.
The Idaho Constitution requires the Idaho Legislature to pass a balanced budget where expenses don’t exceed revenue.
During Wednesday’s meeting, Sen. Janie Ward-Engelking, D-Boise, asked about the delay in setting a revenue projection.
During the second week of the 2025 legislative session, JFAC members discussed and then voted down two proposed revenue projections on Jan. 16. Since then, JFAC set and passed bare bones maintenance of operations budgets that combine all state agencies and departments into about 10 bills. JFAC went on to consider dozens of other budget enhancements for state agencies, and Republican legislative leaders proposed tax cuts that, when combined, would reduce state revenue by more than $400 million.
But until Wednesday morning, there was no revenue projection in place to show how much money the Idaho Legislature has to build its 2026 budget around.
Sen. Scott Grow, an Eagle Republican who serves as the other JFAC co-chair, said there wasn’t enough agreement to move forward.
“As you know, we try to work things out – not just here on the floor – but try to get folks to agree to things,” Grow said during Wednesday’s meeting. “And we haven’t had any success getting that agreement so we figured we just better go ahead (today) and try to give it our best shot and try to go for it.”
A few minutes later, Ward-Engelking and Senate Minority Leader Melissa Wintrow, D-Boise, cast the only two votes against the revenue projection on Wednesday.
“This is the wrong way to do our budgets,” Ward-Engeking said. “We’ve done a lot of actions in this committee. We’ve sent our maintenance budgets out. We’ve looked at tax reduction, or tax cuts and revenue reduction, before we set our revenue projection and I don’t believe that’s the right way to do budgets. I believe this revenue projection should have been set at the beginning of the session, and then we work towards that number in everything that we do and the spending and in the tax reductions or the tax cuts.”
JFAC approves revenue projection the day after major tax cut passes
JFAC adopted the revenue target less than 24 hours after the Idaho Senate passed a major income tax cut bill, House Bill 40, that reduced state revenue by $253 million.
Gov. Brad Little has expressed concern with the amount of state revenue that would be reduced by three major tax cut bills put forth by Republican legislative leaders this year.
House Bill 40 reduces state revenue by $253 million.
House Bill 304 , which shifts money to a state fund to reduce homeowners property tax rates and another fund to pay for the construction or renovation of public school facilities, reduces revenue by another $100 million.
House Bill 231 , which increases the grocery tax credit to offset the sales tax Idahoans pay when buying food, reduces revenues by another $50 million.
Little now has to decide what to do with House Bill 40, the individual and corporate income tax bill that has a $253 million price tag. Once the bill reaches his desk, Little will have five days (not counting Sundays) to sign it into law, allow it to become law without his signature or veto it. If Little vetoes the bill, the Idaho Legislature could override a veto with a two-thirds majority vote of both the Idaho House of Representatives and the Idaho Senate.
Preliminary revenue report shows Idaho revenues fall short of projections
The revenue projection JFAC set is for the 2026 fiscal year that begins July 1.
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Meanwhile, a preliminary, unofficial monthly revenue report published early by the Idaho Division of Financial Management shows revenues falling behind state projections for the current 2025 fiscal year. According to the preliminary February 2025 monthly revenue report published Monday, revenues were running $50 million behind projections for February alone.
According to the preliminary report, three major revenue sources – sales tax collections, individual income taxes and corporate income taxes were all lagging behind projections.
Typically, the state does not release monthly revenue reports until the 10th business day of the ensuing month. The preliminary February revenue report was released on the first business day of the ensuing month. The official, final February monthly revenue report will likely be released late next week or early the following week.
The preliminary February report also indicated that – as of the report’s publication date Monday – state revenues year-to-date for the current fiscal year 2025 were running $57 million behind projections. Sales tax collections alone were $40 million behind projections.
Idaho’s fiscal year runs from July 1 to June 30 every year, which means the February year-to-date report includes data from eight of the 12 months in the current fiscal year.
Although the preliminary February report shows revenue missing the mark, state officials generally view April as the most important month for revenues in Idaho because after the deadline to submit tax returns passes in April, state officials have much better understanding of where the budget and revenues stand.
Horman also pointed out Wednesday that even if revenues are missing state projections, revenues are up by 2.9% compared to the same time period a year ago.
This is the second year that JFAC set the revenue target deep into the annual legislative session.
JFAC also set the revenue projection late in the session last year, on March 6.
That history wasn’t lost on Horman.
“I would point out that we’re at least one day ahead of schedule from when we set this last year,” Horman said Wednesday. “(But) I agree. We would like to be able to set this sooner. Some of us have been ready to do that; others have not.”
Grow agreed.
“We’ve been ready for a long time, waiting for folks to come around,” Grow said.
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