State Projects Major Shortfall Following Updated Fiscal Outlook
The State of Idaho is facing a $79.9 million budget deficit for the current fiscal year, according to an August update from the Division of Financial Management (DFM). The revised forecast reflects a significant reduction in expected General Fund revenue, totaling $853.9 million below earlier estimates.
The DFM, which operates under the Governor’s Executive Office, attributed the shortfall to recently passed legislation and updates to the state’s economic forecast.
Revenue Revised Down by Over $850 Million
Idaho’s original revenue projection for fiscal year 2025 was $6.4 billion. That estimate has now been revised to $5.55 billion — a drop of $853.99 million.
According to the DFM report, the downward revision stems from:
- Legislative changes: Multiple new laws have reduced General Fund revenue by introducing tax credits and exemptions.
- Economic updates: National forecasts indicate slower GDP growth and slightly higher inflation, influencing state-level adjustments.
Legislation Contributing to Revenue Drop
The DFM identified several bills as contributing factors to the budget shortfall. These include:
- HB 25, HB 40, HB 93, HB 144, HB 226, HB 231, HB 304, and HB 479
These measures introduced a mix of tax deductions, exemptions, and credits — notably a new education credit allowing parents to receive a tax benefit for non-public school expenses.
These policies, aimed at providing financial relief or expanding educational choice, have collectively lowered the tax base that funds the state’s general operations.
Executive Response and Agency Cuts
In response, Governor Brad Little signed an executive order to reduce expenditures by 3% across select state agencies. The aim is to offset tens of millions in spending and close the deficit.
The governor emphasized that K-12 education funding will not be impacted by these cuts.
Whether the agency reductions will be sufficient to eliminate the deficit or produce a surplus remains uncertain.
Related Coverage
Idaho News – https://idahonews.co/idaho-news-3/
About the Author
