Idaho Locks In Budget Cuts Through 2027: Medicaid, Prisons, and Colleges Brace for Impact
Idaho is moving forward with $88.7 million in permanent budget reductions for the 2027 fiscal year, following Governor Brad Little’s decision to formalize a 3% spending cut across nearly all state agencies.
The directive, initially issued midyear to prevent a projected budget shortfall, will now extend into the next fiscal cycle, with some of the deepest cuts targeting Medicaid providers, public universities, and prison operations.
Key Agencies Face Multi-Million Dollar Reductions
According to Lori Wolff, the governor’s budget director, the cuts will save an estimated $88.7 million in fiscal year 2027—up from the $86.7 million already trimmed from the current year’s spending.
Nearly half of the total savings—$41.6 million—will come from extending a 4% pay reduction for Medicaid providers, including doctors and facilities serving some of the state’s most vulnerable residents.
The Idaho Department of Correction is set to reduce its budget by nearly $8.5 million, including job eliminations and potential cuts to inmate medical contracts and drug testing procedures. The department is exploring ways to renegotiate vendor contracts and consolidate services, particularly in its Community Supervision division.
Meanwhile, the Idaho Department of Health and Welfare will cut nearly $7.4 million in other areas, including reductions in public assistance programs and the loss of three positions.
Higher Ed Jobs Cut, K-12 Schools Spared
Governor Little exempted K-12 public education from the spending reductions. However, higher education institutions are not shielded, and are already planning to eliminate dozens of positions to meet $13.3 million in required savings, according to reports from Idaho Education News.
State agencies have submitted proposed cutbacks through the Idaho Division of Financial Management, where budget requests are publicly available for review.
Budget Still in Deficit Despite Cuts
Despite aggressive trimming, Idaho remains on course for a $56.6 million deficit by the end of fiscal year 2026—even with the permanent 3% cuts in effect.
The governor’s office maintains that more time is needed before assessing whether additional reductions will be necessary. Wolff noted that they will closely monitor revenue trends through the end of the calendar year before making final decisions ahead of the 2026 legislative session.
“We try not to overreact to early revenue numbers,” Wolff said. “If we need to reduce further, we’ll be looking at other pots of money.”
Supplemental Budget Requests Still on the Table
Despite planned reductions, the Department of Health and Welfare is seeking $60 million more for Medicaid this year, while the Department of Correction is requesting an additional $13.7 million to address inmate population needs.
These requests will be evaluated by Governor Little and the Idaho Legislature during the upcoming 2026 session.
Related Coverage
- Economy & Market – https://idahonews.co/economy-market/
- Global News – https://idahonews.co/global-news/
- National News – https://idahonews.co/national-news/
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