Idaho Gov. Brad Little walks out of the House chamber after delivering his State of the State address on Jan. 6, 2025, at the Statehouse in Boise. (Pat Sutphin for the Idaho Capital Sun)
Idaho Gov. Brad Little said Tuesday he is worried about the amount of revenue that major tax cut packages proposed by legislative leaders would remove from the state’s general fund.
In conjunction with his Jan. 6 State of the State address, Little recommended setting aside $100 million in tax reductions.
But Republican legislative leaders are proposing to reduce revenue by more than $400 million through a combination of bills that would increase the sales tax credit Idahoans receive for buying food, reduce the state’s income tax and shift money to funds to reduce homeowners property taxes and provide funding for school facilities.
- House Bill 40, which lowers the individual and corporate income tax, reduces state revenue by $253 million.
- House Bill 304, which shifts money to a state property tax reduction fund and a fund to pay for school facilities, reduces state revenue by $100 million.
- House Bill 231, which increases the so-called grocery tax credit to offset the sales tax Idahoans pay for food, reduces state revenue by $50 million.
Each of those bills would reduce taxes Idahoans pay. But in order to pay for the tax cuts, the proposals permanently remove money from the state’s general fund revenue stream that would otherwise be available to pay for government programs, fund public schools, improve roads and bridges, fight wildfires on state lands, provide raises for state employees or pay for Idaho Department of Health and Welfare programs.
“I love the signal that every year in Idaho your tax burden is going to get less, but you’ve got to temper that with all those other things,” Little said Tuesday morning during a breakfast with reporters sponsored by the Idaho Press Club. “So they know, I’m not very happy about it.”
Idaho governor says state needs to prepare to absorb some cuts from federal government
Little told reporters that major government cuts and reductions are coming forward from President Donald Trump’s administration, and that the states and public need to be prepared to absorb some of those cuts and adjust to a smaller federal government.
Federal cuts have already come in the form of large scale federal layoffs – including those that cut wildland firefighters and support personnel – and overall program reductions and cutbacks spearheaded by billionaire Elon Musk and the Department of Government Efficiency, or DOGE.
“I have great confidence that we in Idaho will be able to get through this,” Little said. “But I also think that prudence dictates that we be prepared for … all these things… all of them have a nexus to my fundamental belief that we need to be light on our feet, if things change, about how we handle those shocks coming from the federal government.”
Little told reporters Tuesday that he will not publicly comment about how he will act on bills before he takes action. (Once a bill reaches his desk, Little may sign it into law, veto it or allow it to become law without his signature.)
But Little was clear something might have to give.
Little’s fiscal year 2026 budget proposal included $100 million for tax cuts and $50 million for some sort of private school choice initiative, such as a tax credit or scholarship that would state general fund money to refund or reimburse families for education expenses such as tuition at a private, religious school. Little also left an ending cash balance of about $200 million to guard against economic uncertainty.
But unless the Idaho Legislature cuts some of Little’s recommended programs or builds its fiscal year 2026 budget around a much larger revenue projection than Little and the Division of Financial Management issued, there may not be enough money to pay for all of the Idaho Legislature’s proposed tax cuts, fund government programs at levels Little recommended, launch a private school choice program to refund families for tuition at private religious schools and pass a balanced budget.
The Idaho Constitution requires the Idaho Legislature to pass a balanced budget where revenues do not exceed expenses. As of Tuesday, the Idaho Legislature has not yet set a revenue projection to build its fiscal year 2026 budget around, although several budgets and tax cuts are advancing in the Idaho Legislature.
“I said $100 (million, in tax cuts) they’re saying $450 (million),” Little told reporters.
“If I would have thought we could do $450 (million), I would have proposed $450 (million),” Little added.
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