BOISE, ID – Less than two months after strong revenue collections seemingly righted the ship, the state of Idaho is once again facing a projected state budget deficit, according to a new report the Idaho Legislative Services Office published Wednesday.

According to the Idaho Legislative Services Office’s General Fund Budget Monitor report for March, Idaho is projected to end the current fiscal year 2026 with a state budget deficit of $44.1 million if the current projected revenue shortfall remains and no additional budget actions are taken by the Idaho Legislature.

That’s because, through the end of February, actual state revenue collections have come in $89.5 million below the higher revenue forecast that the Idaho Legislature’s Joint Finance-Appropriations Committee, or JFAC, adopted in January.

In January, JFAC adopted a revenue projection of nearly $5.7 billion for the fiscal year 2026 budget. That’s about $152 million more than the revenue projection Gov. Brad Little recommended.

So far, at least, the revenue isn’t coming in as planned, according to the Idaho Legislative Services Office.

Senate Minority Leader Melissa Wintrow, a Boise Democrat who sits on JFAC, said she was disgusted after reading the new revenue report.

“I hope people who vote are paying attention,” Wintrow said Wednesday afternoon. “This Legislature is not acting conservatively or reasonably. They are acting in an anti-government fashion, destroying the services we demand and need.”

Wintrow called for immediately restoring state revenue by delaying or undoing tax cuts, rather than making further cuts to the budgets for state agencies and programs. If legislators won’t delay or repeal the tax cuts they passed, Wintrow said, legislators need to consider tapping into rainy day reserve funds to avoid a budget deficit.

However, officials with the Idaho Division of Financial Management said in a written statement Wednesday that it is too early to project a budget deficit.

“The governor’s budget recommendation is based on the revenue forecast at the close of the fiscal year, not month-to-month fluctuations,” Idaho Division of Financial Management Administrator Lori Wolff said in a written statement. “The Governor’s Office does not overreact to a single month of revenue changes. February is typically a lower-revenue month, while April and June historically bring in significantly higher collections. It is too early to project a deficit for FY 26.”

Efforts to reach Sen. Scott Grow, a Republican from Eagle who serves as co-chairman of JFAC, were unsuccessful Wednesday afternoon.

Overall revenue collections are also $41.5 million less than the same time period a year ago, according to the General Fund Budget Monitor report.

However, state budget analysts said the Idaho Legislature’s budget committee still has options.

“JFAC is still considering several budget items that will balance the budget before adjournment, Sine Die,” Idaho Legislative Services Office officials wrote in the new report.

Sine Die is the Latin phrase legislators and officials use to indicate legislators are adjourning without scheduling a date to return – thereby signalling the end of the annual legislative session.

The new revenue report showing the projected state budget deficit already takes into account the 4% cuts for most state agencies and departments, which reduced state spending by $131.3 million in fiscal year 2026. That suggests the Idaho Legislature may need to take even more steps to avoid a budget shortfall.

The Idaho Constitution requires the Idaho Legislature to pass a balanced budget each year where expenses do not exceed state revenues.

Why is Idaho facing a budget deficit after cutting budgets?

Idaho legislators spent the last five years cutting income taxes, which reduced the amount of state revenue by a combined total of $4 billion, according to the nonprofit Idaho Center for Fiscal Policy.

Last year alone, the Idaho Legislature reduced revenue by more than $450 million to pay for tax cuts and a new refundable education tax credit that reimburses parents for education expenses including tuition at private religious schools.

“We cut revenue too hard over the last four to five years, but in particular last year when passed tax cuts and the voucher program for lining the pockets of people sending their kids to private schools,” Wintrow said. “We should be restoring some of that revenue.”

After passing the tax cuts and reducing state revenue, Idaho faced a projected state budget deficit for several months heading into the start of the 2026 legislative session. 

However, the January edition of General Fund Budget Monitor indicated that state revenues, particularly corporate income tax collections, rebounded so strongly that the state’s earlier projected deficit was transformed into a projected surplus.

Days later, JFAC adopted the higher revenue forecast on Jan. 19, with co-chair Rep. Josh Tanner, R-Eagle, specifically mentioning strong December revenues showed a projected budget surplus at the time.

“So we’re sitting heavy as we sit right now,” Tanner said Jan. 19, referencing the surplus.

Then, during the first week in February, the Idaho Legislature passed House Bill 559, which retroactively implements federal tax cuts championed by President Donald Trump at an additional cost of $155 million to the state in fiscal year 2026.

If Idaho legislators had not chosen to comply with Trump’s tax cuts retroactively, Idaho would not be facing another projected budget deficit, Wintrow said.

“It’s important to look at tax conformity, and if we hadn’t done it that way we would be a lot better off,” Wintrow said.

State officials have routinely cautioned the news media and the public not to assign too much significance to any individual monthly revenue report. Revenues can fluctuate from month to month for complex reasons, and the larger trends and yearly revenue performance are more important than monthly fluctuations, officials with the Idaho Division of Financial Management have said several times this year.

However, the newly projected deficit may complicate the budget picture for several reasons. That’s because both fiscal year 2026 and the 2026 legislative session are nearly over, meaning there may be less time and fewer options to respond to a budget crunch than normal.

Legislative leaders’ target date to adjourn the 2026 legislative session is March 27 – only about two weeks away. Legislative leaders have already approved budget cuts of 4% for most state agencies and departments in fiscal year 20206 in an effort to avoid a budget shortfall.

Additionally fiscal year 2026 ends June 30, giving state leaders less than four months to turn the budget picture around.

Wintrow said state agencies and state employees cannot shoulder more budget cuts, so she recommends delaying tax cuts or tapping into state rainy day reserve accounts.

The Idaho Legislature’s Joint Finance-Appropriations Committee is scheduled to reconvene at 8 a.m. Thursday at the Idaho State Capitol in Boise to resume working on state budgets.

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