The Idaho Division of Financial Management told state agencies and departments the Fiscal Year 2026 budget cut of 3% will continue into 2027 on Wednesday, Sept. 17. University of Idaho President Scott Green informed UI faculty of this directive at the university faculty meeting held the same day.
Five house bills were signed into law in early 2025 that reduced state revenue for the 2026 fiscal year by over $450 million.
HB 25 gradually increases the amount sales tax revenue allocated for the Transportation Expansion Congestion Mitigation program. The budget of $122 million increased by $23 million in the 2026 fiscal year and will total $63 million in additional revenue allocation by 2028.
HB 40 reduces the state’s flat income tax rate by 0.4%, expands exemptions for some U.S. military pension income and removes capital gains and losses on precious metals for income tax purposes. In total, these income tax cuts reduce state revenue by $253 million.
HB 93 provides refundable tax credits up to $5,000 or $7,500 for special needs students to pay for qualified K-12 education expenses, including private school tuition, tutoring, test or application fees and education related transportation costs. The tax credits have a maximum of $50 million in reduced revenue.HB 231 provides grocery tax credits to offset state sales tax with $50 million in allocated funds.
HB 304 reduced state property tax by $100 million beginning in 2025.
Governor Brad Little issued an executive order on Aug. 15 to cut midyear spending for state agencies by 3% to avert a deficit. The fiscal year began in July. These cuts reduced UI’s 2026 budget by $5 million, a number which will continue forward.
The Sept. 17 directive additionally requires all state agencies to eliminate general fund budget requests for replacement items, new equipment or vehicles which replace aging models, in the 2027 fiscal year. All state agencies and departments must resubmit their Fiscal Year 2027 budgets by Oct. 3 to be in compliance with the directive.
“This effort is about ensuring that Idaho government remains lean, efficient and aligned with the values of our taxpayers,” IDFM Administrator Lori Wolff wrote in the Sept. 17 budget memo. “By right-sizing government today, we strengthen our ability to fund the state’s highest priorities well into the future and create an even stronger economy.”
Joshua Reisenfeld can be reached at [email protected].