Idaho Agencies Told to Plan for More Budget Cuts

State lawmakers seek up to 2% additional reductions amid tax conformity uncertainty

Jan. 27, 2026 at 10:15pm

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Idaho state agency directors have been instructed to submit plans for cutting their budgets by up to an additional 2% for the current fiscal year in order to balance the state budget. The move comes amid uncertainty over the impact of a new federal tax conformity bill, House Bill 519, which could further reduce state revenue.

Why it matters

The additional budget cuts could have significant impacts on state services and programs, as agencies have already been asked to trim 3% from their budgets. Some lawmakers are calling for the state to use its rainy day funds instead of making deeper cuts, arguing that the Legislature's previous tax cuts have already reduced state revenue too much.

The details

In a memo, the Idaho Legislative Services Office gave agency directors until Friday to submit plans for 1% and 2% budget reductions for both this fiscal year and next. This would be on top of the 3% cuts announced last summer. The budget issues stem from uncertainty over the impact of House Bill 519, which would fully adopt federal tax changes retroactively rather than starting in 2026 as originally proposed by the governor.

  • The budget memo was released on Monday, January 26, 2026.
  • Agency directors have until noon on Friday, January 31, 2026 to submit their budget reduction plans.

The players

Sen. Scott Grow

A Republican state senator from Eagle, Idaho, and co-chair of the Joint Finance-Appropriations Committee.

Janie Ward-Engelking

A Democratic state senator from Boise who serves on the Joint Finance-Appropriations Committee and opposes the additional budget cuts.

Keith Bybee

The budget and policy analysis division manager for the Idaho Legislative Services Office, who issued the memo about the budget reduction plans.

Rep. Josh Tanner

A Republican state representative from Eagle, Idaho, and co-chair of the Joint Finance-Appropriations Committee.

Rep. Jeff Ehlers

The Meridian Republican who sponsored House Bill 519, which would fully adopt federal tax changes retroactively.

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What they’re saying

“We are already cutting into the bone on some of these agencies. Half of the year is already done, so half of their budget or more has been expended, depending on if it is personnel, and we could be talking about massive furloughs. I am not in favor of this.”

— Janie Ward-Engelking, Senate Minority Caucus Chair

“If the Legislature is going to go ahead and put (conformity) back in 2025, that's at least $155 million, and that wipes out that increased revenue that we tried to have.”

— Scott Grow, State Senator

What’s next

The Joint Finance-Appropriations Committee will review the budget reduction plans submitted by state agencies and determine if additional cuts are necessary to balance the state budget.

The takeaway

The budget challenges facing Idaho highlight the difficult tradeoffs lawmakers must make between tax cuts, spending, and maintaining critical state services. As the state grapples with the fallout from previous tax reductions, some lawmakers are calling for a more balanced approach that utilizes the state's rainy day funds rather than making deeper cuts to agency budgets.