Idaho Faces Projected Budget Deficit Despite Recent Tax Cuts

New report shows state revenue collections falling short, raising concerns about potential budget cuts

Mar. 12, 2026 at 6:21am

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Less than two months after strong revenue collections, the state of Idaho is once again facing a projected state budget deficit of $44.1 million for the current fiscal year 2026, according to a new report from the Idaho Legislative Services Office. The revenue shortfall comes despite recent tax cuts that have reduced state revenue by a combined $4 billion over the past five years.

Why it matters

The projected budget deficit raises concerns about potential cuts to state agencies and services, as the Idaho Constitution requires the legislature to pass a balanced budget each year. This comes after years of tax cuts that have significantly reduced state revenue, leading to budget challenges.

The details

Through the end of February, actual state revenue collections have come in $89.5 million below the higher revenue forecast adopted by the legislature in January. This has resulted in the projected $44.1 million budget deficit for the current fiscal year. The legislature had previously enacted 4% budget cuts for most state agencies and departments in an effort to avoid a deficit, but those measures may not be enough.

  • In January 2026, the Idaho Legislature's Joint Finance-Appropriations Committee adopted a revenue projection of nearly $5.7 billion for the fiscal year 2026 budget.
  • Through the end of February 2026, actual state revenue collections have come in $89.5 million below the higher revenue forecast.
  • The Idaho Legislature's target date to adjourn the 2026 legislative session is March 27, 2026.

The players

Melissa Wintrow

Senate Minority Leader and member of the Joint Finance-Appropriations Committee, a Boise Democrat who is critical of the legislature's tax cut policies.

Lori Wolff

Administrator of the Idaho Division of Financial Management, who stated it is too early to project a budget deficit.

Scott Grow

Republican co-chairman of the Joint Finance-Appropriations Committee.

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What they’re saying

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

— Melissa Wintrow, Senate Minority Leader

“The governor's budget recommendation is based on the revenue forecast at the close of the fiscal year, not month-to-month fluctuations. 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.”

— Lori Wolff, Administrator, Idaho Division of Financial Management

What’s next

The Idaho Legislature's Joint Finance-Appropriations Committee is scheduled to reconvene on Thursday, March 14, 2026 to resume working on state budgets and address the projected deficit.

The takeaway

Idaho's repeated budget deficits despite recent tax cuts highlight the difficult fiscal challenges facing the state. Lawmakers will need to carefully consider options like delaying further tax cuts, tapping into reserve funds, or making additional budget cuts to address the shortfall and maintain essential state services.