DFM presents governor's "keeping promises" executive budget: $150M for schools, rainy-day growth and targeted investments

Boise, Idaho ' The governor's executive budget for fiscal 2026, presented Jan. 8 to the Joint Finance-Appropriations Committee, emphasizes education funding, reserves and targeted investments in transportation, water and workforce capacity while holding $100 million for tax relief.

Lori Wolfe, administrator of the Division of Financial Management (DFM), told the committee the proposal is the governor's "keeping promises budget," citing continued commitments "to education, tax relief, red tape reduction, and making government more efficient." She described the plan as structurally balanced and conservative on revenue assumptions while maintaining record rainy-day balances.

The numbers: DFM projects general fund revenue of about $6.2 billion for FY 2026 with a projected ending balance of roughly $227 million after recommended expenditures and transfers. The executive budget recommends a $59 million transfer to the budget stabilization fund and a $50 million transfer to the public education stabilization fund; after those transfers, DFM said the state would maintain a large revert reserve (about $1.4 billion, roughly 22 percent of the budget).

Education priorities: Wolfe said the governor recommends $150 million for public schools, including roughly $83 million toward teacher pay and nearly $30 million for school employee health insurance. The proposal sets aside $50 million for education-choice initiatives pending policy legislation and $50 million earmarked for rural school facility needs, mental-health supports and literacy/accountability measures.

Transportation and infrastructure: The governor recommends $50 million for a transportation expansion and congestion-mitigation fund intended to preserve bonding capacity for high-value projects once current federal and state bonding programs mature. DFM also recommended a 3 percent increase to the strategic initiatives fund (raising total annual funding to about $312 million) to support state and local road projects.

Workforce training and higher education: The budget includes $25 million for workforce training: $15 million one-time to the State Board of Education for infrastructure block grants (requiring private-match) to expand capacity at community and technical colleges, and $10 million ongoing for Career and Technical Education (CTE) operations to support increased enrollments.

Natural resources, water and fire: Wolfe said the governor recommends a $60 million supplemental in FY 2025 to backfill the fire-suppression account for costs already incurred, plus $40 million ongoing in FY 2026 to stabilize that account going forward and $5 million for aviation and early-detection tools. The budget also includes $30 million ongoing to the Idaho Water Resource Board to prioritize recharge and other water projects.

Public safety and cybersecurity: Recommendations include $10 million for cybersecurity and infrastructure resiliency and $500,000 to continue the fentanyl prevention program. The Department of Correction also has agency-requested items to manage prison security and contraband.

State public defense: Wolfe described a recent Supreme Court interpretation affecting costs and said the governor recommends a FY 2025 supplemental of $5.4 million and a FY 2026 one-time request of $16.8 million; combined with other funding considerations, DFM noted a total FY 2026 recommendation of about $83 million to support state public defense operations as the state transitioned responsibilities from counties to the state.

Other items: The budget proposes $15 million one-time for the workforce housing fund and additional investments in medical residency positions (Wolfe said the proposal funds roughly 18 residency slots using program dollars) to address rural physician shortages.

Questions and next steps: Committee members probed revenue assumptions, the composition of maintenance versus enhancement spending, and specifics behind the fire and transportation requests. Wolfe and staff said agencies will present detailed budget requests in upcoming hearings and that the committee will set program-maintenance budgets and then move to enhancement and replacement-item requests.

Ending: The DFM presentation framed the budget as conservative on revenue yet committed to targeted investments and record reserves. Agency-level hearings and workgroup sessions were scheduled to begin the following week, where analysts and agency officials will provide detailed line-item justification and answer members' questions.