Governor's executive budget proposes $151 million in agency enhancements, boosts education, transportation and wildfire funding

Lori Wolfe, administrator of the Division of Financial Management, told the Joint Finance and Appropriation Committee on Jan. 8 that the governor’s executive budget for fiscal 2026 is structurally balanced and emphasizes education, workforce training, transportation, natural‑resource resilience and cybersecurity.

Wolfe said the proposal uses a conservative revenue forecast and leaves healthy ending balances while recommending $151 million in recommended agency enhancements and transfers to reserve accounts. She gave a line‑by‑line summary of projected revenues, transfers and expenditures and highlighted budget items she described as the governor’s priorities.

The budget summary presented to JFAC shows a FY25 revenue projection of about $5.9 billion and a FY26 projection of about $6.2 billion; Wolfe said the committee’s FY25 projected ending balance is roughly $383 million and the FY26 projected ending balance $227 million after recommended transfers. The proposal would transfer $59 million to the budget stabilization (rainy day) fund and $50 million to the public education stabilization fund in FY26; Wolfe noted the state’s reserve totals would leave the revert reserve at about $1.4 billion, or roughly 22% of the budget.

Wolfe outlined the administration’s maintenance and enhancement structure: maintenance items include employee compensation and benefits, contract inflationary adjustments, SWCAP and other baseline costs; the governor recommends a 5% or $1,250 (per cent and dollar figures are broken out in the at‑a‑glance provided to members) compensation approach aligned with last year’s CEC language. Total recommended enhancements across agencies amount to about $151 million ($129 million ongoing, remainder one‑time), she said.

Major priorities spelled out in the DFM presentation include: - Education: Wolfe said the governor set aside an additional $150 million for public schools in FY26, including roughly $83 million directed toward teacher pay increases and about $30 million for health insurance for teachers, plus $50 million earmarked for rural school facility needs, mental health, and literacy and learning accountability measures. The governor also set $50 million in revenue adjustments reserved for education choice initiatives that would require a policy bill, Wolfe said. - Transportation: The budget would add $50 million to a transportation expansion and congestion mitigation fund intended to support bonding for high‑value projects; Wolfe said the infusion would enable roughly $800 million of additional bonding capacity for projects that ITD has identified. The administration also recommends a 3% increase to the strategic initiatives fund, taking that fund to just under $312 million annually. - Workforce training and CTE: The governor recommends a $25 million workforce training package, with $15 million one‑time for infrastructure and capacity grants administered by the State Board of Education (block grants that require private match, Wolfe said) and $10 million ongoing for career and technical education operating capacity. - Natural resources and wildfire: Wolfe said the governor proposes $100 million for fire management: a $60 million supplemental in FY25 to backfill the fire suppression account for expenses incurred the prior season and $40 million ongoing in FY26 to stabilize funding for suppression, plus $5 million for aviation and early detection tools. The budget also includes $30 million ongoing for the Idaho Water Resource Board to prioritize recharge and other water projects. - Public safety and cybersecurity: The package includes $10 million directed to statewide IT security and infrastructure priorities, $500,000 to continue the fentanyl “Takes All” program and funding for prison security and contraband mitigation efforts. - State public defense: Wolfe said the state public defense consolidation and a December court ruling led to increased costs. The administration proposes a FY25 supplemental of $5.4 million and a $16.8 million FY26 increase presented as one‑time pending policy decisions about funding sources; the total FY26 recommendation to support state public defense is presented as approximately $83 million in the materials Wolfe gave the committee. - Housing, health, and physician recruitment: The governor would place $15 million one‑time into a workforce housing fund; Wolfe also outlined a physician recruitment package that includes funding for medical residency slots (Wolfe referenced $850,000 to fund roughly 18 residency positions in Boise) and $500,000 ongoing for a rural physician incentive program.

Wolfe emphasized conservative forecasting and said the administration is prioritizing investments that support workforce participation and Idaho’s growth while maintaining higher reserves than many states.

The presentation was followed by questions from JFAC members about revenue assumptions, the composition of the maintenance budget, the proposed ongoing wildfire funding versus a supplemental approach, the mechanics of the transportation bonding discussion and the public defense budget. Wolfe and DFM staff identified where items appear on the at‑a‑glance budget sheet members received and said agency presenters would provide further detail during their scheduled hearings.

The DFM presentation is the governor’s starting point for the committee’s review; members and staff discussed the schedule for agency hearings and work groups that will examine maintenance budgets, replacement items, and agency enhancement requests in detail over the coming weeks.

Wolfe’s presentation and the governor’s budget book are available in JFAC’s SharePoint and in the Legislature’s session record, which DFM said the public can access for presentations, recorded audio and video of hearings, and supporting documents.