JFAC budget briefing: nearly $700 million structural balance, governor proposes $5.65 billion in general‑fund appropriations for FY2026

Keith Bybee, division manager for budget policy analysis at the Legislative Services Office, told the Joint Finance‑Appropriations Committee that Idaho’s revenue and expenditure outlook gives the legislature choices about tax relief, program increases and savings.

"There is a structural balance of almost $700,000,000 with the current revenue forecast," Bybee said during his presentation on the FY2025 and FY2026 budget overview.

The committee was presented with the governor’s recommended baseline for FY2026: general‑fund revenue of about $5.9 billion, revised total revenue available of $6.36 billion after law changes and transfers the governor proposes, and a governor’s recommended general‑fund maintenance budget of roughly $5.4 billion. On top of maintenance, the governor’s proposed enhancements total about $242 million, bringing recommended total general‑fund appropriations to about $5.65 billion and leaving a projected FY2026 ending cash balance of roughly $227 million under the governor’s package.

Why it matters: Bybee explained the numbers reflect a post‑pandemic era in which Idaho’s new baseline revenue is higher than historical pre‑COVID trends, largely because personal income and population growth raised income tax collections. That leaves the legislature with a multi‑hundred‑million‑dollar structural margin to allocate, he said, but also creates difficult policy choices about whether to use the margin for ongoing programs, one‑time spending or tax relief.

Key details from the presentation

- Bybee described a roughly $700 million structural balance in the near term for fiscal 2025–2026 under current forecasts. He attributed much of the state’s recent revenue growth to federal pandemic relief and in‑migration that increased personal income and tax collections.

- The governor’s FY2026 recommendation (as presented) shows $6.36 billion in revenue available before transfers and $5.65 billion in proposed general‑fund appropriations (program maintenance plus $242 million in enhancements). Bybee said the governor’s package uses some one‑time cash and ongoing revenue to reach those totals.

- On cash reconciliation, Bybee said the governor’s budget proposes transfers out to other funds totaling about $477.3 million (some for spending, some for savings), and the budget assumes the State Controller will transfer about $62.8 million from the closed bond levy equalization account back to the general fund as directed by House Bill 521 from last session.

- Bybee reported the governor’s FY2025 projected ending cash balance at about $338 million. He noted the governor’s recommendation would add about $59 million to the budget stabilization fund (bringing it to approximately $939 million and hitting the statute’s 15% cap in the projection) and would transfer $50 million to the Public Education Stabilization Fund.

- Program maintenance items in the governor’s package include benefit changes, contract inflation, statewide cost allocation and compensation changes; Bybee said program maintenance would constitute about a 3.4% increase over FY2025 original appropriations on the general fund.

Committee questions and context

- Members asked for follow‑up details on the governor’s emergency fund and the prior $2 million appropriation put there in 2020; Bybee said he would follow up with the committee on specific expenditures and history.

- Members asked how interest earnings on cash balances are reported and how interest offsets tax‑anticipation borrowing; Bybee deferred to the treasurer’s office update later in the agenda and said that interest on set‑asides and tax‑anticipation notes typically offset one another in cash reconciliation reports.

- Senators and representatives discussed the statutory cap on the budget stabilization fund (15% of general‑fund revenues) and noted that last year the legislature temporarily suspended the transfer limit to avoid automatic transfers back into the general fund. Bybee and committee members said the committee would need to decide whether to keep money in savings or allow it to move back into the general fund.

What happens next: Bybee said agency presentations and program maintenance hearings begin the following week (health and welfare were noted as early hearings), and the committee will work through working groups on statewide adjustments and enhancements.

Ending

Bybee told the committee that while the state is in a comparatively strong cash position, the legislature faces tradeoffs between tax relief, ongoing program funding and savings. The committee scheduled ongoing working sessions and agency hearings to resolve those decisions during the session.