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Staff: growing Techum and earmarks shrink share of sales tax flowing to Idaho general fund
Summary
Legislative budget staff outlined how statutory distributions (including Techum and the tax relief fund) reduce the share of sales tax that flows to the general fund and warned the committee this reduces flexibility in future downturns.
Legislative Budget Office staff reviewed sales tax distributions, the tax relief fund and the Techum program's share of sales-tax revenues, warning the Joint Finance-Appropriations Committee that statutory earmarks have reduced the portion of sales tax available to the general fund.
Staff walked through gross and net sales tax projections and the statutory distribution formula (Idaho Code 63-36). The presentation showed gross sales tax collections projected near $3.37 billion in 2025 and higher in 2026, but substantive statutory distributions reduce the amount reaching the general fund. Staff emphasized that certain statutory earmarks'including revenue sharing to local governments, the Techum allocation, a tax relief fund transfer tied to online retail sales, and a $125 million school modernization appropriation'redirect substantial sales tax revenue before the general fund receives its share.
On Techum specifically, staff explained that "Tecum receives 4.5% of net revenues" under the current distribution formula and that $80 million of that allocation is earmarked for bonding. Staff also described a potential proposal discussed in the meeting to earmark additional dollars for Techum-related bonds (a governor-level proposal referenced on the floor sought an additional $50 million), which could further reduce amounts available for general fund appropriation if enacted.
Staff provided historical context: during the Great Recession the general fund received roughly 85'86% of sales tax receipts; in the current 2025 projection that share falls to about 65% after statutory distributions. Budget staff warned that because personal income and corporate tax collections are more volatile in recessions, the legislature may have less flexibility in downturns if a growing portion of sales tax is pre-committed by statute.
Representative and senator-level committee members flagged the policy implications for local government funding and for the legislature's ability to balance budgets in future downturns. "It's not, the bad years that get you, it's what you do during the good years that get you," staff said, urging caution about adding more earmarks.
Ending: Staff said they will correct a small reporting error in the legislative budget book tables and will circulate updated pages; they urged members to review the sales-tax distribution worksheets as they prepare for the upcoming budget cycle.
