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Legislative analysts present $700 million structural surplus amid choices over tax relief, spending and transfers
Summary
Legislative Services Office staff told the Joint Finance-Appropriations Committee that Idahos revenue outlook leaves roughly $700 million in structural balance for FY2025FY2026 under the governor's forecast, while the committee will weigh transfers, one-time spending and tax relief.
Keith Bybee, division manager for budget policy analysis at the Legislative Services Office, briefed the Joint Finance-Appropriations Committee on Idahos FY2025 and FY2026 general fund outlook and cash reconciliation.
Bybee said the governors budget projection shows a persistent gap between projected revenues and projected expenditures of about $700 million over the near business cycle: "For fiscal 2025, you're seeing a structural balance of almost $700,000,000 with the current revenue forecast," he told the committee. He explained that revenues remain above pre-pandemic trend lines in part because population growth pushed personal income and income-tax collections higher after federal COVID relief such as the CARES Act and the American Rescue Plan Act.
The overview showed FY2024 actual general fund collections at about $5.7 billion, a governors-recommended FY2026 baseline revenue near $5.9 billion, and total recommended expenditures on the order of $6.26 billion in the governor's call. After transfers and the governor's supplemental and enhancement requests, the governor's proposal projects an ending cash balance of roughly $338 million for FY2025 and about $227 million for FY2026.
The presentation walked through the front-end "cash reconciliation" report from the legislative budget book. Bybee highlighted several adjustments that affect available cash: reappropriations and executive carryforward (obligations written in one fiscal year but paid in the next), a $62.8 million transfer coming back from the closed bond levy equalization account under House Bill 521, and proposed transfers out including a $60 million transfer for fire suppression deficiency warrants. He said total transfers out in the governor's proposal approximate $477.3 million.
Committee members pressed for detail on specific transfers. A member asked how returning $62.8 million from the bond-levy-equalization closeout would affect a separate $125 million-per-year bonding commitment for school facilities; Bybee replied that the programs are distinct and that HB 521 deleted the old bond levy equalization program and created a new bonding structure the state will use to bond on behalf of school districts.
Bybee and members also discussed the governor's use of roughly $160 million of one-time cash in the FY2026 recommendation and the trade-offs the legislature faces between tax relief and ongoing spending increases. "If a budget is a statement of your values, your previous legislatures have done you a big favor, by setting you up for success," Bybee told JFAC, adding that the policy choices this year will determine how much of the structural balance is used for tax relief, ongoing program growth or one-time spending.
The briefing previewed program-maintenance elements that will drive the FY2026 baseline: benefit-cost adjustments, contract inflation, statewide cost allocations, employee compensation changes and public-school support. On the governor's figures, program maintenance adds about $177.5 million (3.4%) to the FY2025 original appropriation and enhancements total roughly $242 million, leaving FY2026 recommended total appropriations up about 7.4% year over year.
Members asked follow-up questions about timing and cash management, including how interest earnings, tax-anticipatory notes and the timing of school payments affect net cash. Bybee said those items largely offset one another in the general fund cash reconciliation and that the treasurer's office would present the detailed interest earnings and cash-management numbers later in the day.
The presentation underscored two practical points for the legislature: (1) the governor's budget leaves a material structural balance that is politically fungible (tax relief vs. ongoing spending vs. transfers), and (2) many transfers and reappropriations already authorized by prior legislatures and statute affect the pool of cash available for new policy choices.
Ending: Committee members scheduled detailed agency hearings and working groups to examine program maintenance and enhancements before JFAC sets final appropriation bills.
