DFM presents governor's "keeping promises" executive budget: $151 million in enhancements, larger reserves, $100M held for tax relief

Boise — The Joint Finance and Appropriation Committee on Jan. 8 heard the governor's executive budget from Division of Financial Management Administrator Laurie Wolf, who described the proposal as a “keeping promises” budget that prioritizes education, infrastructure and workforce programs while maintaining conservative revenue assumptions and larger reserves.

Wolf told the committee the administration used a conservative revenue forecast for fiscal 2025 and 2026 and structured the request to preserve a healthy ending balance. “It is important that we... make a conservative budget that ensures structural balance, puts healthy ending balances to make sure that we can hedge against any fluctuations in revenue,” Wolf said.

The proposal includes $151 million in recommended enhancements (ongoing and one‑time), and recommends transfers to the state’s rainy day accounts including a roughly $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 still hold an unusually large revert/reserve balance — described in the presentation as roughly $140 million — and an ending balance in the general fund projection.

Why it matters: The package funds priorities the governor highlighted in his State of the State address — additional K‑12 investments, transportation capacity, workforce training, water and wildfire management — while keeping money available for possible tax relief. Wolf said the governor is reserving $100 million for tax relief but is seeking legislative direction on how to deliver it.

Key elements and amounts the administration highlighted

- Education: The governor recommended roughly $150 million for public schools, including $83 million aimed at teacher pay and nearly $30 million toward school health insurance costs; the presentation also set aside $50 million for education choice initiatives subject to a legislative policy bill. Wolf said the Department of Education’s budget will provide additional detail when it is presented to the committee.

- Transportation: A $50 million proposal to expand the state’s transportation capacity and congestion mitigation fund administered through the Idaho Transportation Department (ITD). DFM said the funding would support bonding to move high‑value projects into construction given ITD’s current bonding limits.

- Workforce training and career technical education (CTE): $25 million total: $15 million one‑time for a block‑grant program requiring private match to expand training capacity (laboratory equipment, classrooms and other capital needs), and $10 million ongoing to support operating costs for expanded CTE seats.

- Natural resources and wildfire: DFM recommended a $60 million supplemental for FY2025 to replenish the fire suppression account after the recent wildfire season and an additional $40 million ongoing for FY2026 to stabilize funding for future fire seasons. Wolf said the five‑year average state cost for fire suppression is around $40 million per year.

- Water: $30 million ongoing to the Idaho Water Resource Board to advance recharge and other water projects identified in the state plan.

- Public safety and cybersecurity: $10 million for statewide IT security (to centralize priorities and replace critical infrastructure components), $500,000 to continue the fentanyl abatement program, and targeted spending at corrections to improve detection and contraband controls.

- Public defense: The administration said the consolidation of state public defense spending requires additional funding. Wolf described a supplemental request for the current year and an FY2026 recommendation that, in total, results in a recommendation of $83 million to support the consolidated State Public Defense program. DFM characterized some FY2025 supplemental needs and other FY2026 costs as tied to a recent Idaho Supreme Court decision and challenges filling contract attorney positions; specific supplemental dollar splits in testimony were described as part of the agency submission and not finalized in committee materials.

- Housing and health workforce: A one‑time $15 million transfer to the Workforce Housing Fund targeted to higher‑need (including rural) counties; about $850,000 one‑time for medical residency slots and $500,000 ongoing for rural physician incentives to address provider shortages.

Maintenance and technical items

Wolf highlighted maintenance components of the budget the committee will consider separately from enhancements: a proposed 5 percent compensation increase (the governor recommended a 5 percent/state employee and teacher pay approach consistent with prior committee direction), higher per‑employee benefit cost assumptions than last year, contract inflation adjustments that agencies must absorb under existing contracts, and a set of repair and replacement requests — especially IT security and infrastructure replacements — that DFM and ITS flagged as high‑priority for resilience.

Revenue, reserves and forecasting approach

DFM said it used a more conservative revenue baseline for FY2025 when assembling the budget and therefore recommends prudent reserves even in a strong economic period. Wolf's presentation showed a plan to leave significant ending balances, move tens of millions into statutory stabilization accounts (Budget Stabilization Fund and the Public Education Stabilization Fund), and keep a record revert/reserve balance. She told the committee that Idaho’s rainy‑day balance and reserve posture compares favorably to the guidance from bond‑market analysts.

Questions and committee concerns

Committee members questioned several items in the presentation: the magnitude and permanence of ongoing wildfire funding, the rationale for adding $50 million to transportation bonding capacity while Techum funds and prior bond capacity remain active, the relative balance between new spending and tax relief, and details about public defense supplemental requests.

LF quotes and attributions

“This is his keeping promises budget,” Wolf said, summarizing the administration’s framing. On forecasting and reserves she said the state should “put healthy ending balances to make sure that we can hedge against any fluctuations in revenue.”

What the committee will do next

DFM’s presentation was intended to provide a high‑level framework before line‑by‑line agency budgets begin. Committee members and staff indicated they will review agency submissions, examine replacement/repair items in a special hearing, and proceed through the scheduled work groups and hearings over the next several weeks.

Ending

DFM’s presentation laid out the administration’s requested priorities and a conservative approach to revenues and reserves. Committee members pressed for additional detail on certain large items — public defense funding, wildfire funding permanence, and the transportation bonding request — that agencies and DFM staff will be expected to clarify during upcoming hearings.