Staff outlines sales‑tax distribution changes, earmarks and risks to general fund growth
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Summary
Budget staff walked JFAC through sales‑tax distributions, the growth of the tax relief fund, an earmark that directs a portion of sales tax to bonding for transportation (4.5% Tecum line) and how statutory distributions have reduced the share of sales tax flowing to the general fund.
Budget policy staff presented a detailed review of sales‑tax collections and the statutory distribution formula that routes portions of sales tax to revenue sharing, a tax relief fund and state programs. The briefing highlighted how statutory earmarks have reduced the share of gross sales tax that reaches the general fund and discussed proposals that could further shift funds away from general‑fund appropriations.
Staff reported total sales tax collections and the steps that reduce net collections available for distribution (refunds, the tax relief fund transfer) and then the statutory allocations under Idaho Code (the presentation cited the sales tax distribution statute). Staff said gross sales tax collections were projected to grow to about $3.37 billion in 2025 and roughly $3.5 billion in 2026; after statutory transfers and distributions, the share available to the general fund is smaller than in earlier decades. One staff chart showed the general fund capturing roughly 65% of net sales tax distributions in the most recent projection, compared with roughly 85% during the Great Recession era.
Bybee noted that a program that receives 4.5% of net sales tax collections (identified in the presentation as the Techum/TechEm line) currently is associated with an $80 million earmark for bond payments and that proposals discussed in the meeting could add another $50 million earmark. If additional statutory earmarks are adopted or the percentage‑based allocation grows, that would further reduce the general fund portion available for JFAC appropriation. Representative Petzke asked why a percentage was used for the Techum allocation rather than a fixed dollar amount; staff said the law was written as a percentage and the $80 million bond target was the original design point when the program received funding.
Staff reiterated that some statutory distributions now route substantial dollars to local units of government and state programs before JFAC considers spending. Senator Wintrow and others noted the policy implication: in a future downturn, with a smaller share of sales tax entering the general fund, the state could face harder choices or need to reclaim some distributions to balance budgets and avoid deeper cuts.
Other details in the presentation covered product taxes, premium taxes, interest and miscellaneous revenues, and recent growth in unclaimed property and other accounts that feed the general fund. Staff said they will correct one chart in the legislative budget book and circulate updated figures.
Why it matters: statutory redistributions of sales tax reduce the pool JFAC controls for general fund appropriations. Proposals to increase earmarks or bond commitments would further limit discretionary general‑fund capacity and could require larger reductions in appropriations in a revenue downturn.