Division of Financial Management frames conservative, structurally balanced budget; proposes $2 billion for school facilities over a decade

Alex Adams, administrator of the Division of Financial Management, presented the governor’s budget to the Joint Finance and Appropriations Committee on Wednesday, saying the recommendation is built around a lower revenue forecast, increased reserve cushions and targeted proposals for schools, transportation and public safety.

Adams said the administration built the budget around $5.3 billion in general‑fund revenue for the current year and $5.7 billion for the next fiscal year, down from the $5.5 billion target used last year. "We built this year's around a $5,300,000,000 budget," Adams told the committee, adding that revenue has softened after pandemic-era surpluses and successive tax cuts.

The governor’s plan aims to preserve structural balance rather than rely on one‑time fixes, Adams said. The recommendation leaves higher ending balances than recent practice — $314 million for the current fiscal year (a roughly 5.6% cushion) and $265 million for the next year (about 4.5%) — and to restore the budget stabilization ("rainy day") fund toward its statutory cap. Adams said the administration proposes to return $33.5 million to the budget stabilization fund in the next budget year and add $24 million more so the state reaches about 21.2% of general fund revenue in combined reserves, a level staff said is within the 18–23% range Moody’s recommends to weather a recession.

The package contains several major policy proposals that will require legislation, Adams said. The largest is a proposal to transfer $125 million in sales tax annually into a new school modernization trust fund that would be bonded against through the State Building Authority. Adams described the mechanics: a $125 million annual transfer could support debt service on a 10‑year bond that would generate roughly $1 billion in proceeds. "The first would be taking a $125,000,000 from the revenue reduction I talked about earlier. It would be a sales tax transfer ... to a new school modernization trust fund," Adams said. Paired with that, the governor proposes $75 million annually to raise the school building maintenance match from 2% to 4%.

Adams and committee members discussed implementation details. Representative Tanner asked whether local districts could opt out and who would pay bond interest; Adams replied the administration envisions local opt‑out options and that the model would be similar to existing transfers used to back transportation bonding, with the state bonding on the revenues and debt service provided from the transferred sales tax (the proposal as presented includes the debt service in the state budget lines Adams showed).

Other education measures include $9 million to double college‑and‑career adviser capacity and proposals to fully fund Idaho Launch — the governor recommends unlocking the full $75 million dedicated in the in‑demand careers fund to meet unexpectedly high applicant demand for workforce training and credentials.

On transportation, the governor recommends a one‑time $200 million for locally owned bridge projects (a backstop to clear a previously identified $600 million local‑bridge backlog) and a $50 million annual sales‑tax transfer that staff said could support roughly $800 million in additional bonded transportation projects. Adams called the $50 million transfer a policy change that would require legislation and said the transfer would allow bonding for high‑priority ITD projects.

Public safety and natural‑resource recommendations include a $25 million one‑time appropriation from the Permanent Building Fund for a secure 26‑bed mental‑health facility to serve patients committed by courts; a $30 million one‑time transfer to the Idaho Water Resource Board for regional water projects; $6.6 million to finish a response to Quagga mussels (both one‑time and ongoing components were proposed); and reallocations of some ARPA or onetime funds to parks and outdoor‑recreation deferred maintenance. Adams also described an ongoing allocation to help Idaho State Police regularize equipment and vehicle replacement as an ongoing budget item rather than a series of one‑time requests.

Medicaid and health‑care related items were addressed as well. Adams said the governor included three offsets to keep Medicaid roughly flat year‑over‑year in the general‑fund budget, including use of the Millennium Fund as a partial offset for non‑expansion Medicaid costs and two assessments that would require enabling legislation. Adams cautioned that Medicaid remains a mandatory program and is sensitive to eligibility and cost assumptions; he urged careful review of any policy changes that could change fiscal notes.

Adams repeatedly emphasized the administration’s approach to hedging forecasting risk: building the budget on conservative projections, maintaining larger ending balances, and keeping rainy‑day funds near statutory maximums so the state retains flexibility if revenues fall short. He said the budget is structurally balanced across a five‑year horizon based on the revenue forecast, but reminded the committee that policy choices or slower revenue growth would change that outlook.

Committee members asked questions ranging from technical mechanics of bonding and opt‑out provisions to how the Millennium Fund and opioid settlement dollars might be used. Adams noted the governor "proposes and the legislature disposes," and that the proposals will be debated and could be altered in committee and on the floor.

The presentation contained no formal committee votes; Adams concluded by standing for questions.