JFAC briefed on FY2025–26 revenue outlook, $700 million structural balance and spending options

The Joint Finance‑Appropriations Committee heard a broad overview of Idaho’s fiscal position and the governor’s budget recommendations, including revenue projections, proposed transfers and the administration’s program‑level spending plan.

Keith Bybee, division manager for budget policy analysis at the Legislative Services Office, told the committee the revenue forecast powering the governor’s FY2025 and FY2026 recommendations projects ongoing general fund revenues above the pre‑pandemic trend line because of population growth and other factors. He said the governor’s recommendation leaves a structural surplus — the difference between ongoing revenues and ongoing obligations — of about $700 million in both 2025 and 2026 under current forecasts.

That structural balance is the source of the committee’s policy choices, Bybee said: “you have a lot of choices,” including tax relief, program increases and one‑time spending. The governor’s package shown to the committee includes roughly $5.65 billion in general‑fund appropriations for FY2026 (about 7.4 percent above FY2025 original appropriations), with about $242 million in requested enhancements and a program‑maintenance base of roughly $5.4 billion.

Why it matters: the committee must reconcile competing demands — program maintenance, requested enhancements and transfers to other funds — before setting appropriations. Bybee emphasized the budget uses both one‑time cash and ongoing revenue, and noted an ongoing discussion around where to fund some programs (for example, the state public defender program) if they are moved from dedicated streams to the general fund.

Key numbers and proposals

- Governor’s baseline/general‑fund revenues shown to the committee: roughly $5.9 billion in the baseline year with $6.36 billion shown as total revenue availability for FY2026 under certain assumptions. - Program maintenance for FY2026 in the governor’s recommendation: about $5.4 billion (a 3.4 percent increase over FY2025 original appropriation). - Enhancements requested by agencies: about $194 million; governor added roughly $51 million, for $242 million in enhancements. - Total general‑fund recommended appropriations for FY2026: about $5.65 billion, leaving a projected ending cash balance of roughly $227 million under the governor’s assumptions for FY2026; the governor’s FY2025 ending cash balance was shown as about $338 million.

Revenue drivers and recent history

Bybee reviewed the revenue surge during 2020–2021 tied to federal COVID relief (CARES Act and American Rescue Plan) and rapid population and personal‑income growth. He said that while temporary federal dollars and multiplier effects partly explain the peak revenues, the committee’s new baseline is higher than the pre‑2020 trend because of population growth and higher personal income tax collections.

Transfers and one‑time uses

The governor’s proposal includes a package of transfers and uses of cash: transportation and infrastructure transfers, funds for fire suppression and other targeted transfers. Bybee summarized transfers out of the general fund of about $578.9 million in the governor’s plan (offset in part by transfers into the general fund such as the bond levy equalization closeout). Last year the legislature authorized about $580 million in transfers, largely to road and surface transportation.

Policy choices ahead

Committee members asked questions about specific transfers and timing — for example, how the bond levy equalization closeout (House Bill 521) affects school bonding programs — and about the degree to which one‑time cash should be used versus ongoing revenue to fund programs.

The committee will next examine agency presentations and program maintenance packages; Bybee and staff told members the bulk of detailed agency hearings begin with Health and Welfare next week. The committee must decide how much of the roughly $700 million structural surplus to allocate to tax relief, ongoing program changes, one‑time investments and savings.