Idaho

State Fiscal Briefs

January 2020

Idaho’s budget basics

According to the National Association of State Budget Officers (NASBO), Idaho’s total expenditures in fiscal year (FY) 2019 were $9.3 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2019 were $2.1 trillion, ranging from $4.5 billion in South Dakota to $311.3 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Idaho’s combined state and local direct general expenditures were $11.6 billion in FY 2017 (the most recent year census data were available), or $6,766 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $9,449.

Idaho’s largest spending areas per capita were public welfare ($1,467) and elementary and secondary education ($1,283). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Idaho’s combined state and local general revenues were $12.1 billion in FY 2017, or $7,068 per capita. National per capita general revenues were $9,573. Idaho uses all major state and local taxes. After federal transfers, Idaho’s largest sources of per capita revenue were charges ($1,315), such as state university tuition and highway tolls, and property taxes ($1,018).

Idaho’s politics

Governor Brad Little, a Republican, was elected in 2018 with 60 percent of the vote. The next gubernatorial election is in 2022.

Republicans control both the House of Representatives (55 Republicans to 14 Democrats) and Senate (28 Republicans to 7 Democrats), with veto-proof majorities in both houses. Control of the governor’s mansion and each house of the legislature gives Republicans a trifecta in Idaho. The entire legislature is up for election in 2020 because both representatives and senators serve two-year terms.

Idaho’s budget institutions, rules, and constraints

Idaho uses an annual budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. Idaho further limits spending growth with a formula related to the state’s personal income growth. The rule is binding and requires a legislative supermajority to override it. The state also limits total authorized debt and debt service.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Idaho’s recent fiscal debates

  • Idaho is one of the few states to use federal taxable income (instead of federal adjusted gross income) as the starting point for its individual income tax. As a result, Idaho faced many federal-state tax conformity issues after Congress passed the Tax Cuts and Jobs Act (TCJA). Because of the TCJA’s substantial changes to the standard deduction and personal exemption, the federal changes could have led to state tax increases for some Idaho families. In response Idaho passed legislation (HB 463) that conformed with the federal changes but also lowered income rates and created a child tax credit. These changes prevented state tax increases but generally favored higher-earning tax filers.
  • Idaho’s Republican-controlled legislature rejected the Medicaid expansion offered under the Affordable Care Act, but Idaho voters demanded it with a 2018 ballot measure. In 2019, Governor Little subsequently signed expansion legislation but included limitations such as stricter income qualifications and work requirements. As with other states, however, the federal government did not approve Idaho’s work requirements or the stricter income qualifications. The state is still attempting to figure out the final details of its Medicaid expansion.
  • Idaho is one of only 13 states that do not fully exempt groceries from their general sales tax. Instead, Idaho offers a grocery tax credit its individual income tax to offset the sales taxes paid on groceries. According to the Idaho State Tax Commission, the average Idaho resident receives $100 each year from the credit. State politicians constantly promise to repeal the “grocery tax”, but finding a way to replace the revenue from the tax has stopped all efforts to do so.

Idaho’s current budget

Governor Little’s proposed FY 2020 budget highlighted education as a top priority. The budget included spending increases for literacy proficiency and higher teacher pay. The proposed budget included a relatively large surplus, which Governor Little said in his 2019 state of the state address would pay for a repeal of the state’s sales tax on groceries in FY 2021.

The legislature passed its budget in April 2019 and generally agreed with the governor’s recommendations, including the budget surplus. But recent revenue forecasts show the surplus is far smaller than anticipated, and Governor Little has called for budget cuts.

Governor Little released his proposed FY 2021 budget and gave his 2020 state of the state address in January 2020.

For more on Idaho’s budget, see