Powerful budget committee expands potential cuts to Medicaid, public schools
AI-generated summary reviewed by our newsroom.
- Budget panel asks agencies to find cuts beyond the governor’s plan.
- Budget committee asks Medicaid and schools to identify areas for deeper cuts
- Gov. Little’s budget director notes opposition to cuts, others question cause.
In a tough budget year, the state’s powerful budget-setting committee on Monday asked state agencies to look for ways to slash beyond 3% cuts Gov. Brad Little proposed in his annual State of the State address. The potential cuts would be for fiscal years 2026 and 2027. But lawmakers exempted K-12 education and Medicaid.
Days later, the committee’s co-chairs changed their tune. On Wednesday, they called for public schools and Medicaid to look for ways to lower their costs, too.
Medicaid has already been a contentious issue in the 2026 legislative session. Protesters have rallied against potential cuts at the statehouse since the Legislative session began in mid-January. Cuts to public schools could include the Idaho State Board of Education and the Idaho Department of Education too, said Sen. Scott Grow, R-Eagle, a co-chair of the budget committee.
As the state stares down a budget shortfall, some people don’t want any reductions, while others see an opportunity to make deep cuts to spending, Grow said in an interview with reporters on Thursday. Earlier this week, Grow told the Idaho Statesman that the committee was leaning towards bigger cuts.
He did not directly answer a question about what had changed in two days but said every agency should look at their budgets.
“We invited (Medicaid and public schools) to the party,” Grow said Thursday. “It’s not a fun party. But just to be responsible, I think everybody ought to take a look at where they are.”
Both memos this week asked for the agencies to look at a 1% or 2% cut beyond what Little had proposed. For Medicaid, that could be anywhere from $9.9 million to just under $20 million. For public schools, potential cuts range from $27. 5 million to $55 million, according to the memo.
In a speech ahead of the session, Little called for lawmakers to leave funding for K-12 public schools untouched. His budget director, Lori Wolff, told the Statesman on Thursday that the governor did not want legislators to make additional cuts.
“We’re not supportive, or we did not indicate that we needed to do additional cuts in any of the agencies,” Wolff said in a phone interview.
Lawmakers asked the Idaho Department of Correction to look at its budget for possible savings too, but only for the fiscal year beginning July 1, not the current year.
“Public safety is one of our No. 1 concerns,” Grow said. “How do you skimp? Do you lay off correction officers? What does that do to the security inside the prison? We just didn’t feel comfortable going there.”
The One Big Beautiful Bill
The budget committee co-chairs, Grow and Eagle Republican Josh Tanner, began looking at extra cuts because of questions about whether the state would conform its tax code with the federal one. The question about whether to conform is typically an easy one – but this year, the state is dealing with sweeping tax changes, including a tax exemption for tips and overtime, included in President Donald Trump’s “One Big Beautiful Bill.”
Conformance would reduce tax collections and could affect which programs are funded or cut. Little’s proposed budget called for near-complete conformance starting in calendar year 2026, while Ehlers’ proposals have called for it to begin in calendar year 2025.
Just how much revenue the state will lose is the subject of debate. Meridian Republican Rep. Jeff Ehlers used the governor’s estimate of the cost of full conformity: $155 million in lost revenue each year. But some estimates are higher. The Boise-based nonprofit Idaho Center for Fiscal Policy, for example, estimated it would cost the state nearly $300 million annually to conform with federal tax cuts.
In a new conformity bill introduced Thursday, Ehlers proposed spreading out the impacts of a change to a corporate tax break over multiple years so that the state budget isn’t hit hard all at once. But even with those changes, the finance committee is still looking for ways to curb spending, Grow said.
Rep. David Cannon, a Blackfoot Republican who cosponsored Ehlers’ bill, told the Statesman in a Wednesday interview that the changes were prompted by politicians’ concerns about the cost of a previous version of the bill. The new version, Ehlers said, would ensure a “clear path” through the Senate and the governor’s desk.
Little’s plan would leave the state with $32 million in its general fund at the end of fiscal year 2026, according to a presentation during a committee meeting. But Grow said he wants $100 million left, and that even though the state took in more revenue than expected in December, there was no guarantee that January would continue that trend, he said.
“We could be upside-down next month,” Grow said.
Debate continues: Is revenue or spending driving budget crunch?
The budget fight has sparked pointed comments in committee meetings where Tanner and Grow have offered primers to their fellow legislators about how the Joint Finance and Appropriations Committee works to set the state’s budget. The two men have encouraged committees focused on areas such as local government or transportation to make recommendations about areas for possible cuts and areas that should be protected.
In a House State Affairs Committee meeting Thursday, lawmakers pushed back on Tanner’s arguments that the state needed to cut spending to balance its budget.
“I guess I’m tired of hearing that we have a spending problem,” said Rep. Stephanie Mickelsen, R-Idaho Falls. “We’ve got a revenue problem.”
She argued that lawmakers’ decision in 2025 to set revenue projections late in the legislative session, after deciding to make large tax cuts and pay for expensive state projects, led to the budget crunch.
Rep. Annie Henderson Haws, D-Boise, challenged Tanner’s argument that the state should cut spending rather than dip into its “rainy-day” savings to help balance the budget this year.
“I wonder why we are putting our citizens’ safety at issue,” said Haws, who replaced former Rep. Todd Achilles after he stepped down from the Legislature to run against U.S. Sen. Jim Risch in the November election. “I understand we’ve got bridges in our state that were built 90 years ago that are incredibly unsafe, and we’re going to decide this year that we’re not going to fund that critical infrastructure when we’ve got one of the fastest-growing economies in the country?”
In a separate presentation on Wednesday morning, Sen. James Ruchti, D-Pocatello, asked Keith Bybee, the manager of budget and policy analysis in the Legislative Services Office, how much the state’s spending had increased in the last 20 years.
Adjusted for inflation, in 2005, Idaho spent $2,500 per person. In 2026, that amount is $2,700 per person, Bybee said.
“It’s about as flat as you can get,” he said.
