Idaho Democrats blast new round of budget cuts amid GOP Tax Plan
BOISE, Idaho (KIFI) — Idaho Democratic leaders are condemning a directive from Republican budget chairs that orders state agencies to prepare for additional mid-year budget cuts of 1% to 2%. The move aims to offset the estimated $155 million cost of adopting tax changes from the federal "One Big Beautiful Bill Act," championed by the Trump administration.
The proposed reductions would come on top of a 3% holdback already imposed by Governor Brad Little last August to address a $40.3 million shortfall. Combined, state agencies could face total spending cuts of up to 5%, which Democratic leaders argue will "take a chainsaw" to essential services.
Background: HB 519 and the $155M Price Tag
Every year, the Idaho Legislature must adopt an annual tax conformity bill to update references to the Internal Revenue Code. House Bill 591, Introduced by Rep. Jeff Ehlers, R-Meridian, House Bill 519 would fully conform Idaho’s income tax code to federal changes for the 2025 tax year.
President Trump's bill includes around 39 tax code changes — for example as the elimination of taxes on worker tips and overtime. Ehlers' bill, introduced last week, proposes to adopt nearly all the changes, excluding federal tax changes related to bonus depreciation. Ehlers’ plan also applies retroactively to the 2025 tax year.
“If we don’t allow them to take it in 2025, then they’re missing one of the four years,” Ehlers said in an interview. “So that’s like 25% of the benefit; they’re only going to take it for the three years. So, we wanted to make sure that they got the full four years of the One Big Beautiful Bill.”
Ehlers estimates the annual cost at $155 million, though other state estimates reported by the Idaho Capital Sun suggest the price tag could climb as high as $400 million.
JFAC Directs Additional Reductions
On Monday, Jan. 26, 2026, the Republican co-chairs of the Joint Finance-Appropriations Committee sent a formal memo to state agency directors. The letter directs state agencies to draft plans for an additional 1% to 2% in budget reductions.
Democratic Backlash
House Democratic Leader Ilana Rubel characterized the move as a manufactured "budget mess." She argued that the 3% holdback is already straining Idaho families and that further cuts would result in longer wait times for services and reduced public safety.
"They pass tax giveaways for the wealthy and well-connected, then stick working families with the consequences," Rubel said in a news release Tuesday.
Senate Minority Leader Melissa Wintrow echoed these concerns, pointing to warnings from the Idaho Sheriff’s Association regarding the loss of six behavioral health programs as a direct result of a 4% pay rate cut for Medicaid medical providers to avoid the budget deficit.
"When law enforcement warns about impacts to public safety, we should listen. When families of children with disabilities are losing access to critical therapies, we should act with care," said Wintrow. "Idaho leaders should make thoughtful choices, not take a chainsaw to health care, education, and public safety so the biggest winners in the tax code can come out even further ahead.”
Governor Little, in his State of the State Address, maintained that Idaho is positioned to "weather the revenue challenges," as he encouraged agencies to tighten their belts for the 2026 and 2027 fiscal years.
“A combination of factors has shifted us from years of record budget surpluses – driven by rapid population growth, business expansion, and one-time federal funds – to a period ahead that demands restraint,” said Little during his address. “Thankfully, the way we have governed in recent years has positioned Idaho to weather the revenue challenges ahead.”
While Gov. Little characterized the budget constraints as a shift from years of massive budget surpluses to a period "demanding restraint," according to the Idaho Center for Fiscal Policy, five years of aggressive tax cuts have resulted in a $4 billion revenue loss between 2021 and 2025.
