Letter to JFAC outlines impact of budget cuts

In a letter to the members of the Joint Finance-Appropriations Committee, Administrator of the Division of Financial Management Lori Wolff compiled a list of what the state can expect in the coming fiscal year following the committee's approval of ongoing budget reductions.

The letter arrives in response to JFAC’s Friday meeting, where it was decided that state agency budgets will be reduced on an ongoing basis by an additional 2%, or $30.1 million. This number includes the 3% agency holdback order issued by Gov. Brad Little in the fall, meaning many agencies face a 5% reduction in agency budgets for the 2027 fiscal year.

The letter highlighted Little’s appreciation for the committee’s response to his request to exclude K-12 public schools, Medicaid, the Department of Correction, and the Idaho State Police from proposals for additional spending reductions. Still, it noted that any additional cuts outside these agencies would remain detrimental to the state.

“Additional cuts jeopardize Idaho’s ability to keep up with population growth, service delivery, infrastructure, and economic development,” Wolff’s letter said. “These effects are not temporary; rebuilding after cuts can take years, even when revenues recover.“

After not being recommended to receive any cuts in funding by Little, Idaho’s courts will see a reduction of 5%, or $3.8 million in funding, as a result of JFAC’s direction. Wolff’s letter states explicitly that these reductions will hit the state’s treatment courts — pertaining to matters for drugs, mental health and veterans — and in turn increase crime in Idaho. 

Since these courts work to direct individuals away from incarceration and into treatment programs, the result will be an exacerbation of the state’s existing prison capacity problems, “leading to increased costs in the correctional system,” the letter said.

After already receiving cuts impacting the current tax filing season, the Idaho State Tax Commission will face deeper reductions of $903,000 for the next fiscal year. For the average Idaho taxpayer, this means slower processing of tax returns by up to 24 weeks and refund delays of up to six weeks. With an increase in refund-interest payments resulting from these delays, the estimated cost to Idaho taxpayers is $7 million, the letter said. 

Cuts to the Idaho Department of Lands to the tune of $265,000 means either fewer seasonal firefighters will be available to districts under IDL’s protection, or the duration of seasonal firefighters will be reduced, “increasing the risk of uncontrolled fires.”

The Idaho Department of Health and Welfare faces $777,000 in cuts to its Children’s Mental Health and Adult Mental Health services, requiring reductions to the state’s contract with managed health care organization Magellan and leaving “kids and adults with mental health challenges without timely care.” The result is that Idaho is being pushed away from preventive care and toward hospitals and other crisis services, the letter said.

Idaho’s Career Technical Education (CTE) program is estimated to face $1.8 million in cuts, eliminating 164 CTE programs, which will “disproportionately” impact rural Idaho. Wolff said these cuts limit Idaho high school students’ ability to obtain nurse aide certification, take welding classes or receive other technical training that prepares them for careers after high school. 

“When we start eliminating these programs, we limit opportunities for these kids to be able to continue this,” Wolff said. “That is what long-term structural damage looks like.”

Idaho's community colleges are due to lose a total of $1.3 million if budget cuts are adopted. They are poised to lose an average of 7% of their budgets due to CTE reductions and changes to the withholding of enrollment-workload adjustment funding, which increases funding for these institutions as enrollment improves. 

Wolff’s letter notes that reversing the additional 2% cuts mentioned here, as well as several others outlined in her full letter, would cost about $13 million in fiscal year 2027, a year projected to end with an ending balance of $184 million. In directing the letter to JFAC, Wolff said that if these cuts occur, she aims to inform both committee members and other legislators of what the state will lose.

“I think these represent places where we're just cutting too deep, and we're starting to have impacts on communities, on services, prevention — the things that really are going to cause longer term, downstream impacts and costs,” Wolff said. 

Members of JFAC will consider the impact of these cuts Friday, when they set maintenance budgets for state agencies. These are crucial for agencies as individual maintenance budgets go before the House and Senate floors of the Idaho Legislature for a vote. Any additional enhancements (or funding increases) to these bare-bones budgets would have to come through JFAC in separate bills.