Idaho state revenue collections exceeded projections for the second consecutive month of fiscal year 2027, adding to a growing surplus that lawmakers are choosing to hold in reserve rather than immediately distribute.
According to the latest General Fund Budget Monitor, August revenue beat forecasts by $37.5 million. This follows a July surplus, bringing total collections for the first two months of the fiscal year—which began on July 1—$51.2 million ahead of legislative estimates. Individual income tax receipts were the primary driver of this growth, surpassing the August monthly projection by $40.8 million.
If current trends continue through June 30, Idaho is projected to end the fiscal year with a positive ending balance of $657 million. This figure represents a surplus of more than $500 million compared to the budget originally set by state legislators. The strong performance follows permanent budget cuts implemented last year by Gov. Brad Little and the Legislature to fund federal and state tax reductions.
Lawmakers Cautious on Spending
Despite the favorable numbers, legislative leaders are resisting pressure to expand government spending. Sen. Scott Grow, co-chairman of the Idaho Legislature’s Joint Finance-Appropriations Committee, emphasized the need for fiscal conservatism given the unpredictability of future expenses.
“My reaction was its very promising report, and I’m glad to see the individual income tax is up,” Grow said.
Grow noted that budget planning requires looking 18 months into the future, making it difficult to predict economic shifts or emergency costs. Potential unexpected expenses could include increased Medicaid claims, wildfire suppression efforts, rising health insurance premiums for state employees, and corrections system demands.
“The challenge is we always have to project a year and a half out when we are working on budgets during the legislative session, so it’s hard to know what is going to happen, which is why we try to be as conservative as we can,” Grow said.
Corrections Costs Loom
One area likely to draw from state reserves is the Department of Correction. The agency plans to request $45.3 million to open three new facilities, citing overcrowding in existing prisons. This capital expenditure underscores the tension between maintaining a surplus and addressing infrastructure needs.
The 2027 regular legislative session begins on Jan. 11 at the Idaho State Capitol in Boise. Lawmakers will likely face decisions on how to allocate any remaining surplus while balancing the need for fiscal stability against rising operational costs in key state agencies.