It's Time to Cut Spending

A roadmap for conservatives in 2026

Idaho’s constitution requires the Legislature to pass a balanced budget each year. That means every dollar appropriated for government spending must be covered by a dollar of revenue:

No appropriation shall be made, nor any expenditure authorized by the legislature, whereby the expenditure of the state during any fiscal year shall exceed the total tax then provided for by law, and applicable to such appropriation or expenditure, unless the legislature making such appropriation shall provide for levying a sufficient tax, not exceeding the rates allowed in section nine of this article, to pay such appropriation or expenditure within such fiscal year.

The question that vexes members of the Joint Finance-Appropriations Committee (JFAC) is how to accurately estimate how much tax revenue will come in over the next fiscal year. If you guess too low, agencies may not have enough to meet their obligations. If you guess too high, you create a surplus, which really means citizens were overtaxed.

This year’s debate over revenue projections was especially intense, stretching deep into the 2025 legislative session. After two months of discussion, JFAC voted to set the FY 2026 general fund revenue projection at $6.4 billion, a 6.8% increase over FY 2025. Democrats argued that projections should have been finalized before budget bills and tax cuts were advanced. Some Republicans, however, had pushed for higher estimates to justify large tax cuts. Gov. Brad Little, in his State of the State Address, called for $100 million in relief, while Rep. Josh Tanner, assistant majority leader and JFAC member, pressed for three to four times that amount. In the end, lawmakers passed—and the governor signed—more than $400 million in ongoing tax cuts.

However, according to the latest report from the Division of Financial Management (DFM), revenue collections are running well behind those projections. FY 2026 revenues are up just 0.1% over FY 2025, not the 6.8% increase JFAC expected. Instead of $6.4 billion, the updated forecast is just $5.55 billion.

Democrats were quick to blame the tax cuts as the primary reason for the discrepancy, but let’s be honest: Idahoans are not undertaxed; the real problem is overspending. Gov. Little has managed to have his cake and eat it too throughout his tenure, cutting billions in ongoing taxes while still increasing appropriations. State spending has risen more than 75% since he took office in 2019. Federal COVID aid supercharged budgets, and rather than rolling back to pre-COVID levels, those higher baselines became the “new normal.”

Even though year-over-year budget increases have slowed since the height of COVID, they are still rising faster than both population growth and inflation. If spending growth simply matched those metrics, one could argue that government was maintaining its size and scope. Instead, it has continued to expand.

I think Idaho voters are wise enough to understand that there is a natural limit to government spending. Families and private businesses regularly make hard choices about how to use their limited resources, ranking priorities and funding the most important first. Government operates under different pressures, especially during good economic times when tax revenues keep climbing.

But what happens when those revenues stop climbing? We’re about to find out. In response to DFM’s update, Gov. Little signed an executive order requiring cutbacks at state agencies. His press release framed it as a push for efficiency:

“Idaho’s economy is the strongest in the nation, and we continue to move in the right direction. It’s in our DNA here in Idaho to balance the budget, cut taxes, and right-size government so we can continue to make public schools our top priority. My executive order today delivers on our promise to Idahoans that we will implement President Trump’s tax cuts for Idahoans and make the best use of their hard-earned money while putting public schools first,” Governor Little said.

The executive order creates lasting efficiencies in state government by ordering state executive branch agencies to take the following actions in Fiscal Year 2026, which ends June 30, 2026. K-12 public schools are excluded.

1. To further increase efficiencies, examine potential consolidation of services or agencies

2. Revert positions that have gone unfilled

3. Identify cost reductions in existing contracts

4. Streamline boards and commissions

5. Reduce General Fund spending by 3%

6. Reduce travel spending

Notice what’s missing. Public schools—the second-largest single recipient of taxpayer dollars—are untouched. Little even boasted that school funding has increased 63% in six years. If the governor were serious about reining in spending, surely the public school system has low-hanging fruit to trim.

Last session, the House passed a bill to require accountability for funds appropriated to public schools, but the Senate did not take it up. Opponents argued that such a bill was an unnecessary impediment to public schools being able to spend money as they see fit. There are surely efficiencies to be gained and tax dollars to be saved for lawmakers willing to challenge the public school establishment.

I don’t expect Little to do that, because part of having his cake and eating it too has been funneling tremendous amounts of money into the public school system to counter any claim that he and fellow Republicans are anti-education. Recall that in 2022, when Reclaim Idaho pushed a tax-hike initiative for education, Little preempted it by calling a special session to add $410 million to the schools budget, adding to the pattern of ever-higher baselines.

It’s never enough, of course—despite many years of “historic and unprecedented investments in education,” Democrats and their media allies continue to say that our public school system is chronically underfunded.

Speaking of the Democrats, state party chair Lauren Necochea pointed to House Bill 93, the Parental Choice Tax Credit, as another primary driver of the budget shortfall. H93 appropriated $50 million for tax credits to families with children outside the public school system. It’s ironic that Democrats complain about this while ignoring the Launch Grant, which appropriated nearly $75 million for FY 2026. Democrats unanimously supported House Bill 24 in 2023, which created Launch, and they have remained its staunchest defenders.

While the tax credit trusts parents to make educational choices, Launch was designed to funnel tax dollars to politically-connected businesses, with students as the bagmen. No matter how you dress it up, it’s a Democrat-style free college program that falls far outside the traditional Republican understanding of government’s proper role. Gov. Little often touts the program’s supposed success, measured largely by the satisfaction of students receiving free money and businesses benefiting from taxpayer-funded training. But what about the taxpayers who are footing the bill?

The school choice tax credit, by contrast, is different. The Legislature has a constitutional mandate to fund public education, and school choice offers an innovative way to fulfill that duty by trusting parents to spend education dollars more wisely than government bureaucrats. In fact, school choice could even save taxpayers money in the long run, since the $5,000 per-student limit is well below the average amount the state spends to educate each child in public schools.

If one of these programs must go to make ends meet, the Legislature should repeal Launch next year.

Gov. Little’s press release included statements from legislative leadership backing the executive order. House Speaker Mike Moyle said, “This isn’t the government’s money; it’s the people’s money.” Whether you agree with the Speaker on other issues or not, this is the correct frame. Democrats—and far too many Republicans—begin with the assumption that tax revenue belongs to the government, which then “allows” us to keep some of it. I’m no anarcho-libertarian—I believe government has proper functions, and those require funding—but every penny must be scrutinized to ensure taxpayers get the best possible value. Lawmakers deliberating over appropriations must recognize their role as trustees of the public money rather than drunken sailors on leave.

This problem arose from overspending, not tax cuts. In fact, taxes should be cut further. The budget crunch is not a catastrophe, but an opportunity to return to pre-COVID spending levels and finally rein in the endless growth of government bureaucracy. Both Gov. Little, through his executive order, and the Legislature, with the DOGE Task Force, are trying to cast themselves as champions of efficiency. Yet both face the temptation to nibble at the edges—doing just enough to grab headlines without upsetting anyone’s apple cart.

But this is an opportunity to go much further. In an article last week accusing the governor of gaslighting voters about the magnitude of problem, Wayne Hoffman explained the proper perspective:

Lawmakers are not bound to Little’s 3% holdback. The Legislature will have to vote on it; they may choose to cut spending by more or by less. Naturally, some will argue that deeper cuts are needed, while others will argue that agencies and programs “need” the money that was allocated earlier this year. If the argument is that the Legislature spent too much, the decision on holdbacks will be where the rubber will meet the road.

While some fiscal conservatives were quick to dismiss Gov. Little’s press release as only so much grandstanding, I think it creates an interesting opportunity to make some serious change. I find it interesting that, unlike the Democrats, Little did not come out of the gate blaming tax cuts for the problem. Indeed, he framed the entire endeavor as part of his ongoing priority to streamline government as well as adapt to President Trump’s tax cuts that were part of the One Big Beautiful Bill.

If we are to seize this opportunity, fiscal conservatives must enter the 2026 session united in the conviction that it’s time to truly cut spending. Whatever disagreements over strategy or policies that have plagued Idaho conservatives over the past year must be put aside lest we lose this unique chance to seriously change the way government spends our money. This is an ongoing structural problem that cannot be solved by creative accounting, off-book maneuvers, or raiding the rainy day fund.

The Legislature has two paths. One is to follow the example of the Division of Vocational Rehabilitation, which, after overspending by nearly $5 million, approached JFAC with its hat in hand to beg for more money. The other is to follow the Idaho Child Care Program: when it overspent by $15 million, Health & Welfare Director Alex Adams told JFAC he would address the root causes rather than simply demanding more cash.

So, will the Legislature paper over the problem with gimmicks and reserves? Or will it step up and cut spending? To use a family budget analogy: if Dad takes a pay cut, it’s time to downsize the car, stop eating out three times a week, and turn off the AC once in a while. Maxing out the credit card is a recipe for disaster.

The Legislature must comb through every budget and trim wherever possible. Or, even better, as Fred Birnbaum recently suggested, leadership could set a hard spending threshold and force the governor’s office to do the work of prioritizing line items. Nothing should be sacrosanct, not even public education. Government must learn to do more with less now, rather than waiting for the next downturn. This budget crunch is the perfect chance to make hard choices before the whole thing comes crashing down.