Idaho’s financial picture heading into the new fiscal year looks considerably brighter than lawmakers anticipated, with state revenue forecasters revising their outlook upward by more than a quarter billion dollars.
The Division of Financial Management released a revised revenue forecast Monday showing that Fiscal Year 2027 collections are expected to run $291.1 million above what legislative budget writers had projected, a 5.2% improvement over the earlier estimate. Fiscal Year 2027 began July 1.
The first month of the new fiscal year offered early encouragement. July revenues came in $13.1 million above the revised forecast, with individual income tax, sales tax, and miscellaneous revenue all beating projections. The one weak spot was corporate income tax, which fell $15.9 million short of what forecasters expected.
Despite beating the new forecast, July collections still trailed the same month a year ago by $5.6 million, a reminder that the improved outlook is measured against forecasts, not against Idaho’s own recent highs.
If collections track the revised forecast through the rest of the year, the July Revenue Monitor report projects a healthy ending balance. “If monthly revenue collections follow the new forecast exactly for the remainder of the year, the new projected ending balance is $619.5 million,” the report stated, as first reported by the Idaho Capital Sun.
That would be a sharp turnaround from where Idaho stood just a year ago. The state closed out Fiscal Year 2026 with a positive cash balance after finishing in the black, but only after legislators cut budgets for nearly every agency and program during the 2026 session to head off a projected shortfall. Those cuts reflected how quickly the state’s post-pandemic revenue surge had leveled off, and lawmakers were left making difficult choices to keep the books balanced.
The improved forecast now sets the table for a different kind of budget conversation. State agencies will begin submitting their Fiscal Year 2027 budget requests in September. Gov. Brad Little’s budget chief, Lori Wolff, and the Division of Financial Management will work through those requests before the 2027 legislative session convenes in January at the Capitol, where lawmakers will make final appropriations decisions.
A larger projected ending balance gives the legislature more room to work with, though how much of that cushion gets allocated versus held in reserve will depend on the budget requests agencies submit and the priorities lawmakers bring to the session.
The revenue improvement also comes as Idaho workers have seen solid wage growth, with the state ranking among the top nationally for wage gains. A stronger labor market and consumer spending tend to support both income tax and sales tax collections, the two revenue streams that outperformed forecasts in July.
For North Idaho families and businesses, the revised outlook is good news in the short term. Strong state revenue can ease pressure to raise taxes and may create room for targeted relief. Whether legislators take that path or prioritize building reserves after last year’s belt-tightening will be one of the central questions of the January session.
Category: Economy