Idaho's legislative budget writers are facing significant increases in routine expenses as they prepare for the upcoming session beginning in January.
That financial pressure includes big hikes to anticipated employee health care costs, Medicaid spending and public education.
If the lawmakers fully funded these items, plus each proposed request from state agencies, Idaho would end the next fiscal year $555.2 billion in debt.
"We're not really in a budget crisis," said Sen. Scott Grow (R-Eagle), who co-chairs the legislature's budget committee. "It's a matter of how we're going to deal with it in the session."
"The narrative has gotten a little bit out of control keeping in mind the [revenue projection] is a best guess. It's a hypothetical number about what we think might happen," added Rep. Wendy Horman (R-Idaho Falls), the committee's other co-chair.
Idaho's constitution requires lawmakers to pass a balanced budget.
The latest fiscal forecasts show the state ending the current fiscal year in the red by $56.6 million, which represents a nearly $500 million decrease in the anticipated ending balance set back in April.
Revenues have, in some cases, strongly lagged behind expectations over the past several months after legislators passed a $450 million tax cut package.
So far, tax collections are down 6.8% through September compared to estimates. Corporate income taxes fell 40.4% during the first quarter of the fiscal year, while personal income tax collections dropped by 4.6%.
Data from October's collections will be released later this month.
"From my perspective, now we're kind of like the good old days," said Rep. Steve Miller (R-Fairfield).
"This is where we operated from for many years and we get to talk about wants versus needs and we need to talk about efficiencies and we need to talk about things that really need to get done as opposed to things that people would like to do," Miller said.
The $555.2 billion potential deficit does not include how Idaho might conform to the federal tax changes outlined in the One Big Beautiful Bill passed into law this past summer.
Keith Bybee, who oversees the Legislative Services Office's budget division, said those, including implications for corporations, could cost the state up to $284 million.
Since the last recession in 2009, lawmakers have socked away nearly $1.7 billion in rainy day funds, which could be used to cover a potential shortfall.
The state's share for employee health insurance premiums are forecasted to rise by 26%, or $133.2 million in general fund dollars.
Bybee said legislators could have state workers — whose pay regularly lags behind the private sector — shoulder more of these costs. Such a move could save state agencies $36.4 million.
The Office of Group Insurance already jettisoned coverage for GLP-1 drugs, like Ozempic, Zepbound and Wegovy, if used strictly for weight loss. It's expected to save between $30-$50 million annually.
The drugs are still covered for treating diabetes.
From 2022-2024, the state's insurance provider, Regence, said the use of GLP-1 drugs by Idahoans covered under their plans grew three times faster than customers in Washington, Oregon and Utah.
"It's like we stepped on a bomb in 2025," when GLP-1 costs to the state jumped from $4.4 million the year prior to $20.7 million said
Faith Knowlton, the administrator for the Division of Insurance and Internal Support.
Despite GLP-1 drugs reducing obesity-related illnesses, Knowlton said the data shows just a $200 per month reduction in anticipated insurance costs compared to monthly prescription costs of up to $1,400.
Much of the growth in Medicaid spending is not coming from those participating in the program's expansion population, according to Idaho Department of Health and Welfare Director Juliette Charon.
Instead, Charon said, much of the extra expenses are coming from Idaho's basic Medicaid program.
"Which is for children and pregnant women," she said. "We're also seeing growth in disability-related services."
Charon cut Medicaid provider rates by 4% across the board last month in response to the surge in growth. But forecasts show lawmakers will need to chip in another $81.5 million in the current fiscal year to cover those expenses.
Public schools said they need $86.6 million to fully cover the student population this year, while the Idaho Department of Correction said out-of-state placements and medical costs hikes have added up to an extra $22.4 million over what it originally budgeted.
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