Idaho Gov. Brad Little issued plans Monday to balance the state budget by cutting state programs and reducing Medicaid spending without repealing Medicaid expansion.
Read the full text: Idaho Gov. Brad Little gives the 2026 State of the State address
Little kicked off the 2026 legislative session by delivering the annual State of the State address at the Idaho State Capitol in Boise and submitting budget recommendations to the Idaho Legislature.
During the approximately 30-minute address, Little also called for conforming with the federal tax changes championed by President Donald Trump.
“Our plan uses a responsible mix of one-time and ongoing spending reductions to keep the budget structurally sound,” Little said during the speech. “Across state government, executive agencies will tighten their belts. We’re renegotiating contracts to save money. We’re reprioritizing initiatives. We’re finding operational efficiencies, and we will make disciplined use of cash balances and interest earnings. All of this serves to limit the impact on Idahoans as we right-size government.”
Governor: Idaho is well positioned to ‘weather the revenue challenges ahead’
Heading into the 2026 legislative session, Idaho has faced revenue and budget shortfalls following five years worth of tax cuts approved by the Idaho Legislature that reduced state revenue by a cumulative total of $4 billion, according to the nonprofit Idaho Center for Fiscal Policy.
The most recent state budget reports issued prior to the new legislative session projected Idaho would end the current fiscal year 2026 with a budget deficit of $40.3 million. For next year, fiscal year 2027, state officials said Idaho could need to come up with an additional $600 million to $1 billion for the state budget.
To avoid a budget deficit, Little recommended a series of cuts, funding shifts, freezes and reversions.
“A combination of factors has shifted us from years of record budget surpluses – driven by rapid population growth, business expansion, and one-time federal funds – to a period ahead that demands restraint,” Little said during Monday’s speech. “Thankfully, the way we have governed in recent years has positioned Idaho to weather the revenue challenges ahead.”
Little recommended several spending cuts and transfers, including:
- Removing $275 million in funding from the Idaho Transportation Department’s strategic initiatives fund, including $110 million for local highway districts;
- Making the 3% budget cuts Little ordered last summer permanent, reducing spending by an estimated $120 million annually;
- Reducing funding for Medicaid expenses by $45 million by making the 4% reduction in Medicaid provider rates ongoing and reducing services by an additional $22 million.
- Removing $30 million in funding for empowering parents grants, a program the Idaho Legislature ended last year;
- Saving an estimated $20 million in personnel costs by taking back funding for more than 100 state positions that have been vacant for more than six months;
- Pulling back $10 million in funding for local drinking water and wastewater projects through the Idaho Department of Environmental Quality;
- Saving $9.5 million by declining to fund the enrollment workload adjustment for Idaho colleges and universities in fiscal year 2027.
Idaho governor recommends leaving Medicaid expansion in place
Little did not recommend dipping into the state’s main savings account, the Budget Stabilization Fund, to balance the budget.
“Taken together, these actions position us to achieve a balanced budget in the coming years and maintain confidence in Idaho’s economic future,” Little said during the speech.
In addition to the cuts, Little also recommended declining to provide raises for state employees in fiscal year 2027 and did not recommend any new money for the Idaho Department of Lands to fight wildfires on state lands.
“Folks, some of these budget decisions are tough, but we will emerge stronger in the long run because of them,” Little said. “This is what financial responsibility looks like – planning ahead and living within our means.”
‘It’s Groundhogs Day:’ Idaho Legislature to explore repealing Medicaid expansion — again
As Little delivered the speech, hundreds of Idahoans wearing red T-shirts that read “Medicaid unites us” filled the rotunda and the hallways at the Idaho State Capitol to voice support for preserving Medicaid.
More than 60% of Idaho voters approved Medicaid expansion at the polls during the 2018 general election. As of December, Medicaid expansion provided health insurance to about 85,000 Idahoans who did not qualify for traditional Medicaid. Medicaid is one of the largest programs in the budget, but the federal government pays for 90% of the benefits while the state pays the remaining 10%.
In December, the Idaho Legislature’s DOGE Committee recommended repealing Medicaid expansion and House Speaker Mike Moyle, R-Star, said repealing Medicaid expansion is on the table this year.
But Little did not recommend repealing Medicaid expansion. Instead, he presented Idaho legislators with options for trimming Medicaid funding without repealing Medicaid expansion.
“Of course, the health and wellbeing of our people is the key to achieve lasting success,” Little said, referencing the name of his budget plan, Enduring Idaho . “That’s why our Enduring Idaho plan safeguards access to healthcare, particularly in rural communities. We know the affordability and accessibility of healthcare tops the list of concerns for Idahoans right now.”
Little’s budget officials said the 2027 state budget Little proposed Monday is driven largely by so-called maintenance of operations budgets that are merely intended to keep the lights on at state agencies. Overall, Little’s budget officials said the fiscal year 2027 budget reduces state spending by 0.5% compared to the current state budget.
Idaho Capital Sun is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Idaho Capital Sun maintains editorial independence. Contact Editor Christina Lords for questions: info@idahocapitalsun.com.