Idaho’s state revenue came in $21.1 million below forecast in May, a shortfall driven largely by underperforming individual income tax collections — though officials say the fiscal year as a whole remains on solid footing heading into its final weeks.

Total May collections reached $367.1 million, falling 5.4% short of projections. Individual income tax receipts missed the mark by $30.9 million, offsetting stronger-than-expected performances in both sales and corporate income tax categories, which each came in above forecast for the month.

Year-to-Date Picture Remains Positive

Despite the May shortfall, the state is still projected to close fiscal year 2026 with a positive ending cash balance of $72.4 million. That cushion has narrowed, however — one month earlier the projected year-end balance stood at $94 million.

Lori Wolff, administrator of the Idaho Division of Financial Management, offered measured reassurance. “Although May revenues were about $21 million below forecast, overall collections for the fiscal year remain strong and are running $155 million ahead of projections,” she said.

The fiscal year ends June 30, giving the state one remaining month of collections before the books close.

Legislative Budget vs. DFM Projections

A notable gap exists between how legislative budget writers and the Division of Financial Management view expected revenues. The legislature’s budget projection runs $152.5 million higher than the DFM’s own projection — a divergence that could shape how much flexibility lawmakers believe they have as budget discussions continue into the next session.

Wildfire funding has emerged as a specific pressure point, with state officials citing it as a concern for the state’s financial position. Idaho’s exposure to wildfire suppression costs adds an element of unpredictability to year-end and near-term fiscal planning. Efforts to manage federal timber resources in the region — including a large-scale emergency timber project spanning millions of acres across Idaho and Montana — reflect the broader resource management challenges facing state and federal agencies in the West.

Tax Cuts and Agency Reductions Shape the Landscape

The revenue picture is unfolding against a backdrop of deliberate policy choices made over the past several years. Idaho lawmakers have approved roughly $4 billion in cumulative income tax reductions over the last five years, moves intended to promote economic growth and return money to taxpayers but which have also reduced the revenue baseline against which forecasts are measured.

During the 2026 legislative session, the legislature also passed a bill to align Idaho’s tax code with federal tax changes, carrying an estimated cost of $155 million. That measure adds further near-term pressure on receipts.

On the spending side, state agencies have absorbed significant cuts. Most departments saw budgets trimmed by 4% in fiscal year 2026, with a deeper 5% reduction slated for fiscal year 2027. Those reductions were implemented to bring spending in line with a more cautious revenue outlook, even as actual collections have largely run ahead of the DFM’s baseline projections.

What Comes Next

With June 30 marking the close of the fiscal year, state finance officials will be watching final-month collections closely. The remaining gap between the legislature’s more optimistic revenue assumptions and the DFM’s projections could influence the starting point for next session’s budget negotiations.

If the year closes near the current $72.4 million positive balance estimate, it would represent a manageable — if tighter — position compared to recent fiscal years. A further erosion in June collections, however, combined with wildfire suppression demands, could compress that cushion further before the new fiscal year begins.

Idaho’s broader fiscal management has drawn attention in other areas as well. The state recently ranked among the top performers nationally for accuracy in administering public assistance programs, with Idaho earning second place in the country for SNAP payment accuracy — a sign of administrative efficiency that state officials have highlighted amid ongoing budget pressures.