In January, Gov. Brad Little and the Legislature could be sitting on a staggering surplus of close to $900 million.
A new state economic report closed the books on the 2020-21 budget year, which ended June 30, and brought the record-setting surplus into sharper focus.
The surplus could have big implications for education. The fortunes of K-12 and higher education can rise or fall based on the state’s general fund budget — and the tax collections that fill Idaho’s coffers. Perennially, K-12 receives the largest share of the state budget, or close to 50 percent of the general fund. When the state’s four-year and two-year colleges are added to the equation, education’s slice of the general fund exceeds 60 percent.
As the budget year drew to a close, Little allowed himself a victory lap.
“Idaho’s economic numbers show even in the middle of a global pandemic, conservative governing works,” he said in a news release. “We have worked hard to curb government spending while providing tax relief and making investments where they count. We are seeing the impact of those conservative principles in action.”
A few of Tuesday’s key numbers:
- The 2020-21 budget year crossed a milestone never seen in state history. General fund tax collections exceeded $5 billion for the first time.
- The budget year ended on a high note. June revenues came in at $465.8 million, beating projections by $84.4 million. It was a strong month across the board. Sales taxes, corporate income taxes and individual income taxes — the three main sources of state revenue — all beat forecasts. That big month pushed the surplus closer to the $900 million mark; just a month earlier, state analysts were forecasting a surplus of slightly more than $800 million.
- Sales tax collections continued their spring surge. Since March, when COVID-19 vaccinations became more available and Congress passed its third coronavirus stimulus law, sales taxes have exceeded forecasts by more than 25 percent. “Idaho’s consumers may be readjusting to an economy with more avenues for spending,” the state Division of Financial Management said in its monthly revenue report.
The large surplus sets up a showdown over competing interests.
Without spelling out specifics, Little has said he wants to use the surplus to cover tax cuts, transportation programs and investments in education.
But even within education, the money could flow in any number of directions — from pay raises for teachers and staff to private school scholarships, from pre-kindergarten and all-day kindergarten to higher education.
The surplus also could define a contentious, election-year 2022 session — as Little is expected to seek a second term, Lt. Gov. Janice McGeachin seeks to oust Little in the May Republican primary, and all 105 legislative seats are on the ballot.