Little 'betting' on Idaho's economy

BOISE — Gov. Brad Little’s budget recommendation, as is always the case with early budget frameworks, makes assumptions about where the state economy and growth will be heading over the course of the next year. 

For 2026, his "Enduring Idaho" plan arrives after years of budget surpluses that have allowed the state to implement infrastructure investments, tax cuts, and surpluses in the hundreds of millions of dollars. This year, however, the state is poised to operate off of far slimmer margins: to the tune of $25 million in fiscal year 2027, if the governor’s proposed spending cuts are adopted. 

With comparatively limited margin, both Little and Division of Financial Management Administrator Lori Wolff have said the state is “betting” revenues will improve over the next year compared to revenues for this fiscal year, which declined a projected 6.2%. 

Little’s budget framework uses a projection from DFM that state revenues will increase 3% compared to where they were in fiscal year 2026. This revenue increase shrinks to 0.8%, however, when incorporating the cost of the tax cuts within the One Big Beautiful Bill Act. Little's budget puts this number at $155 million, the midpoint of the cost estimates provided by the Idaho State Tax Commission. 

The Economic Outlook and Revenue Assessment Committee, which provides a revenue number that informs the state's budget, put forward projections on Thursday more optimistic than those used by Little. In a 10-8 vote, the committee opted for a projection that would see this fiscal year end with $5.665 billion for this fiscal year and $5.816 billion for fiscal year 2027.

Compared to Little's forecast, this is 2.8% higher for fiscal year 2026 and 2.4% higher for fiscal year 2027.

Rep. Josh Tanner, R-Eagle, characterized the governor's revenue numbers as being overly pessimistic. "We still see a little bit of tightening in the economy, but not as drastic as what the governor has actually indicated," he said.

Sen. Camille Blaylock, R-Caldwell, was one of two committee members who put forward revenue projections that fell below the governor's forecast.

She conversely expressed "surprise" at the vast majority of the committee members having revenue projections several million dollars over what the governor recommended in his budget and cautioned if the committee were too optimistic in projecting revenue, "we will be upside down as we are this year."

A possible indication as to what lies ahead for Idaho's economy came from EORAC on Wednesday, when the committee heard from state and private economists about where the economy is headed in the 2026 calendar year and beyond.

The economists broadly provided assessments that painted a picture of fragility within the nation’s economy, but strength within Idaho.

For the nation, positive GDP growth in the last quarter has arrived alongside gradually increasing unemployment, a spending down of household savings and an decline in consumer sentiment, particularly among those with lower incomes, Robert Spendlove, Zions Bank’s economic and public policy officer, said.

“Even with a lot of this weakness around the country,” Spendlove said, “our region continues to be relatively strong and resilient in the face of some of this economic uncertainty."

WHERE IDAHO’S ECONOMY IS HEADED

Sam Wolkenhauer, an economist with the Idaho Department of Labor, said while the national economy has shown contradictory signs of a soft labor market coupled with booming GDP, this “analytical confusion” is not present in Idaho. 

For Idaho, the labor market is not showing “signs of distress” with an unemployment rate that has held steadily at a low rate. A year ago, Idaho’s unemployment rate was 3.8% and today that rate is 3.7%. The state has been holding at this “abnormally low range” since 2016, with the exception of a few months during the pandemic, Wolkenhauer said.

Other positive signs stem from the state being net positive for migration and high population growth relative to the nation. Current Idaho Department of Labor forecasts indicate the state will continue to grow at a stable rate. Idaho’s labor market is expected to add 21,000 jobs by the first quarter of 2027, a 1.2% annual increase with the largest industry growth stemming from the health care and social assistance sector. 

What could slow down is the rate of wage growth within the state. Department forecasts also indicate total incomes will grow from $52.6 billion in the second quarter of 2025 to $55.5 billion in the second quarter of 2027. This represents a significant cooling from the wage growth seen in the wake of the pandemic, as first-quarter wages in 2020 were sitting at $34 billion, well below present income values.

Wolkenhauer said this should be understood as a departure from the “super-heated” economy in 2022 and 2023 when demand for labor far outpaced availability. While wages are predicted to continue to grow over the course of this year, it will be at a rate more similar to Idaho’s pre-pandemic economy, a healthy but “more moderated” labor market.

AGRICULTURE OUTLOOK

The committee also heard from Brett Wilder, an assistant professor within the University of Idaho’s Department of Agriculture, to provide an assessment of the agriculture industry. For Wilder, the agricultural industry represented a tale of two different products: crops and livestock.

The pressures faced by the industry in recent years were highlighted in a December agriculture summit led by the American Farm Bureau Federation. Among these concerns were the diverging trends in farm infrastructure costs and crop prices, with feed, fertilizer and machinery increasing dramatically in recent years while crop prices have either not kept pace or dropped in price. Wilder provided a similar appraisal Wednesday. 

According to the United State Department of Agriculture’s National Agriculture Statistics Service, a variety of crops returned lower cash receipts in Idaho last year including barley (down 6%), potatoes (down 12%), sugar beets (down 17%), and wheat (down 5%). Wilder said a large driver for this was the result of speculative price increases in 2022 due to concern the war in Ukraine would mean a “breadbasket of crops” would be lost.

When this did not materialize, it resulted in the agricultural sector having an “extreme glut of basically all commodities," Wilder said.

Despise these negative trends for crops, total agriculture cash receipts were up slightly for the year, from $11.8 billion in 2024 to $12.1 billion in 2025. This was driven by the significant increase in receipts for cattle and livestock, each up 18% on the year. Between cattle, milk and other livestock, these sectors accounted for $8.195 billion or 68% of the total cash receipts, the first time it has ever accounted for this size of the returns in the industry, Wilder said.

With these disparate outcomes in mind, the state is poised to see two different trends over the course of this year: livestock receipts are expected to retreat from their current highs but stay strong through the year while crop receipts are expected to be squeezed by the aforementioned proliferation of crops in years past that has dramatically increased global supply and in turn lowered crop prices for the state, Wilder said.

In spite of the struggles surrounding crop over-supply, cattle and livestock has nonetheless been able to serve as the driving force in cash receipts from the industry’s exports, which grew to a record $3 billion in 2025. While these were the product of agreements forged in 2024, Wilder said the federal tariff policy could have an impact on negotiations that may not be visible until this calendar year.

“It is my assessment that trade is continuing to happen,” Wilder said, “but I would not be surprised if 2026 is not another all-time high.”