Gov. Brad Little at press conf 10-9-20 by Betsy

Gov. Brad Little speaks during a press conference in the state Capitol’s Lincoln Auditorium on Friday, Oct. 9, 2020; at left is sign language interpreter Steven Stubbs.

BOISE — Idaho is on track to roll up a historic budget surplus of well over half a billion dollars, even as the coronavirus pandemic rages and the state’s economy weathers everything from job losses to business closures due to the pandemic.

“If this holds, it would be the largest surplus in state history,” Gov. Brad Little said at a news conference Friday at the state Capitol. However, he didn’t announce any change in the budget cuts he’s already ordered this year in anticipation of COVID-19-related shortfalls.

“I took steps to rein in government spending so that we could be prepared for the worst,” the governor said. “We are optimistic but cautiously optimistic. We will continue to track revenue and be conservative until we see what happens in the fall and winter months.”

“Idaho still has about $130 million in CARES Act funding available to deploy across Idaho in the coming months to help mitigate the impacts of COVID-19 in our state,” he noted. “I’m optimistic that if we collectively continue our efforts to mitigate COVID-19, we will have enough money in the state budget at the end of the fiscal year to provide tax relief to Idahoans and to make much needed investments,” including in transportation infrastructure, education, and water projects, he said.

Little proactively imposed 5% holdbacks across the state budget at the start of the fiscal year July 1, cutting it $200 million below where lawmakers set it during this year’s legislative session. State economists expected general fund tax revenues to take a big hit this year — possibly dropping by as much as 14% — due to impacts from the coronavirus pandemic. But Idaho’s tax revenues have instead far exceeded forecasts since July 1, exceeding even the pre-COVID forecasts the state had set.

Little already has restored the $99 million cut from K-12 schools as part of the holdback by tapping CARES Act funds, and on Thursday, he sent a memo to state agencies ending hiring and compensation freezes that had been imposed along with the holdbacks. That will allow agencies to give merit increases and pay increases needed for hard-to-fill positions, but not to give across the board raises to state employees. Alex Adams, the governor’s budget director, said the governor will make recommendations to lawmakers when they convene in January with regard to previously approved funds for raises, which are known in state budget parlance as CEC or “change in employee compensation.”

Idaho’s state tax revenues for September again came in much higher than expected — $33.4 million higher, the third straight month of big overages.

Legislative budget analyst Keith Bybee calculated that with the latest figures, and if the trend holds, Idaho’s ending balance at the end of the current fiscal year next July 1 would come to $537.1 million, $482.2 million more than lawmakers expected at the close of this year’s legislative session.

Idaho’s general fund tax revenue in September came in at $381.2 million, which is 6.9% or $24.6 million more than the state collected in September 2019. The revenues beat forecasts for the month by $33.4 million or 9.6%; for the fiscal year to date, just three months in, Idaho is $102.5 million ahead of its revenue forecast, or 10.2%; and 18.4% above where it was a year ago.

All major sectors of tax revenue were up, with individual income taxes leading the way. The state’s forecast had that sector dropping by 5.4% in September; instead, it was 10.8% higher than last September.

“This is a major testament to Idaho’s business community,” Little said. “Thank you, Idaho businesses, for instilling confidence for the public to engage in the economy and for your workers to return to work safely.”

While lauding Idaho’s economic rebound, Little noted that COVID-19 cases are again on the rise in Idaho, with winter looming. “We simply cannot continue that trajectory if we forget how we got here,” he said. “Healthy people, open schools and a strong economy are not separate. They are all the same.”

He called on Idahoans to continue to take precautions to slow the spread of COVID-19. “Let’s do all we can,” he said. “Please wear a mask around others as much as possible. Keep your distance from people who aren’t in your household. Please do. … Do it because it protects yourself and all others that are around you. Please do it because it’s the best way to show love for your neighbor. Do it because we want our kids to stay in school. Do it because it’s the right thing to do. Our personal and economic well-being depends on it.”

The revenue figures also showed that sales tax collections continue to rise, and that a special tax relief fund lawmakers created is continuing to build; it’s where all money from online sales taxes is going. That fund swelled by another $9.8 million in September.

The fund has now collected more than $113 million, though $39.3 million was transferred to the governor’s emergency fund for the coronavirus pandemic. That may still be paid back from federal CARES Act funds; the state hasn’t directed any tax relief from the fund, so its balance simply accumulates.

Betsy Z. Russell is the Boise bureau chief and state capitol reporter for the Idaho Press and Adams Publishing Group. Follow her on Twitter at @BetsyZRussell.