Presentation of Idaho Reports on Idaho Public Television is made possible through the generous support of the Laura Moore Cunningham Foundation, committed to fulfilling the Moore and Bettis family legacy of building the great state of Idaho.

With additional major funding provided by the estate of Darrell Arthur Kammer in support of independent media that strengthens a democratic and just society.

And by the Hansberger Family Foundation.

By the Friends of Idaho Public Television.

The Corporation for Public Broadcasting.

And donations to the station from viewers like you.

Thank you.

As we gear up for the 2026 legislative session, the budget is on everyone's minds.

Everyone knows the state needs to cut expenses, but how much to cut and whether or not it's a crisis is where you'll find the disagreements.

I'm Melissa Devlin.

The new season of Idaho Reports starts now.

Hello and welcome to Idaho Reports.

This week, former Representative Wendy Horman joins us to discuss her take on Idaho's current budget situation as well as her new role at the Office of Child Care at Health and Human Services.

But first, some notable news out of the Idaho Press Club's legislative preview on Thursday, when I asked Governor Brad Little if he would be open to repealing Medicaid Expansion to balance Idaho's budget.

No.

No, you're not open to it?

Well, we've got a lot of stuff to do with Medicaid, but, no, that's not.

One word answers.

That's all you're getting.

Later in the morning, legislative leaders responded to Governor Little's remarks.

You cut it in one place, we're going to shift the cost somewhere else, and hospitals are going to take it on the chin.

My biggest concern is if we don't figure out how to get this under control, it's going to start having impact on budgets that are important to me, like education.

So you've got to figure out how to stop this behemoth.

We've got to quit making up these funny numbers, and we got to delve in to find out what the realities are.

When we did go forward with Medicaid Expansion, we took away some of those other safety nets that were in place in the counties.

And by the way, the promise was to those counties and to the county property tax payer, this is going to help you get your property taxes down.

Ask Idaho taxpayers whether that's happened.

So when you get those that DOGE working group together, this is why this is a hot topic.

Whether it translates into an actual bill that gets legs, I don't think does.

We'll have much more from Thursday's legislative preview later on in the show.

But first, last month, Representative Wendy Horman, co-chair of the legislature's Joint Finance-Appropriations Committee, announced she would step down to accept a job with the federal Department of Health and Human Services as director of the Office of Child Care.

Since then, Speaker Mike Moyle appointed Representative Josh Tanner to chair the House Appropriations Committee, and Tanner has his work cut out for him, as does the rest of the legislature.

After last session's $450 million in tax cuts and federal tax changes in President Donald Trump's One Big Beautiful Bill, Idaho faces a revenue shortfall.

But the size of the projected gap is nebulous, anywhere from $50 million to 800 million depending on which office or think tank is doing the projections.

I sat down with Horman on Monday, her last day in the Idaho Legislature, and asked for her thoughts.

We are not in a financial crisis at all, in my opinion.

What we always do in JFAC is match spending to revenue.

And that's what will happen again this session.

You've said before and just now it's not a crisis.

It's not a rainy day.

There are others who disagree with you.

How concerned are you, though, about the legislature's ability to fund some of these constitutional services?

I'm not concerned.

The money is there.

If we had a zero increase budget and no increases at all, there are sufficient funds to pay for that.

Now, we do know there are some necessary and constitutional requirements around Medicaid, around our prison population, where there are some increases, health insurance increases, and we do need to pay for those.

But the funds, the funds will be there and we'll make adjustments in other budgets that don't have constitutional priority to them.

Public safety is another one that must be funded.

Public schools must be funded.

Now, we have declining enrollment there, so a decline in funding there doesn't necessarily mean a cut.

It just means there are fewer students driving fewer dollars.

There are other priorities that some agencies have, that might not meet constitutional muster but you've said before are pretty important.

Our producer Logan Finney has done some reporting on cybersecurity and how agencies pay for replacement technology.

Not in the Constitution, but you've worked on the cybersecurity issue before.

How concerned are you that we won't be able to pay to keep Idahoans' data safe?

That must be a priority.

The personally identifiable information that the state has, the health records or criminal records or other personal records, must be kept secure.

So those are the types of things where I'm confident that JFAC will continue to fund and protect Idahoans.

You've said the things that you view as important as constitutionally critical.

What would you recommend doing to get the budget back right side up to line up with that forecasted revenue?

So right now, what the agencies submitted in September is $555 million higher than what the governor's economist predicts we will have for next fiscal year, fiscal year 27.

So very few, if any, of those requests will be able to be granted, because we make sure we need to make sure we have sufficient funds for necessary expenses, increases in health insurance, prison population, Medicaid, those sorts of things, to pay for those.

And then we'll do what we can in other places.

Well I won't, but Representative Tanner, Senator Grow and the committee will make those decisions as necessary to make sure that the size of government fits the amount of revenue.

And just to clarify, when you say the agencies submitted budgets in September, are you talking about the original ones or the ones after the governor asked them to reduce by 3%?

That was after the governor made that 3% continuation of the request in the current fiscal year.

But also then he forwarded that to FY 27.

And yet when we were presented that in JFAC in November, it was still $555 million.

Did anything in those requests stand out to you as unnecessary?

Yes and no.

Agencies think every request is necessary, but it is the job of the legislature to assess what's nice and what's necessary.

And so, I don't want to call anything out specifically, but I know there's a proposal coming from ISP, for example, through a germane policy bill that I think is absolutely critical to maintaining public safety in the state, making sure we have the necessary troopers on the road.

That one to me is non-negotiable.

Making sure that the three branches of government, the governor's office and the legislature and the courts, have sufficient to carry out their constitutional responsibilities.

And so it's just going to be a matter of priorities this session.

We briefly mentioned the parental choice tax credit.

You addressed previous budget concerns about this program by saying that while you're in the legislature, the program will stay capped at $50 million.

Do you anticipate that holding this year with your departure?

Yes, I do, because the legislation specifically says we're not going to increase it until we have evidence showing demand.

We're not going to have that this year.

So I hope to see it stay right there and that future legislatures will evaluate demand and decide whether to decrease or increase it.

Is there a timeline in that statute about how much evidence you need, or is one year enough?

To say, it's good, we're doing a good job.

I think one year gives us a baseline data.

We'll continue to collect that, but it gives us baseline data about demand and who's using it, the incomes of people that are applying and that sort of thing.

We'll have more with Wendy Horman later on in the show.

On Thursday, Governor Little was asked about the possibility of increasing the cap on those tax credits for private education expenses.

That program needs to work.

The people who are advocates for it want it to work.

They don't want it to fail.

They don't want people buying hoverboards and video game controllers, because that is not a good look for them if they want to get more money into it or they want to maintain the money.

Joining me to discuss is Kevin Richert of Idaho Education News.

Doctor Jaclyn Kettler of Boise State University’s School of Public Service and Senate majority leader Lori Den Hartog.

Senator, you were a co-sponsor on the parental choice tax credit bill with former Representative Horman, as well as the now expired Empowering Parents grants.

There's been a lot of talk about fraudulent use of government grants or those that don't honor the original intent of the funding.

What safeguards are there with this tax program?

Really important difference is between the Empowering Parents grant program and the tax credit.

The structure is completely different.

One of the things that we can do when we pass policy is learn from what we have previously done.

And we learned some things through Empowering Parents.

And we made the eligible expenses for the tax credit much narrower, and tied to those four core areas of education.

And so, you know, the governor had made a comment about hoverboards.

And in the background, I was saying, you can't do that.

That's impossible.

So, you know, there's nothing like computers or any additional educational materials, things like that.

So curriculum and those kinds of things will be eligible.

But really, none of the extracurricular things that were eligible under Empowering Parents.

And we feel like that was a really important structural decision that we made in House Bill 93.

Wendy Horman had mentioned that statutorily, the legislature needs to see data on the program and whether or not a successful bill for exploring an increase in that $50 million cap.

What kind of data and how much would you like to see?

For me personally, I would actually like to see at least two years’ worth of data.

So as we head into this legislative session, the first application period will be opening this, you know, January 15th.

We won't have data from this first year until next year when the Tax Commission is required to prepare a report will have the required parent surveys, from parents who were in the program and have to complete those surveys to reapply.

And so not even by next session, we would have even the following session to see another year of who the applicants are, what their income levels are, how they're choosing, how they're spending those funds, what type of educational, opportunities that they're seeking for their kids.

So I think there's some really important data points for the legislature to consider.

And of course, we're having this conversation in the background of the current budget situation.

And earlier Thursday, legislative leaders were also asked about that budget.

Any cuts at this point are excruciating.

In fact, the cuts that have already gone into effect in the interim.

I'm getting calls every day from people who are suffering greatly from the 3% and 4% holdbacks to, say, caregivers and care providers to people with disabilities.

Our law enforcement is already sounding the alarm on the elimination of services for people with severe mental and behavioral health problems.

We already have serious problems and fallout from the cuts we've already made, and those cuts are going to get a lot more drastic given the severe revenue shortfalls we're looking at at a state level.

And I'm very concerned about it getting worse.

I mean, the first rule of holes is when you're in one, stop digging.

What we dealt with in ‘08-09 was way more draconian and tougher, and it took some time to work our way through it.

And we did a good job, and we got through it.

And we'll do the same here.

We're in good shape, not that much work to get there.

We'll get through this.

It'll be entertaining to watch, right?

Because what you have when you have situations this are everybody wants to tell you where the waste is in somebody else's budget.

Of course we want to do, you know, tax cuts to citizens when we can.

But in the last recession we had, it really wasn't our fault.

And now it's our fault.

And the governor talked about looking ahead and seeing the clouds on the horizon.

All I could think is that this legislature has seeded those clouds.

We've actually made them come in.

And that's what's really so upsetting, is no matter how we talk about it now, we've got to solve the problem.

We should never have been here in the first place.

We should have been managing better.

Kevin, you wrote on Thursday about the differences between the budget cuts during the Great Recession and the ones the state faces this year.

Oh, I think it's going to be entertaining, I would agree with the speaker on that.

We're going to get a lot of copy out of this.

But it's very different than it was in ‘08-09.

I mean, Mike Moyle was one of only four legislators who was there in ’08 and ‘09 serving in the legislature.

And maybe more fundamentally than that, it's not just the experience gap that makes this a difficult process.

This legislature is going to have to make permanent cuts and ongoing cuts in state programs, unlike we've seen in the past two budget crunches that we've seen.

In the Covid crunch and the Great Recession crunch, in both of those instances the federal government came in with a ton of money.

Over $1 billion during the Covid crisis.

Nobody's coming to Idaho's rescue on this budget situation.

I mean, the revenue and budget decisions that this legislature makes, they're going to have to make on their own.

Jaci, what's your take on the budget conversations from the past few months and the uncertainty about where those numbers might land?

Yeah, I mean, I think it adds a complication to all of this, right?

It's challenging to balance the budget even when you don't have a deficit.

So you're trying to prioritize, right?

What and where is the priority, and what is going to be cut.

And so this is really challenging to make those decisions.

And now you're trying to make decisions, the legislature will try to make decisions without fully knowing some details.

Yet our kind of estimates are still a little loose on different things, like how federal budget and federal tax changes will affect or be implemented in Idaho.

So there's still a lot of questions, I think, which, you know, sets up a pretty monumental task as we move into the session.

The Senate President Pro Tem Kelly Anthon was skeptical about repealing Medicaid Expansion.

We touched on this a little bit earlier in the show.

Where are you on Medicaid expansion and cutting Medicaid costs?

I think what's really important to think about in framing the Medicaid conversation is making sure that Medicaid exists for the people who absolutely need it.

As we think about people with disabilities, people who aren't able to work at all, people who have children with special needs and need access to those services.

So I think the state has a priority and an obligation to make sure that we can preserve that program for those reasons.

In the press conference this morning, we were talking about some of the things that the state was forced to do during the Covid era.

And to Kevin's point earlier, we've been in a very strange budget situation the last several years with the significant infusion of federal cash into the state of Idaho.

And so this year, frankly, as we right size many programs and many things- You know, we've asked the federal government for waivers for the Medicaid expansion program.

We haven't been as successful as some other states.

And so I think we still as we look at things like work requirements, I think we don't want to have disincentives for people to, you know, I think the speaker mentioned it this morning, people making decisions about working less so that they can stay on Medicaid expansion versus a really easy on ramp to something like the health care exchange.

And these are really important conversations.

Like the pro tem, I don't know where this conversation is going to go this session, but I do think the policy and the budget conversation certainly intersects as we look at things that we have to pay for and things that maybe we would consider not paying for as much in the future.

And I think there's going to be a wide diversity of opinions on what is necessary and what is nice, because we hear that a lot, right?

We need to look at when times are tough, looking at what's constitutionally necessary, and necessary for public safety, and what's nice to have but not necessary.

But there are 105 of you in that legislature, and I think 105 different opinions on what is actually necessary.

Are you confident that the Republican caucus in the Senate is going to be mostly on the same page as far as what's necessary?

I think so.

I think we have a really good handle on the things that government should be responsible for, and is constitutionally obligated for, and the bills that we have to pay.

And so to that end, you know, public education and public safety and existing Medicaid programs.

We have to do some of these things.

Now, does that mean we can't do some of them differently, or make other policy changes or reforms that need to be made in other areas?

Absolutely those will be things that we consider.

You brought up public education, Kevin, what are you going to be watching for when it comes to talking about the public education budget?

I think the big question about public education at this point is, does the K-12 budget continue to get through unscathed?

I mean, K-12 was the one part of state government that Governor Little carved out of the holdback in August, 3% across the board except for public education.

So at this point, K-12 has not been affected.

But when we start talking about the gap between agency requests and revenues, and we start to talk about the potential costs of conformity with the federal tax changes, how much longer can the legislature go and how much longer can Governor Little go without having to tap into K-12 funding to some degree?

Also, earlier this week, I asked Wendy Also, earlier this week, I asked Wendy Horman about her thoughts on federal childcare grants, as well as her new role at HHS.

So, at the time I accepted the position, which was the evening of December 16th, a lot of this national news had not yet broken, and that came out the week of Christmas.

And so, former budget director Alex Adams is now handling a lot of the things he had expected me to handle when I get there, undoing Biden-era regulations that seem to invite fraud rather than prevent it.

Really bringing a school choice mindset to child care, a focus on children and families rather than bureaucracy and government.

And so he's taking a lot of the actions that we had anticipated me taking, now, because of the urgency of the situation.

But I will continue that work and support him in the decisions he's making.

Last week, Senator Lenney and Representative Tanner sent a letter asking the Department of Health and Welfare to freeze child care grant funds in Idaho, citing, quote, inadequate enrollment verification, limited financial oversight, and insufficient inspection controls.

This was money that was appropriated in your committee.

Do you share those concerns about Idaho's system?

I think it's a very reasonable request.

It's what's happening.

It's what Alex has done at the federal level, is freeze those funds until they can assess program integrity and the validity of the how the program is operating or not operating.

And so I think it is a reasonable request, to make sure that Idaho is being preventative rather than reactive and get the assurances from the legislature.

This isn't the first time we've had to deal with alleged fraud in the Idaho Department of Health and Welfare.

If you remember the community partner grants, same division.

And so I think it's a reasonable request to make sure that those proper guardrails are in place in Idaho.

And there is a difference between potential vulnerabilities and proven fraud.

Is the potential for exploitation enough to pause distribution of these funds as opposed to strengthening the system and auditing in real time?

So one of the things that actually Health and Human Services in D.C.

did today, Director Adams, is change the reporting requirements from being enrollment-based to attendance-based, and where you're now going to have to verify attendance instead of just saying we have these many children enrolled and so we're going to give you this much money, we don't care if they're there or not.

Well, that's inviting fraud.

And so I think those are reasonable things to do in Idaho as well.

We know the governor cares a lot about attendance in school, paying on attendance versus enrollment, because we want to make sure the kids are there and that they're learning.

And so I think those are very reasonable steps to require.

We don't necessarily need the feds to tell us to do that, although we have been told to do that now, to guard against fraud.

Are there guardrails or is there accounting within these new guidelines for things like influenza spikes?

We're in the middle of influenza season right now, and I know that my child's daycare will often have a lot fewer kids in there if there are a lot of people getting sick.

As you know, daycares and classrooms are little petri dishes, with adorable little vectors.

But at what point does that dock a daycare owner or a child care facility operator for taking care of their sick kids, keeping them home?

I have not actually read the new regulations, and so I can't tell you any specifics about them.

I know that the Biden-era ones were rescinded today.

I believe I will be participating in creating the new ones.

And so there are always.

You want to establish the rule first, and then you want to be able to deal with exceptions, as we did during the pandemic with public schools.

We switched temporarily over to enrollment.

But, I think you want to set a fraud prevention rule in place first, and then deal with exceptions as they happen.

A lot of these concerns about fraud, and to be clear, these fraud allegations first came to light in 2022 in Minnesota under the Biden administration with, I think, 47 people being charged in that first wave.

But now we're seeing videos on social media with people showing up at daycares with cameras during business hours and knocking on doors, asking to see inside the facility with children there.

What exactly should daycare owners do if people with cameras knock on their doors and asked to look inside the facility and put their eyes on kids, lest they be accused of fraud?

Yeah, you always want to protect the identity of children, minor students.

So I think it's reasonable to protect identities, but I think it's equally as reasonable to demand records that prove the kids were there.

And if they can't prove that, which is showing to be the case with some of these daycares, then I think you do need to ask different questions and require different verifications.

Should that verification come in the form of people knocking on doors who are not affiliated with state or city inspectors?

So, I'm a huge fan of citizen journalism, frankly.

I've had concerns with how the mainstream media has reported things for a number of years, and it's only grown the longer I've been in the legislature.

So I'm actually a big fan of independent citizens, as is happening in Idaho right now, if you look on X, you will see that there are people out there trying to verify if these are actual businesses or if they might be fraudulently created and funded.

And as long as they're not violating private property rights or violating the identity of minors and children, then I don't think that's a terrible thing.

But it needs to be done in the right way and in a safe way.

What is that right way and safe way?

Protecting children's identities.

Allowing them to report to the proper authorities if they have specific concerns about a specific facility.

As you know, the Department of Health and Human Services, Director Adams has, or I should say, Secretary Adams now, not Director anymore, created a fraud reporting line.

And it's kind of a crowdsourcing way of saying, look, it's like what we see in the airport, if you see something, say something.

And that's not a bad way to find fraud in government.

You can see the full interview with Wendy Horman online at Idahoreports.org.

Jaci, there are two questions here.

Whether or not there is fraud.

And to be clear, there's been fraud in many grant programs before, healthcare, business relief loans, education certainly.

And fraud is bad.

I think everybody agrees with that.

Then there's a second question of what's the best way for citizens to confirm that federal money or state money is going to legit causes?

Yeah, I mean, we definitely want to evaluate for fraud, right?

Catching fraud is important for ensuring government and public resources are used appropriately, and that the program is able to fulfill its purpose.

It's going to help increase trust, right.

And that's an important role.

for our governments, including our state governments, to evaluate and provide oversight of existing programs.

Look to see is money being used appropriately.

You know, how is this program going?

And one thing that sometimes can happen is there is kind of a fire alarm effect, right, of like, oh, wait, we think there's an issue here.

And so that could be where our constituents maybe are contacting their elected officials to be like, hey, I'm a little worried here.

Can you look into this?

Which people should do?

Right.

Absolutely.

We've got about a minute left, very briefly.

We talked a lot about the budget when it comes to policy.

Kevin, what are you going to be looking for?

Well, I think are a lot of policy issues in the education front that maybe are not related as much to money.

What happens with virtual education?

How does this legislature approach that?

What happens with the medical education debate that we've seen unfold, not just during the 2025 session, but in the off session?

There are a lot of education issues that are somewhat decoupled from the budget, but everything's going to be coupled to the budget to some degree this year.

Very briefly.

Any policy priorities for you?

The budget is my is my top priority.

Making sure our members have the information that they need to make good decisions.

And I had mentioned earlier, in my mind this is a solvable problem.

Like, we can do this.

Idaho is well positioned to deal with the current situation that we're in.

We will get the data that we need.

We will work to understand the one big beautiful bill, and we'll get a balanced budget passed at the end of the day.

All right.

Thanks so much for joining us.

And be sure to watch us live at the state of the state.

1 p.m.

Mountain Time on Monday.

Presentation of Idaho reports on Idaho Public Television is made possible through the generous support of the Laura Moore Cunningham Foundation, committed to fulfilling the Moore and Bettis family legacy of building the great state of Idaho.

With additional major funding provided by the estate of Darrell Arthur Kammer in support of independent media that strengthens a democratic and just society.

And by the Hansberger Family Foundation.

By the Friends of Idaho Public Television.

The Corporation for Public Broadcasting.

And donations to the station from viewers like you.

Thank you.