Bill Description: Senate Bill 1435 appropriates the maintenance budget for Health and Human Services (HHS).
Analyst Note: This legislation includes a reduction of $14,000,000 in Federal Funds to the base for a onetime reduction of unspent money in the Idaho Child Care Program (ICCP). It also includes an ongoing reduction to Res Hab provider rates as called for by H863, characterized as a negative ongoing enhancement in the SoP of $64,963,200 in all funds, including $21,008,900 in general funds. This will be rolled into the base next year.
Rating: 0
Is the continuation or growth in ongoing spending, if any, inappropriate for the changes in circumstances, scope of the agency, or current economic environment? Conversely, is the continuation or growth in ongoing spending appropriate given any change in circumstances or economic pressures?
Including new reductions, this bill would reduce the general funds base by $26,112,100, increase the dedicated base by $1,476,300, and decrease the federal funds base by $74,117,500 for a total base reduction of $98,753,300. The total budget decreases from a FY26 original appropriation of $6,014,852,600 to a new FY27 maintenance appropriation of $5,663,172,000, a decrease of 88.87 FTP and $351,680,600, or 5.8%. Note that most of the reductions have to do with the end of federal funding for projects as they are completed and do not include enhancements, which distorts the comparison.
The particularly large drop from the FY26 original to FY27 maintenance budget is mostly attributable to the removal of over $130 million in federal and over $50 million in dedicated and general fund one-time appropriations. Note the relatively small total base reduction.
These agencies implemented a 4% provider rate cut as their contribution to the governor’s holdbacks. However, from FY20 to FY27 this group of agencies has also grown significantly faster than inflation and population growth would prescribe. A maintenance budget must begin with the correct baseline before its growth or reduction can be rationalized as either positive or negative. For this budget, not only is the baseline too high, but it has not participated in reductions to the same degree as other agencies.
Additionally, these reductions are illusory. The Department of Health and Welfare’s Indirect Support Services unit will be receiving over $185 million per year through the federal rural health transformation fund. Due to the fact DHW spending increases are mostly statutorily mandated benefits increases, the term maintenance budget loses significance. Mandatory enhancements, meaning benefit payments, are set to increase by hundreds of millions more in FY27. These enhancements are functionally required, and should be included in the maintenance budget for all intents and purposes.
This budget fails to grapple with the runaway costs of entitlement programs, which have been spared from all reductions outside of the 4% provider rate cut implemented by the department itself. This budget implemented neither the DOGE recommendation (repeal medicaid expansion) nor any of the governor’s suggestions. Given the unsustainability of the programs contained in the department of health and welfare at both state and federal level, this budget does not take seriously the consistent cost overruns that threaten the financial solvency of the entire agency.
(-1)
Does the budget fund any programs or line items that violate the spirit or the letter of either the U.S. Constitution or the Idaho Constitution? Conversely, is this budget restricted to programs and line items that better align the agency with the spirit and the letter of both the U.S. Constitution and the Idaho Constitution?
The ICCP is currently operating as a non-statutory program, authorized nowhere in Idaho Code and governed by rules promulgated by the DHW. This abandons the very core concept of our constitution and our state, as well as our republic.That being the fact we are a nation of laws, and those laws are enacted by representatives who were elected by the people. The continued operation of the ICCP is an affront to the concept of self-government and makes a mockery of the legislature itself as well as the idea we are governed by law.
By defunding the ICCP’s year one capacity expansion ($14,000,000 FF) this legislation takes a step toward halting the expansion of this unlawful program. This funding was supposed to be spent in FY26, but the program was halted due to fraud concerns.
This legislation also included additional language. This language stated that the DHW would undertake a rules review to determine if they had the authority to operate certain (mainly the ICCP) programs that rely on their general authority found in Idaho Code Section 56-202.
This was in response to a March 9th letter from the director of the DHW stating that to date the ICCP “has been administered via administrative rules and budget intent language. A program of this size and magnitude without a clearly defined statute is untenable. Further, DHW has determined that the authority in code we have historically relied upon for rulemaking is insufficient to sustain any of the ICCP rules.”
The budget language requested that in cases “where the department cannot explain how an identified rule section expressly fulfills a duty outlined in Section 56-202…” they must either update the rule to reflect the proper section of Idaho code or “b) steps to repeal the rule section.” Further, when a rule section is identified as needing to be repealed “the department shall not expend any appropriation in the exercise of the rule.”
The director’s own analysis in conjunction with this language could have led to the end of this lawless program, if this legislation were adopted. However, on March 19th the Attorney General of Idaho determined that “DHW has sufficient legal authority to continue operating ICCP.”
This likely renders the language null and void. However, it is an open legal question whether “sufficient legal authority” is the same standard as “expressly fulfills a duty.” The legislature’s reduction of ICCP funds and attempt to curtail an unconstitutional program are a step toward ending the program, and it is unfortunate the Attorney General is legitimizing the agencies’ lawless and unconstitutional action, when even they admitted they did not have the authority.
(+1)
