MOSCOW, Idaho — The Idaho Senate has passed a rewritten health and human services budget that includes deeper cuts to Medicaid disability services than an earlier version that failed on the Senate floor, a move that has drawn criticism from at least one Republican lawmaker who says the reductions amount to punishment for the state’s most vulnerable residents.
Senate Bill 1435, which replaces the previously rejected Senate Bill 1375, represents the fiscal year 2027 maintenance of operations budget for the Idaho Department of Health and Welfare and the State Independent Living Council. The legislation reduces the general fund portion of the state budget by $68.4 million, or 5.6 percent, and cuts all funding by $351.7 million, or 5.8 percent compared to the prior fiscal year.
For Latah County residents who rely on state health and welfare services — including Medicaid recipients, families with disabled dependents, and patients served through programs tied to state funding — the budget changes could have tangible consequences in the months ahead.
Idaho Rejects Tens of Millions in Federal Funds
One of the most significant aspects of the new Idaho budget is its rejection of federal matching dollars. The rewritten budget incorporates an additional $21 million in new state-level cuts to Medicaid disability services. Because Medicaid operates as a federal-state partnership, those state-level cuts trigger a loss of an additional $44 million in federal matching funds, bringing the total combined impact to nearly $65 million.
The cuts stem from the incorporation of House Bill 863, which reduces provider rates for residential habilitation programs — services that help individuals with developmental disabilities live and function in community settings. These programs support some of Idaho’s most medically fragile residents, including those with intellectual disabilities and complex behavioral needs.
The budget also includes a one-time removal of $14 million in federal funding, compounding the overall financial impact on Idaho’s health and welfare infrastructure.
For communities like those across Latah County, where residents often depend on a limited network of service providers and where Gritman Medical Center serves as a regional healthcare anchor, reductions in provider reimbursement rates can translate directly into reduced service availability or provider departures from the market.
Republican Senator Calls Cuts ‘Punishment’ for Vulnerable Idahoans
The original budget, Senate Bill 1375, failed in the Idaho Senate on March 12 following pointed remarks from Sen. Jim Guthrie, R-McCammon, who challenged his fellow lawmakers to reconsider broad across-the-board cuts being applied to state agencies and departments. Guthrie called the moment a defining one for the Legislature and urged members to “do better.”
The rewritten budget that emerged, however, went further than the one Guthrie had criticized. He voted against the new version as well.
“I felt we could have done better than what was contained in Senate Bill 1375, but what we have done before us is a replacement bill that cuts an additional $64,963,200, and it feels to me like punishment for not conforming to Senate Bill 1375,” Guthrie said on the Senate floor. “I don’t know how else to look at it. If we had the money for Senate Bill 1375 two weeks ago, where did that money go today? The problem is we’re not really punishing ourselves. We’re punishing Idaho’s most vulnerable.”
Guthrie’s remarks represent a notable moment of intraparty friction in a Legislature dominated by Republicans. His concerns echo those raised by disability advocates and healthcare providers across Idaho who have warned that cuts to residential habilitation programs could force some individuals out of community-based care and into more costly institutional settings.
While fiscal discipline and responsible budgeting remain critical priorities for state government, critics of these particular reductions argue that cutting programs that serve individuals with disabilities — while simultaneously forfeiting federal matching dollars — does not represent sound financial stewardship. Idaho taxpayers effectively leave federal funds on the table while reducing care for residents least equipped to absorb those reductions.
Statewide coverage of Idaho’s legislative session and budget deliberations is available through Idaho News. Additional reporting from across the Idaho News Network can be found at IdahoNewsNetwork.com.
What Comes Next
Senate Bill 1435 now moves forward in the Idaho legislative process. The budget will need to be reconciled with any House-passed versions before being sent to Gov. Brad Little for his signature or veto. Disability advocates, healthcare providers, and families who rely on residential habilitation services are expected to continue pressing legislators for reconsideration of the rate cuts embedded in House Bill 863. Latah County residents with questions about how these changes may affect locally available Medicaid services are encouraged to contact the Idaho Department of Health and Welfare or reach out to their regional legislative representatives. Latah County News will continue monitoring the progress of this budget as the 2026 Idaho legislative session moves toward adjournment.