Idaho’s Departments Aren’t Banks – Nor Legislatures
Did you know that many Idaho government agencies are sitting on hundreds of millions of your tax dollars with no obligations or direction on how to spend them? Single departments are sitting on cash balances large enough to cover the State of Idaho’s so-called deficit, itself a symptom of government excess. Money just sitting there, “unobligated,” sloshing around like a [gasp] slush fund. This shouldn’t happen in Idaho. Government should never take money (by force) from taxpayers unless there is a stated need, a clear approval process, and a plan to refund any excess monies to Idaho households already struggling under inflation and over taxation.
The Idaho Constitution states, “No money shall be drawn from the treasury, but in pursuance of appropriations made by law” (Art VII, Sect. 13). Idaho Code defines an appropriation act as setting “fixed budgets beyond which state officers, departments, bureaus, and institutions may not expend,” whether the funds are approved yearly or approved on a continuing basis (Code 67-3516).
The law makes it clear: for money to be spent by the state, it must be appropriated by the Legislature. Some agencies, like the Department of Water Resources, are dubiously constructed and have seemingly maintained, for years, piles of “unobligated funds.” Setting aside the department’s constitutionally questionable make-up, let’s focus on one main aspect of agency practices: the stockpiling of unspent and unused funds.
To illuminate this issue, let’s look at the following conversation between Rep. Rod Furniss and the Principal Budget and Policy Analyst at the Idaho Legislative Services Office, Janet Jessup, regarding the reversion of unspent funds on capital projects during the Joint Finance-Appropriations Committee on November 6th, 2025 (emphasis added):
Rep. Furniss: We have lots of construction projects… Construction costs have actually come down over this period of time. We’ve seen savings in those construction projects. So, what happens to the money if the money is not expended and the construction project is finished? Where does that money go?
Esq. Jessup: To a degree that depends a little bit about the budget, because I know that the Department of Administration and the Permanent Building Fund have their own policies for unused balances and how they use that within their agency. I know that for the Department of Water Resources, if there are efficiencies which are captured, they are able to use those on additional projects or to fund unexpected increases in other funds, depending on what materials they may be using. I know with the Department of Environmental Quality, one of the reasons why they had such a healthy contingency amount built into how they budgeted was because when you are digging out a drinking water system or a wastewater system, which in some communities was actually made of wood, you don’t exactly know what you are going to find. I think that while there have been efficiencies in the cost of construction, in many cases those funds are utilized for unattended aspects of the construction project which may not have been built into the initial project.
Rep. Furniss: Quick follow-up: So, you are saying there is no policy, necessarily, for the revision of those funds to come back to be reappropriated with an understanding from this committee on how those moneys are spent. I would think that there would have to be a revisionary policy that says you just can’t spend the money willy-nilly wherever you want. We would need to reappropriate that and do it with authority, and I’m not seeing that when there is money left over. Is there a solution for that?
Esq. Jessup: Again, I think that would be an agency-by-agency solution and very much driven by what the Legislature would like to see. And I think that the agencies would be very responsive to messaging from the Legislature in that respect.
We must ask, under what authority are departments setting their own policies for unused funds? No such authority can be found in the code, and even if such authority did exist, only the Legislature can make appropriations. Maybe the department simply meant it is using transfer authority according to section 67-3511 of the Idaho Code? But this is also unlawful, as section three states, “All moneys appropriated to any agency for the state of Idaho for the purpose of capital outlay shall be used for that purpose and not for any other purpose.” Rep. Furniss is precisely speaking about outlays for capital projects in this instance.
If the practice Rep. Furniss identifies is true, then what stops agencies from always asking for more than what is needed for projects, and then building up discretionary, unfettered slush funds to play with as they wish? Idaho government departments are not banks, nor should they be. And they shouldn’t be repositories of extra “walking around” money for bureaucrats to use as they wish, like travel, conferences, vehicles, office perks, etc. One’s imagination need not run wild when you see examples of government waste in the past: look no further than our 2024 Idaho Pork Report.
Idaho Code states, “Executive carry forward not liquidated by payment of the accrued cost during the succeeding fiscal year shall revert to the fund from which it originated and shall be recorded as a reversion in that fiscal year, unless approved for extension by the administrator of the division of financial management. Liquidation of executive carry forward shall be recorded as an expenditure only in the fiscal year in which it is liquidated.” (67-3521). So, unspent moneys must, by law, be reverted to the fund from which they originated and cannot be used for any other purpose.
Several things are unclear here. Does the money revert to the General Fund if it is from there, or does this refer to the fund inside the agency? From first principles, it is clear that money outlaid from the General Fund should return to the General Fund instead of sitting idly in scattered agency accounts. Departments are not banking institutions. They should not hold unobligated state money, whether the Legislature eventually decides to reappropriate idle funds or not.
It is freely admitted that at least several agencies have developed their own internal policies for what to do with unspent money from capital projects — behavior which appears to be unlawful. Departments are not legislatures. They cannot reappropriate unspent funds for their own whims. They, by letter and spirit of the law, can spend no money without proper legislative appropriation. If reckless spending is ever to be brought under control in this state, it begins with a systematic rethinking of the way appropriations and spending are done and firm reliance on sound constitutional principles to guide that thinking. Failing this, for every dollar clawed back, two will likely be sucked into the departmental abyss.
From idahofreedom.org