- The One Big Beautiful Bill Act has forced Western states to rethink their budget as legislative sessions begin.
- It is projected to reduce tax revenue by $400 million in Arizona, $300 million in Utah and $200 million in Idaho.
- Republican-controlled legislatures proposed spending cuts to achieve conformity with the federal tax changes.
Lawmakers in Arizona and Idaho launched their 2026 legislative sessions on Monday grappling with the same historical shift in revenue that will shape Utah’s budget debate starting next week: the One Big Beautiful Bill Act.
The centerpiece of President Donald Trump’s domestic agenda extended corporate tax cuts and expanded working-class tax credits. It also adjusted tax rates in states that conform with federal taxes, like Utah, Arizona and Idaho.
Before lawmakers in these Intermountain states pass top policy priorities, they must decide how to compensate for the decreased revenue, or whether they will decouple from the federal framework, making taxes more complicated.
The No. 1 issue for legislators and lobbyists will be working around what is projected to be roughly $400 million less revenue than expected in Arizona, $300 million less in Utah and $200 million less in Idaho for the current fiscal year.
“This year is going to be a very tight budget for, well, for one big reason,” Utah Gov. Spencer Cox told the Deseret News Editorial Board in December, referring to the One Big Beautiful Bill Act. “So we’re making cuts everywhere.”
In addition to tax conformity — which has contributed to deep budget deficits for Utah’s Western neighbors — Utah, Arizona and Idaho will also share a focus on affordable housing, school choice and energy incentives.
Utah
The Republican majorities in all three states have promised to balance their budgets through cost savings, instead of new taxes. In Utah, legislative leadership has gone further, proposing a series of additional tax cuts as this year’s signature policy initiative.
House Speaker Mike Schultz is pushing to shift the burden of gas taxes onto oil companies, and property taxes onto commercial assets. Meanwhile, Senate President Stuart Adams has signaled his commitment to lower the state’s income tax for the sixth year in a row.
The tax changes in the One Big Beautiful Bill Act also constitute a projected $300 million tax cut for Utahns, all but wiping out the expected revenue surplus that lawmakers had planned on, Senate budget vice chair Scott Sandall told the Deseret News.
Besides the budget, Utah is gearing up to debate scores of bills “centered around populism,” GOP consultant Renae Cowley said. These include reforming judicial nominations, regulating artificial intelligence and restricting junk food for welfare recipients.
“The 2026 general session theme is the 2026 election,” Cowley said. “Everything is going to be in preparation of, in advance of, to bolster one’s chances, or to mitigate other election concerns, that are going to happen in November.”
Amid these electoral incentives, legislators will decide whether to keep up the pressure on municipalities to approve starter homes, or to emphasize building infrastructure that helps developers access vacant lots, said Adam Gardiner, who lobbies for West Jordan.
Arizona
Arizona lawmakers are also focused on housing affordability, energy and tax cuts, according to Arizona House Majority Leader Michael Carbone. The debate centers on whether Arizona should maintain its growth by bringing in, or blocking, data centers, Carbone said.
This week, a rift emerged between lawmakers and Democratic Gov. Katie Hobbs, who called for ending the state’s tax credit for AI data centers which have exploded demand for electricity, but also contribute millions to the state’s economy, Carbone said.
The bigger question is how Arizona can fund its ballooning school voucher program under looming revenue shortages, Arizona consultant Kevin DeMenna said, adding this could set up a fight over whether the state can afford to follow the new federal tax structure.
“Arizona is operating on the premise that we have very little and much of that will depend upon the degree of conformity to the ‘big, beautiful bill,’” DeMenna said. “It’s not a good year to be an agency in state government.”
Idaho
Idaho followed Arizona and Utah’s example last year with its own school voucher program. But Idaho faces more difficult financial prospects than its friends, according to Brian Whitlock, the Idaho Hospital Association president, Meridian City Council member and former top staffer for the Idaho governor.
Lawmakers’ decision last year to reduce taxes by $450 million, paired with federal policy changes, turned a $400 million surplus into a $40 million hole, Whitlock said, which some are proposing to fill by eliminating the state’s $100 million Medicaid expansion.
State Rep. Josh Wheeler expects the session to highlight innovative cost savings, including proposals to shift high school toward workforce readiness, incentivize food-as-medicine preventative health care and attract companies to reprocess spent nuclear fuel stored in Idaho.
The biggest story early in the session will be the same as Utah and Arizona, according to Wheeler: tax conformity. Typically, this is not a top issue, Wheeler said, but “there’s enough complexity in the ‘one big, beautiful bill’ that there will have to be some robust debate about that.”