About $14.5 million in state revenues that should have gone toward reducing Idaho property taxes this year isn’t going out to taxpayers yet because of reporting challenges with the state’s massive new Luma business, HR and IT system, state budget officials said Tuesday.

The $14.5 million was flagged Tuesday during the Joint Finance-Appropriations Committee’s first day of interim fall budget meetings at the Idaho State Capitol in Boise. 

Because of reporting delays attributed to the Luma system, the $14.5 million will be added to any potential surplus next year, meaning it could be available for property tax cuts in another year, budget officials said.

Under House Bill 292, the property tax reduction bill passed during the 2023 legislative session, a state budget surplus is supposed to be directed toward cutting property taxes through what is called a surplus eliminator.

When state officials went to close the books and reconcile the fiscal year 2024 budget this summer, reporting and reconciliation issues with Luma delayed the process, Division of Financial Management Administrator Lori Wolff said. 

State officials had an Aug. 31 deadline to report the surplus numbers to the State Controller’s Office, but were only able to verify and report a surplus of $76.4 million – not the full amount.

State officials were not able to fully validate year-end budget numbers until late September – nearly three months after the 2024 fiscal year ended June 30. By that time, the deadline for reporting surplus numbers, which counties then use to calculate property taxes, had passed.

“At the time we reported the surplus, we had not completely closed out FY24 revenue and expenditures in Luma,” Wolff said in an email to the Idaho Capital Sun on Tuesday. “Once we validated year end numbers in late September, we were able to validate an additional $14.5 million in revenue that had not been initially calculated which also tied to the cash balance in Luma. Once this was verified, we worked with the Legislative Services Office to determine what actions should be taken for the additional surplus balance for FY24, since it was past the due date for reporting the surplus to (the State Controller’s Office).”

So instead of about $91 million, the state will use the $76.4 million that officials verified by the Aug. 31 deadline.

Idaho’s Luma system has faced prior challenges

Sen. Janie Ward-Engelking, D-Boise, asked for additional clarification about reporting deadlines and the $14.5 million during Tuesday’s meeting. 

“I’m still hearing from lots of constituents that they need that property tax relief,” Ward-Engelking said.

Rep. Wendy Horman, the Idaho Falls Republican who co-chairs the Joint Finance-Appropriations Committee, told Ward-Engelking there are ongoing reconciliation challenges with Luma.

State employees say Idaho’s Luma business system is still time consuming and unreliable 

“We’re not going to blame Luma for everything in these next three days (of meetings). However, it did make reconciliation at year end, closing the books, extremely challenging,” Horman said. 

Since going live in July 2023, the $117 million Luma system has been blamed for a series of budget, financial, reporting and reconciliation errors, including duplicative payments, delays in or the inability to independently verify cash balances, payroll processing concerns and unauthorized internal access to financial data, according to a series of audits and an evaluation of Luma.

Luma was designed to replace older separate HR, business and finance systems that dated to the 1980s, which had become outdated and vulnerable to security threats, state officials said. Luma’s cloud-based enterprise resource planning system is designed to centralize all budget, finance, purchasing and HR functions for all state agencies, increase security and eliminate the need to enter data in multiple systems for different agencies, officials with the Idaho State Controller’s Office said. 

However, reporting errors and a rocky rollout hampered the process. State officials also said Tuesday they are not out of the woods yet with Luma. 

April Renfro, a division manager for the Idaho Legislative Services Office, told legislators that Luma’s reporting and reconciliation errors will likely prevent the state from submitting its annual comprehensive financial report audit by the end of the year as required by law. Those same challenges may also prevent the state from completing and submitting its single audit report on time next year as well, Renfro said.