Senate Finance advances $10.8 billion budget amendment, holds 30% reserve and boosts education and behavioral health funding

The Senate Finance Committee advanced the Senate Finance amendment for House Bill 2 — the general appropriation act — moving a proposed state budget of $10,795,269,200 that committee presenters described as balanced and designed to preserve a 30% reserve while limiting recurring spending growth to about 6%.

Adrian (staff member), the committee presenter, told the committee: "The general appropriation act is a balanced budget that maintains robust reserves and limits recurring spending to ensure sustained growth could be maintained into the future." Charles (staff member) emphasized the budget’s scale, noting that Medicaid is larger than the general fund in several measures.

The amendment’s chief features include maintaining a $3,252,500,000 reserve target; raising recurring general‑fund costs roughly in line with a 6% revenue growth assumption; and targeted increases across education, early childhood, behavioral health, infrastructure and public safety. The presenters said the package uses both general fund and other state funds along with multiyear pilot appropriations to hold agencies accountable for spending.

Key line items and figures cited by staff and committee members include: - Total proposed state budget: $10,795,269,200. - Reserves: $3,252,500,000 (30% target). - Education: an added $76,000,000 above the House increase to expand the unit value for secondary education (grades 6–12), described by staff as funding for career technical education and additional middle/high‑school supports. - Early childhood: staff said the amendment increased early childhood investments beyond the House proposal, and insulated base budgets for childcare assistance, prekindergarten and Medicaid‑linked early childhood services. - Behavioral health and housing: the committee added about $61,500,000 to fully fund the behavioral health package, bringing total behavioral health and housing investments to roughly $280,000,000. The amendment also makes an initial $100,000,000 deposit to a behavioral health trust fund and appropriates $50,000,000 for fiscal 2027 uses tied to regional plans described in related legislation. - CYFD (Children, Youth and Families Department): the amendment adds $27,800,000 over two years to address requirements of the Kevin S. remedial order; that funding is routed through the GROW (government results and opportunity) fund, staff said. - Compensation and benefits: a 4% salary increase for state employees, educators and higher‑education staff; an increase in the state contribution for employee health insurance to 80% (with up to 100% coverage for employees under 250% of the federal poverty level and for National Guard members), and a targeted pay increase for lowest‑paid court employees. - Infrastructure and recovery: $65,000,000 for road maintenance, $12,000,000 for rural air service, $50,000,000 initial infusion to a natural disaster revolving loan fund, and community benefit fund appropriations for grid modernization, EV school buses, economic development and workforce development. - Public safety: funding for a statewide case management system for district attorneys, recruitment/retention funding for the Public Defender Department, and funding for the Attorney General’s training and legal expenses.

Medicaid scale and federal risk: Charles drew attention to Medicaid’s size in the state budget, noting Medicaid outlays in the amendment’s federal‑fund column totaled about $8,600,000,000 (with total Medicaid spending near $11,000,000,000 when other state funds and the general fund are counted). Committee members repeatedly raised the risk of federal actions that would reduce Medicaid funding; staff told senators they would prioritize interim work to model mitigation strategies. Charles said a projected 12%–13% federal reduction in Medicaid would equate to roughly $1,100,000,000 and be difficult to backfill.

Lawmakers debated distribution choices and duration for multiyear appropriations. Several members praised increased K‑12 unit value funding and expanded early childhood support; others pressed for more transparency in the drafting and posting of the bill before a committee vote. Senator Steinborn said he opposed the bill primarily because he objected to differential treatment of certain higher‑education appropriations and to the committee’s practice of voting the budget before posting a final, public version.

The committee moved a motion to report House Bill 2 with a “do pass” recommendation. Senator Padilla moved the motion, seconded by Senator Gonzales. A roll call produced nine votes in favor and two opposed: Senator Brandt (yes); Senator Campos (yes); Senator Gonzales (yes); Senator Lanier (yes); Senator Padilla (yes); Senator Tobias (yes); Senator Trujillo (yes); Senator Shandoh (yes); Senator Muñoz (yes); Senator Steinborn (no); Senator Woods (no). The committee’s clerk recorded the outcome as a due pass.

Why it matters: The general appropriation act determines the recurring and nonrecurring funding priorities for the coming fiscal biennium and shapes agency operations, workforce pay, public‑safety capacity, school funding and statewide capital plans. Committee members and staff said the amendment is intended to temper growth so the state can sustain spending if federal revenue or oil and gas receipts change.

What’s next: The committee’s vote sends the committee amendment to the full chamber. Staff said interim monitoring and contingency planning for potential federal Medicaid reductions are a priority for the Legislative Finance Committee going forward.