Senate proposes revenue gains, fund and program shifts in House budget revisions

Michael Kane, the legislative budget assistant, told legislators during a briefing that the Senate’s revisions to the House-passed budget produce higher revenue estimates and several source-of-fund shifts that leave the Education Trust Fund and rainy day fund with larger projected balances than the House proposal.

Kane said the Senate’s base revenue estimates for fiscal 2025–27 were about $416 million higher than the House’s and that, after schedule adjustments and fund splits, the aggregate difference between the House and Senate proposals was roughly $237 million. He summarized key drivers as differences in business, real estate transfer and tobacco tax splits, and a lower video-lottery-terminal (VLT) revenue assumption in the Senate’s analysis than the House’s.

The briefing matters because those revenue and source-of-fund choices affect how the state funds education adequacy, Medicaid and behavioral-health items, corrections and court resources, and whether and how much is transferred into the rainy day fund ahead of the next biennium.

Kane walked through the surplus statements and schedule 2 adjustments line by line. He said the Senate increased the Department of Health and Human Services lapse estimate after HHS reported it expected a larger lapse for FY25 (Kane reported HHS moved from an assumed ~$22 million lapse to a figure “closer to over $60 million,” producing about $38 million of additional lapse in the Senate numbers). That change, plus revised revenue splits, reduced the amount the Senate expects to draw from the rainy day fund for FY25 (Kane gave the Senate figure as roughly $93.4 million versus the House’s roughly $148.8 million assumption).

Kane described the Education Trust Fund differences as driven primarily by revised tax splits for business taxes,…