Budget office defends conservative revenue forecasts and planned use of rainy day fund

Budget Secretary Ori Munson told the House Appropriations Committee on Feb. 25 that the administration used conservative five‑year revenue assumptions when preparing the governor's budget and that the statutory test requires examining sustainability over five years.

Why it matters: Lawmakers pressed the budget office about apparent gaps between recent spending increases and modest out‑year growth rates in the financial plan, and about the administration's proposal to draw down $1.6 billion from the Budget Stabilization Reserve (the state "rainy day" fund) to help balance the 2025‑26 budget.

Munson said the budget office distinguishes ‘‘budget’’ (one year) from ‘‘financial planning’’ (the out years) and that the office relies on annually refreshed information. "Budget is about 1 year revenues and expenditures. Financial planning is more about general overall, kind of big ideas where you're headed," Munson said. He added the office includes only obligations it must fund and explained that multi‑year appropriations are not available to the executive, which requires yearly updates to the plan.

Committee members repeatedly pressed the administration on whether the assumed revenue growth rates (3.1% average annual revenue growth in the planning years) are realistic given higher historical increases in recent budgets. Representative Kale emphasized long‑term forecasting concerns and asked whether the administration's smaller out‑year increases were credible given recent larger annual spending increases.

On the rainy day fund, Munson said the administration had not previously drawn from the account and that the proposed use reflects the five‑year outlook and specific revenue assumptions. He stressed that the budget office must consider multi‑year sustainability when certifying certain amounts, including the property tax relief certification.

Members who opposed drawing on reserves called for greater caution. Representative Mustela asked whether it was appropriate to use $1.6 billion when state revenue officials did not foresee a recession; Munson replied that the fund is intended to address emergencies such as a sudden interruption in federal cash flows and noted a range of federal risks (including potential federal debt‑limit or budget actions) that could create a cash emergency.

The secretary said revenue performance was close to plan year‑to‑date through February and that prior years had various timing and one‑off effects; he described the office's 3.1% five‑year revenue growth projection as a conservative planning assumption.

Looking ahead, Munson and members agreed the projections and the administration's revenue proposals (including skill games and adult‑use cannabis licensing assumptions) would be the subject of further legislative negotiations. The secretary said the administration will provide supporting documentation for its revenue assumptions to the committee.

The hearing did not include a formal vote; members signaled that the budget debate will continue as the House and administration reconcile assumptions and priorities.