House Energy and Digital Infrastructure Committee backs $15 million buy-down for ADS billing shift, urges further oversight

The House Energy and Digital Infrastructure Committee on Tuesday told appropriators it supports a $15 million appropriation in the governor's recommended budget intended to reduce what members called deficit-style chargebacks from the Agency of Digital Services (ADS) and to help shift the agency from billing in arrears to current-year, set-rate billing.

Committee members described the $15 million as part of a two-year plan ADS presented to buy down arrearages created by a service-level-agreement (SLA) chargeback model. Members said ADS aims to move agencies from the SLA recovery method to an allocation or set-rate approach so departments budget for digital services in the year they are consumed.

Why it matters: Members said the accounting method has produced large year-end adjustments that show up in the budget adjustment act (BAA). The committee framed the appropriation as a short-term step toward reducing those adjustments while stressing that it does not fully eliminate the underlying deficit in future years.

Discussion details: Committee members asked for clearer estimates of remaining annual chargebacks after the two-year buy-down. A witness’s slide deck shown to the committee did not present a firm post-implementation deficit number; members recalled testimony that the total shortfall could be in the range of $15 million to $20 million, and that the $15 million is an initial, substantial portion of a multi-year plan. The committee also discussed variability among agencies in how accurately they budget for ADS services; the BAA often reflects agencies that spent more on digital services than they had budgeted.

Next steps and oversight: Committee members asked staff to track the ADS transition and signaled intent to request more detailed follow-up testimony in the second half of the session. The draft budget letter the committee is preparing will record support for the governor's recommended appropriation while adding language that the committee will continue legislative oversight during ADS's two-year transition to a new enterprise-services approach.

Attribution and limits: The committee recorded that ADS presented the transition plan in testimony and that Secretary Riley Hughes had previously testified to the committee; the legislative record available to committee members did not include a definitive, permanent deficit figure after implementation.

Ending: Committee leaders said they view the appropriation as a step to reduce year-end adjustments while reserving judgment until ADS provides clearer, post-implementation estimates and the committee can perform follow-up oversight.