House Committee on Finance hears overview of governor’s fiscal 2026 budget; officials flag out‑year gap

Sharon, a member of the governor’s budget staff, told the House Committee on Finance that the governor’s fiscal 2026 proposal uses about $185 million in one‑time surplus funds to cover ongoing commitments and leaves a projected roughly $300 million budget gap for fiscal 2027.

“The governor’s budget is based on current federal law,” Sharon said, explaining assumptions behind Medicaid and other federal match rates. She outlined a mix of strategies: capping statutory growth for some human‑service and local‑aid lines, shifting costs to other fund sources, targeted tax and fee increases, and program‑integrity efforts that assume new staff will generate net savings.

The overview matters because the committee will use the presentation as a baseline for upcoming subcommittee hearings and statutory changes. Sharon said the executive branch and agencies will provide detailed hearings starting the next day so lawmakers can probe assumptions and implementation plans.

Sharon emphasized that the budget relies on several one‑time moves and management assumptions that carry risk in later years. Key items she highlighted included a proposal to defer a required transfer of roughly $43.3 million to the retirement system and a supplemental rainy‑day fund, an expected $9.5 million digital advertising tax in fiscal 2026, and a proposed 50‑cent increase in the cigarette tax. The…