Joint Fiscal Office deputy explains Budget Adjustment Act and why midyear changes occur

Emily Byrne, deputy fiscal officer at the Joint Fiscal Office, told legislators that the Budget Adjustment Act (BAA) is the Legislature’s midyear vehicle to update spending authority and revenue projections based on new information.

The presentation, given during a committee meeting, explained why state budgets change between the as‑passed appropriation and midyear reviews: revenue forecasts are updated, program caseloads and utilization shift, one‑time events occur and agency contracts or service level agreements (particularly IT procurement through the Agency of Digital Services) can alter costs.

Byrne outlined the timeline for a state budget: the executive branch began building the FY2025 budget on Aug. 31, 2023; the governor presented it to the General Assembly on Jan. 23, 2024; and the governor signed the FY2025 budget into law on May 23, 2024. She said the Emergency Board adopted a new revenue forecast on July 31, 2024, that projected an additional $172,000,000 in available revenue for FY2025, and that the Emergency Board would meet again to adopt another forecast.

“The budget is just a plan,” Byrne said. “It doesn’t mean that we’re exactly going to do anything that’s set in the budget, but it’s our best sort of estimate on how we anticipate we’re gonna spend the estimated revenues that are available within a given fiscal year.”

She described common drivers of BAA changes: changes in revenue collections (for example, lower‑than‑expected sports wagering receipts), higher or lower program utilization (Byrne cited Medicaid utilization), delays or savings from inability to hire staff, unexpected events such as floods and differences between assumed and actual prices for goods and services. Byrne also discussed budget mechanics that can create duplicated spending lines in documents, such as the state match and federal funds that flow through the Global Commitment Fund for Medicaid.

Byrne walked through examples from recent letters of intent (guidance from appropriations chairs): a clerical error that left out a digit in an Agency of Digital Services appropriation — the intended reduction was $873,000,000 but the printed figure read $87,000 — and clarifying language for opioid abatement special fund appropriations so that $2,000,000 was allocated across four entities as intended. She said the Governor’s proposed BAA this year proposed roughly $110,000,000 in new spending and held about $87,000,000 to carry forward into FY2026; Byrne cautioned that what is proposed by the executive can be accepted, changed, or rejected by the General Assembly.

Byrne described statutory treatment of excess revenue if the Legislature does not appropriate it: by statute, 50% goes to the general fund balance reserve and the remaining balance is split between the teacher pension and the state employee pension funds. She said that, at the end of the prior fiscal year, roughly $17,000,000 went to the balance reserve and about $8,000,000 went into each pension fund from additional receipts beyond contingent appropriations.

Committee members asked procedural questions about reading BAA documents, the typical size of adjustments and whether midyear changes become the base for the next fiscal year. Byrne said the BAA is primarily a technical reconciliation and does not automatically become the base for the next budget cycle; the FY2026 base budget will start from the as‑passed FY2025 budget, not the adjusted FY2025 totals, though many adjustments — for example sustained changes in Medicaid caseload or utilization — commonly carry forward into subsequent budgets through the consensus budgeting process.

Byrne offered to show committee members how to read the narrative and line‑item materials agencies provide when they testify and emphasized that some adjustments are policy constrained (federal mandates or entitlement spending) and therefore not subject to discretionary change by the Legislature.

The presentation closed with an offer to review letters of intent and to bring agency budget documents for a walkthrough; Byrne said the Emergency Board’s forthcoming revenue forecast will be important for final midyear decisions.