Susie Lindsay, of the Legislative Fiscal Division, told the committee the session would begin with training on the state's short-term financial stability tools and how they operate. "I'm here to talk to you today about our current tools that we use, to manage, short term risk, for state finances," Lindsay said.

The presentation explained four principal mechanisms the state uses to smooth revenue volatility: the Budget Stabilization Reserve Fund (BSRF), the Capital Development Fund (sometimes described as a "working rainy day" fund), several targeted state special funds including a debt-and-liability fund, and a wildfire fund. Lindsay said the BSRF was established in 2017 and "saw its first flow in" 2019; she told members the fund stood at about $522,000,000 and is at a statutory cap of 16% of general revenue appropriations for the second year of the biennium.

Lindsay and fiscal staff walked members through the statutory mechanics: each Aug. 15 a percentage of unexpended, unencumbered general fund from the most recently completed fiscal year is transferred to the BSRF until it reaches 16% of general revenue appropriations in the second year of the biennium. When the BSRF is full, excess flows to the Capital Development Fund until that fund reaches roughly 12% of general revenue appropriations. Lindsay said the capital fund has a standing balance of about $139,000,000 for fiscal 2025 under the current forecast.

Josh Pollet, also with the fiscal office, outlined statutory limits that apply if the governor must reduce appropriations under a projected shortfall. Pollet noted, "An agency can't be required to reduce general fund spending in any program by more than 10% in the biennium," and an agency may not be reduced by more than 4% of general revenue appropriations in the second year. He described the BSRF as a joint tool between the governor and the legislature: the governor may match cuts with transfers from the reserve at a ratio of $3 from the BSRF for every $1 in executive expenditure reductions, but the governor may not transfer the BSRF below a 6% floor without legislative action.

Committee members asked for clarifications about when various funds can be accessed. Lindsay and Pollet repeatedly emphasized that the Capital Development Fund is controlled by the legislature and does not provide automatic executive spending authority; to spend that fund the legislature must appropriate it. Lindsay summarized the policy rationale: the reserve system is intended to let executives handle smaller revenue hiccups without calling the legislature back but not to permit deep, unilateral reallocation of appropriations absent legislative involvement.

Representatives asked detailed questions about the wildfire fund cap (6% of general revenue appropriations), the newly created pension state special fund (described in the presentation as an "empty container" created last session and intended as a backup for pension shortfalls), and whether interest-account transfers that had been used to pay down debt would eventually flow into capital development. Rep. Vinton, Rep. Walsh, Rep. Denton and others pressed on timing rules and why some transfers depend on revenue growth rather than on one-time balances left in the general fund when the legislature adjourns.

Lindsay and Pollet told members their office will return with numerical illustrations tracing hypothetical dollar flows through the system. Chair Jones and staff said additional presentations are scheduled later in the week and next week to show worked examples and to answer more technical questions.