Joint Finance Committee briefed on statewide decisions: revenue forecasts, health‑insurance costs and compensation options

Keith Bybee, Division Manager of Budget Policy Analysis for the Legislative Services Office, briefed the committee on the packet of statewide decisions that the Joint Finance Committee plans to set this week, including general fund revenue assumptions, personnel benefit cost adjustments, contract inflation, statewide cost allocation and change‑in‑employee‑compensation (CEC).

Bybee presented two revenue options: the governor’s recommendation for FY 2026 general fund revenue at $6,260,000,000 and the Economic Outlook and Revenue Assessment Committee’s recommendation at $6,400,000,000. He noted a distinction between the governor’s baseline used to frame the executive budget and the governor’s alternate forecast, and asked the committee to select a revenue figure to guide appropriation decisions.

On personnel benefit costs (health insurance), Bybee described two options: the governor’s recommended health‑insurance increase that yields an average $1,300 per eligible employee (totaling $56,300,000 statewide) and the CEC committee’s recommendation at $960 per eligible employee (a smaller statewide total of $40,700,000). Bybee said the health insurance numbers are confident and will be entered into the database for committee votes.

Bybee walked through contract inflation ($3,300,000 statewide recommendation) and statewide cost allocation adjustments (roughly $5,500,000 total all funds and $3,600,000 general fund impact), with notable cost shifts into the state controller’s office and the Office of Information Technology Services. He explained that last year’s cost allocation rates included an arithmetic catch‑up related to payroll changes and Luma implementation and that state controller billings were larger this cycle for that reason.

CEC was a focal point. Bybee presented the governor’s CEC package — generally a 5% or an equivalent $1.55‑per‑hour merit for eligible permanent employees with additional salary‑schedule adjustments that total about $179,700,000 statewide — and an alternative recommended by the CEC committee that would use $1.55 per eligible employee as a flat component, resulting in a slightly lower aggregate estimate ($174,700,000 at the time of the presentation). Bybee cautioned that salary‑schedule changes were still being translated into the database and that small adjustments could change the numbers before the committee votes this week.

Committee members asked for more detail. Senator Engelking urged consideration of larger cost‑of‑living increases for highly skilled employees who may be lost to private employers. Several legislators asked for a written memo on the employee‑benefit reserve calculations and the consequences of funding health insurance at a lower level; DFM Administrator Lori Wolf said actuarial estimates were provided in May and October and warned that funding benefits too low in one year can force larger catch‑up allocations later.

Bybee outlined the schedule: the committee will set statewide decisions on Thursday, then program maintenance budgets on Friday and beginning agency hearings next week. Staff committed to follow up with clarifying memos and to correct minor database reporting issues before formal votes.