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Administration proposes temporary reserve to hold unused surplus for FY2026
Summary
The Budget Adjustment Act would set aside roughly $85 million of newly identified revenue in a temporary reserve to carry forward into FY2026, with $110 million appropriated now and the rest proposed for later use.
Adam Greshin and agency staff told the House Appropriations Committee that surplus revenue recognized after the Emergency Board forecast led the administration to propose a temporary reserve in the Budget Adjustment Act.
Greshin said the administration identified about $197 million in additional revenue (from an emergency board revenue upgrade, transfers and reversions). Of that, the administration proposed immediately appropriating or transferring roughly $110 million and placing about $85 million in a temporary reserve to carry forward into fiscal 2026. The reserve is created using “notwithstanding” language to bypass the usual statutory waterfall for unallocated surplus funds.
Under the drafting presented, the committee would not apply the standard statutory distribution for unreserved and unallocated surplus; instead the administration would hold the $85 million in a fenced temporary reserve while it develops specific proposals for the governor’s fiscal 2026 budget submission. Greshin noted that if revenues had been lower, the committee would be discussing cuts rather than carry-forwards.
Committee members asked clarifying questions; the administration emphasized the reserve simply postpones final allocation decisions until the fiscal 2026 budget proposal is presented.
Ending: The temporary reserve construct was presented as a mechanism to carry forward unexpected surplus to fiscal 2026 and the administration said it will propose specific uses when it returns with the governor’s budget proposal.
