Budget director tells House Finance proposed biennium plan shows carryover but warns of out-year risks

The state—s executive budget and multi-year general fund plan would leave modest carryover balances in the near term but face out-year uncertainty, Director of Finance Luis Oliveria told the House Committee on Finance during the Jan. 8 informational briefing.

"The total budget of all means of financing for fiscal year 2026 is $20,500,000,000 and $20,400,000,000 in FY27," Oliveria said while outlining the administration—s executive biennium request and the major drivers of spending.

Oliveria told members the budgetary approach stressed fiscal restraint and noted the administration—s intent to reduce underused long-term vacancies and to reallocate some savings toward higher priorities. He flagged three immediate fiscal considerations: policy uncertainty at the federal level, the effects of enacted tax law changes (with withholding impacts appearing in payroll collections), and an elevated reserve balance that triggers legal and legislative requirements under Article VII, Section 5 of the state constitution.

What the plan shows

- Size and composition: The executive request totals roughly $20.5 billion in FY2026 and $20.4 billion in FY2027 across all means of financing, with most increases in non-general funds. The general fund portion was described as increasing moderately (about 1.5% in FY2026 and 2.1% in FY2027 from the FY2025 base).

- Carryover and reserves: Oliveria said the administration expects carryover balances in the early biennium years but cautioned they are sensitive to one-time revenue items and will be affected by collective bargaining settlements that are still pending.

- Capital improvement program and debt: The executive CIP request calls for roughly $1.3 billion in FY2026 and $601 million in FY2027 for capital projects; the administration said it remains within the state—s constitutional debt limits and noted $8.8 billion in issued and outstanding general obligation bonds and about $5.0 billion of authorized but unissued GO debt.

- Statutory actions and pressures: Under Article VII, Section 5, the legislature must specify actions when general-fund balances exceed the 5 percent threshold (refund, deposit to emergency fund, or prepayment of specified obligations). Oliveria said prior revenue forecasts and collections shifts caused the carryover balances to grow and the administration expects to propose measures to satisfy that statutory requirement.

Risks and near-term dynamics

Oliveria and staff stressed that a portion of recent revenue gains reflect one-time or timing-related effects and that withholding and payroll adjustments will lower collections starting in the month they took effect. He urged caution about relying on elevated carryover when setting recurring policies until revenue and federal-policy risks are clearer. He also emphasized the importance of accounting for pending collective bargaining agreements when estimating structural balances.

Committee questions and follow-up

Members asked about the treatment of unissued GO bonds, the source of the governor—s reported surplus language and deferred-maintenance pressures. The director said the state issues debt to match spending and avoids selling large amounts of bonds before cash is needed; he described the administration—s continuing work to identify deferred-maintenance needs and suggested the comptroller and administration would bring proposals to the legislature to address the backlog.

Ending

Oliveria closed by noting the administration will provide more detailed appropriation documents and Form A/S justifications, and that the financial plan will be updated as collective bargaining and federal developments become clearer. The committee did not take formal votes during the briefing.