Legislative staff outlines statewide budget decisions: revenue options, benefits, cost allocations and CEC tradeoffs

Legislative staff briefed the Joint Finance Committee work group on statewide decision items that the committee will set during the week, including general fund revenue options for FY2026, personnel benefit cost adjustments, contract inflation, statewide cost allocation rates and change‑in‑employee‑compensation (CEC) options.

Division manager Keith Bybee and budget staff told the committee there are two primary revenue options available for FY2026: the governor’s recommended general fund revenue figure ($6.26 billion) and the Economic Outlook and Revenue Assessment Committee’s (EORAC) recommendation ($6.4 billion). Bybee said the governor’s budget uses a more conservative governor‑baseline revenue projection in some places and that the committee should be aware of the distinction when setting targets.

On personnel benefit costs, staff outlined a governor‑recommended health insurance adjustment that increases per‑eligible employee funding (an increase from approximately $13,000 to $14,300 in the packet numbers) and an alternative estimate from the Compensation and Employee Committee (CEC) that would fund a smaller per‑employee increase. Bybee and Division of Financial Management (DFM) Administrator Laurie Wolf explained that actuarial reports and reserve considerations factor into the recommended funding levels; Wolf noted that funding too low in a year when claims rise could require a larger catch‑up increase the following year.

Bybee also summarized contract inflation ($3.3 million statewide in the packet) and statewide cost allocation changes (a $5.5 million statewide increase, $3.6 million of which is general fund), including notable increases in state controller and Office of Information Technology Services billings. For CEC, the governor’s recommendation includes roughly a 5% equivalent for eligible employees (presented in the packet as a $1.55 per hour equivalent for permanent employees and specified schedule shifts), while the CEC committee’s recommendation outlined different distribution and schedule increases; staff cautioned that some salary-schedule amounts were still being reconciled in the budget database.

Committee members asked for more detailed agency‑level information about the CEC proposals and benefits numbers so they can evaluate distributional impacts across agencies before voting. Bybee said the staff will finalize numbers and present them to the committee ahead of Thursday’s statewide decision votes.