JFAC adopts FY2025 revenue projection, approves contract inflation and cost-allocation items; FY2026 revenue and insurance proposals stall

The Joint Finance-Appropriations Committee voted on a package of statewide budget items Thursday, adopting a $5.99 billion general fund revenue projection for fiscal year 2025 and approving several technical and administrative adjustments. Two other major items — the committee’s FY2026 revenue projection and competing proposals to change the state employee health-insurance base — failed to secure the required majority from both the Senate and the House membership of JFAC.

Senator Woodward moved that the committee "adopt the Economic Outlook and Revenue Assessment Committee's recommended general fund revenue projection of $5,990,000,000 for setting state agency budgets." After a roll call vote, Committee Chair Groh announced the motion passed with majorities from both the Senate and House sides of the committee.

The committee also approved the governor's requested adjustments for ongoing contract inflation. Representative Miller moved the item, describing the changes as operating increases tied to ongoing contract lease-rate escalators. The motion passed on a unanimous roll call.

The committee approved statewide cost-allocation adjustments that shift incremental billing among agencies for shared services, including changes to Attorney General fees, legislative audit billings, state controller and treasurer fees, risk management and the Office of Information Technology Services. Co-chair Harman moved that item; it passed unanimously.

Two high-profile items did not pass.

• FY2026 revenue projection: Committee members debated competing forecasts. Senator Woodward offered a substitute revenue projection of $6.33 billion; proponents of the higher Economic Outlook and Revenue Assessment Committee (EORAC) number, $6.40 billion, urged support for the committee recommendation. The substitute motion failed on a roll call, and the subsequent vote on the original motion also failed to obtain a majority from both legislative delegations in JFAC. The chair said voting on the FY2026 revenue projection would be postponed to a later time.

• Health insurance funding per eligible position: Two competing recommendations were before the committee — a CEC recommendation that would set the per-eligible-full-time position health-insurance base at $13,960 and the governor’s recommendation to set it at $14,300 (an increase the administration described as giving an additional cushion to contingency reserves). Committee debate focused on the size of the contingency reserve and the risk of falling below the contractual 10% minimum. Laurie Wolf, the Division of Financial Management administrator, said staying above the 10% minimum is a contractual obligation; Faith Knowlton of the Office of Group Insurance told the committee, "If we fall below the 10% contingency reserve, then a risk charge can be assessed to the state." Neither the CEC substitute nor the governor's original motion secured the required majorities from both the Senate and House delegations in JFAC, and both failed.

Committee leaders repeatedly told members that the voting rules require a majority of both Senate and House members on JFAC before an item can be reported out for floor consideration. Where a motion failed to get a majority on either side, the committee did not advance that item.

The items that passed — the FY2025 revenue projection, contract-inflation adjustments and statewide cost allocation changes — will be incorporated into agency budgets as the committee continues its work. The committee said it will revisit the unresolved FY2026 revenue forecast and the insurance funding question at a later date.