Joint Finance staff present statewide budget decision choices: revenue forecasts, benefit costs and compensation options

Legislative staff briefed the Joint Finance Committee on the statewide decision packet that will guide FY2026 appropriation work. The packet lays out alternatives for general‑fund revenue assumptions, personnel benefit cost adjustments, contract inflation, statewide cost allocation updates and change‑in‑employee‑compensation (CEC) proposals.

Revenue options: The packet presents two alternatives for FY2026 general‑fund revenue. The governor’s revenue estimate included in the packet is $6.26 billion; the Economic Outlook and Revenue Assessment Committee’s (EORAC) recommendation provided as an alternative is $6.40 billion. Committee members will select a revenue forecast before finalizing appropriation decisions.

Personnel benefit costs: The governor’s personnel‑benefit cost adjustment in the packet totals about $56.3 million (chiefly for health‑insurance increases). The CEC committee’s recommendation included a lower health‑insurance funding estimate of roughly $40.7 million; staff warned the committee they are still reconciling several benefit calculations.

Contract inflation and statewide allocations: Staff recommended a $3.3 million all‑funds allowance for contract inflation and presented statewide cost‑allocation adjustments that together added roughly $5.5 million all‑funds (about $3.6 million General Fund), with notable increases in the State Controller’s Office and Office of Information Technology Services allocations.

Change in employee compensation (CEC): The packet detailed two competing approaches. The governor proposed a 5 percent or equivalent increase (distributed as merit) plus schedule shifts, with costs summarized as a $91.8 million merit pool for state employees, a $4.3 million increase for salary schedule shifts (targeted to IT/engineering and other categories), and an $83.5 million figure for public‑school support units; those elements together represent the governor’s CEC package. The CEC committee’s alternative was slightly smaller in total: staff estimated the committee recommendation at roughly $174.7 million all funds compared with the governor’s larger total. Staff cautioned there may be small adjustments to salary‑schedule numbers before the committee votes.

Process and schedule: Legislative staff said the committee is expected to take votes on statewide decisions later in the week and then set program maintenance budgets. Committee members asked for additional agency‑level detail about how the CEC option would affect individual agencies and for more documentation from the Division of Financial Management and the Office of Group Insurance on assumptions and reserve levels underlying the benefit‑cost proposals.

No statewide votes were held at the hearing.