Committee briefed on statewide decisions: two revenue forecasts, benefit adjustments and competing compensation proposals

Legislative staff presented the Joint Finance Committee with the statewide decision packet that will form the basis of multiple FY2026 budget votes, including two alternative general fund revenue forecasts, personnel benefit cost adjustments (notably health insurance), contract inflation, statewide cost allocation changes and competing change‑in‑employee‑compensation (CEC) proposals.

Keith Bybee, division manager for budget policy analysis at the Legislative Services Office, walked committee members through the packet and highlighted two revenue options: the governor’s recommended revenue estimate of $6.26 billion and an alternative Economic Outlook and Revenue Assessment Committee (EORAC) projection of $6.40 billion. Bybee said the packet also contains a governor recommendation and a CEC committee recommendation for employee compensation.

On benefits, Bybee and Laurie Wolf, administrator for the Division of Financial Management, discussed the personnel benefit cost adjustment that primarily reflects health insurance. The governor’s packet included a projection to increase per‑eligible‑employee health funding from about $13,000 to about $14,300 (a roughly $1,300 increase per eligible employee). Wolf said actuarial reports guide funding and that lowering the FY2026 contribution to the minimum could place state reserves and future budgets at risk: “If we go low … in order for us to catch up next year, we would be looking at about a $2,000 jump per employee,” she said.

The CEC debate centered on two choices presented to the committee. The governor proposed an aggregate package that included the equivalent of a 5% merit (or $1.55 per hour equivalent for eligible employees), schedule shifts for certain salary schedules and a 5% equivalent for public school support units. Bybee said the governor’s total CEC recommendation would total about $179.7 million statewide. The CEC committee recommended an alternative dollar‑per‑hour approach (a $1.55 per eligible employee figure) with a slightly smaller statewide cost estimate (Bybee estimated $174.7 million at the time of the briefing) and warned that some agency impacts may vary because of staffing mixes across agencies.

Committee members raised concerns about distributional effects: Representative Ward Engelking asked that committee staff analyze targeted increases for highly skilled and high‑cost positions, arguing a dollar‑per‑hour package may not keep pace with cost of living for professional staff. Members asked Bybee and DFM for analyses showing the percent‑of‑pay impact by agency and potential targeted alternatives. Bybee cautioned that some salary schedule adjustments in the governor’s revised package were still being entered into the database and figures could change slightly before Thursday’s votes.

Why it matters: The packet contains statewide decisions (revenue baseline, benefits and compensation) that drive agency program budgets. Committee members requested additional analyses to understand how a chosen CEC approach would affect recruitment and retention of skilled staff and how benefit funding choices affect reserves and future budget volatility.

Ending: The committee scheduled statewide decision votes; staff will provide additional modeling and reserve impact analyses before the votes.