Legislators press budget officials on $138 million in uncollected business taxes, limits on using lapse funds and rainy-day cap

Lawmakers pressed executive budget and administrative officials at a legislative budget hearing about several fiscal risks and operational constraints, including approximately $138 million in uncollected business tax liabilities, agency requests to use FY2025 lapse funds for ongoing projects, persistent procurement and recruitment bottlenecks, and how close the government is to the rainy-day fund cap.

Senator Shelly Cabo opened a block of questioning on agency flexibility and lapse funds, saying agencies such as the Department of Community Affairs (DCA) and the Department of Youth Affairs (DYA) sought authority to use FY2025 lapse funds in FY2026 for capital maintenance and continuity of programs. A DOA official told senators that lapse funds are generally disfavored unless there is a clear, documented reason for the lapse and that encumbered projects do not need lapse authority because the funds are already committed. The official said exceptions could be considered on a case-by-case basis.

A revenue-collection official identified Business Privilege Tax (BPT) accounts receivable as a “constantly moving target” and said the latest figure the agency had for outstanding BPT was about $138,000,000 (2023 figure). The official cautioned that that number can include amounts that later become uncollectible because of statute-of-limitations issues,…