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Legislative Finance Committee unveils FY27 budget framework with $11.1 billion recurring, targeted investments
Summary
The Legislative Finance Committee presented its FY27 budget framework, proposing a 2.5% recurring increase (about $11.1 billion) that prioritizes health insurance, education, water, transportation bonding and targeted economic development funds while preserving reserves for potential federal cuts.
The Legislative Finance Committee on the opening day of 2026 presented the beginning of its FY27 budget recommendation, proposing a 2.5% recurring increase that the committee chair said amounts to “almost an $11,100,000,000 budget on a recurring level” and prioritizes health insurance, natural resources and education.
The framework, presented by LFC leadership and staff, is intended as a starting point for negotiations when the legislature convenes. The committee emphasized preserving reserves and fiscal discipline amid national headwinds including tariffs and potential federal funding cuts. “We’re prepared not only to weather the storms that are ahead,” the committee chair said, noting prior bipartisan savings and special‑session actions that protected health care and food security.
Key investments outlined in the framework include continued growth in early childhood spending, a $100,000,000 increase proposed for the Water Trust Fund, and substantial support for higher education and workforce initiatives. Representative Dixon highlighted targeted economic development allocations: “an additional $40,000,000 for the research development and deployment fund” to bring that corpus to $80,000,000, $16,400,000 tied to quantum work with DARPA, $30,000,000 for innovation hubs, and $11,600,000 for economic development grants that back small businesses and startups.
Transportation and infrastructure funding are also prominent. A committee speaker described a general‑fund allocation of $155,000,000 for local governments, $12,500,000 for rural areas and $155,000,000 for road maintenance, alongside a proposed $1,500,000,000 bonding program to be issued incrementally over 10–20 years with roughly $290,000,000 available per year for identified projects.
On compensation, the framework includes a modest 1% pay increase for state employees and a broader commitment to pick up insurance costs in an “80/20” split that the committee said produces larger net gains for many employees than a larger pay increase alone.
Committee members noted differences with the executive budget. The chair said LFC’s proposal spends less on a recurring basis than the governor’s request and preserves more reserves, while the executive’s plan contains higher recurring commitments. The LFC also said it is leaving room for further conversation about tax policy and targeted revenue measures, including the possibility of temporary or sunsetted tax changes to fund projects.
The LFC emphasized that the published framework is a starting point: the House and Senate will consider bills and appropriations once the session begins. The committee said it will continue working with the governor’s office, state agencies and legislative colleagues to reconcile recurring vs. nonrecurring choices and identify projects for bonding proceeds.
What happens next: the framework will be carried into the legislative session and is expected to be the basis for bill drafting and committee hearings; formal votes and specific appropriation bills will determine which items are enacted.
