Council hears governor’s 2026 supplemental budget outlook; motion to adopt fails

The Economic and Revenue Forecast Council on Jan. 27 was briefed by Office of Financial Management staff on the governor’s 2026 supplemental budget outlook and the methodology used to produce it, but the council did not adopt the outlook as presented.

Rachel Knudson, senior budget advisor at the Office of Financial Management, walked the council through the methodology document and the outlook balance sheet displayed on-screen. Knudson emphasized that “all the numbers on the balance sheet are in millions” and identified the near‑general‑fund accounts included in the outlook: the general fund, the Education Legacy Trust Account, the Opportunities Pathways Account, the Workforce Education Investment Account and the Fair Start for Kids Account. She said the beginning balance for fiscal 2026 reflects the FY2025 close at $2,536,000,000.

Knudson told the council the outlook uses the ERFC revenue forecast adopted in November 2025 and that the statutory 4.5% revenue assumption was removed where ensuing‑biennium growth is under 4.5%, a change that reduces 2027–29 revenues by $2,168,000,000. She presented total forecasted revenues of about $74.5 billion for 2025–27 and about $79.4 billion for 2027–29. Projected near‑general‑fund ending balances were $98,000,000 at the end of 2025–27 and negative $1,880,000,000 at the end of 2027–29. Knudson also said the governor’s proposal includes an $880,000,000 transfer from the Budget Stabilization Account to the general fund in 2025–27 and proposed revenue legislation estimated to raise $454,000,000 over the outlook period.

Several members objected to elements of the outlook and asked for an alternative to be prepared. Director Chapman Sye said she “intends to vote no” in order to request an alternative outlook that reflects the reversion assumption used in the governor’s budget submission (1% per fiscal year), and expressed a separation‑of‑powers concern about the council deviating from the governor’s submitted budget documents. Representative Couture said the council must “write assumptions that actually work” and indicated he would vote no on this version. Representative Berg and other members responded that the governor has a statutory role in setting an initial starting point for budget negotiations and that the outlook is intended to establish that starting point rather than to set policy.

Representative Ormsby moved that the council adopt the outlook “as presented”; the motion was seconded, but a hand vote produced uncertainty about whether the required seven votes were secured. The chair ultimately indicated the council did not adopt the outlook as presented. Staff confirmed they will post the version prepared for the meeting as the staff‑prepared outlook on the website and will also prepare and post alternative outlooks reflecting members’ requests.

The meeting adjourned with direction for further interim discussion about methodology and reversion assumptions.