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LSO: State spending growth stresses General Fund; projected 2025 revenue shortfall noted
Summary
LSO's Keith Bybee told the committee the state aims for a three-year structural balance, reported average expenditure growth of 5.7% since 2013, a 2025 revenue forecast of $419 million and an unobligated cash balance of $313 million, and warned Medicaid spending has nearly doubled since 2017.
Keith Bybee, Budget and Policy Analysis Division manager at the Legislative Services Office, presented the FY2026 and FY2027 budget update and said the Legislature's goal is "to work toward structural balance over a three-year business cycle." He cited a 5.7 percent average annual expenditure growth from 2013 to 2025, noted a 2025 revenue forecast of $419 million and an actual unobligated cash balance of about $313 million, and said sales tax collections were weaker than population and income growth might suggest.
Bybee highlighted long-term drivers of budget growth: Medicaid program spending had almost doubled from 2017 to 2026 and policy changes were a primary driver of budget growth. He also said the Catastrophic Health Care Fund peaked at approximately $40 million in its high point and that medical inflation had been running near 10 percent. Bybee presented choices: accept the Governor's recommendation to balance with one-time funds or make more significant structural changes to attain long-term stability.
