Transcript Highlights:

• </c> governor's budget governor's budget recommendations<00:03:15.799><c> I'm</c><00:03:16.000><c> here
• </c> in the budget in the budget proposal<00:04:17.759><c> these</c><00:04:17.959><c> include</c><00:
• </c><00:04:38.320><c> will</c> proposals included in the budget will proposals included in the budget
• </c> Minnesota has made yet this budget Minnesota has made yet this budget dismantles<00:05:25.880><c
• Yet this budget proposal uses nursing homes to balance the budget, which leaves us with the question:

Committee: House Human Services Finance and Policy

Transcript Highlights:

• I serve as the lead budget writer in the Senate.
• budget.
• This, again, is a supplemental budget. We wrote a biennial budget last year.
• So you will see some reductions in this budget.
• Yesterday, after the release of the budgets, the WEA issued a statement and said that the budget is less

Summary: Senate budget writers, led by Sen. June Robinson, rolled out the Senate operating budget and described it as a difficult supplemental budget shaped by flat revenue growth, rising maintenance costs, and uncertainty from federal actions, including H.R. 1 and tariffs. They said the proposal aims to preserve core services such as K-12 education, health care, food assistance, long-term care, housing stability, and child care while mitigating federal cuts, and they emphasized that it does not include broad-based tax increases like sales, property, or B&O tax hikes. A major focus of the discussion was how to pay for the Working Families Tax Credit and how to reduce the budget gap. Robinson said the Senate proposal uses about $750 million from the rainy day fund because additional cuts would be too severe, and she noted the statute allows that use in a slow-growth economy. Senators also discussed the Climate Commitment Act as a possible funding source for the tax credit, but said they would negotiate with the House on that issue. On child care, they said the Senate avoided the governor’s approach of capping Working Connections Child Care enrollment and creating a waitlist, instead relying more on attendance-based payment changes to reduce costs while trying to avoid destabilizing the provider network. The senators also responded to criticism from educators and Republicans. They acknowledged concerns from the Washington Education Association that schools and special education remain underfunded, but argued the state has made major progress and that Washington’s tax structure limits school funding growth because of the 1% property tax cap. They said a future “millionaires tax” could help stabilize revenue and support education and other services. In response to Republican claims of a “spending addiction,” Robinson said critics should identify specific cuts they would support, and noted Republicans had offered little support for prior budget-cutting measures.

Transcript Highlights:

• As part of the budget cabinet, we put a lot of work and consideration into this supplemental budget and
• So this budget is a true bipartisan budget.
• is a supplemental budget.
• You may know if you look a couple hundred pages into the budget... ...drain on this budget.
• I write that other budget.

Bills: HB2720 , HB2073 , HB2681 , SB5467 , SB5820 , SB5863 , SB5892 , SCR8406 , HB2487 , HB2711 , SB5816 , SB5919 , SB5995 , SB6278

Keywords: behavioral health, emergency services, health insurance, provider access, mental health funding, premium assistance, funding, healthcare, subsidies, cannabis, license fees, regulatory framework, revenue generation, legalization, SB 5467, water-sewer district, water sewer district, surplus property, public property sale, local government

Transcript Highlights:

• We started this budget process in January.
• As this smoother budget year will not be real. we are now facing what is one of the more difficult budget
• We need to look at these budgets, make sure that they're supporting each other, that the budgets align
• Work would be ongoing in the budget year and budget year plus one.
• It's not just budget math.

Transcript Highlights:

• Because in the current budget year, you're projecting revenues that you then true up in the next budget
• ..Governor's budget proposal to make some changes to the Budget Stabilization Account, which, if enacted
• I'm the budget director at the California Budget and Policy Center.
• a budget problem in the first place.
• I want to thank Speaker Revis, Budget Sub-Chair 7, Mr.

Summary: The Assembly Budget Subcommittee on Accountability and Oversight held a hearing on proposals to reform California’s Budget Stabilization Account, or rainy day fund, ahead of the May Revision. Members and witnesses reviewed how Proposition 2 (2014) changed reserve rules, including mandatory deposits, a 10% cap on the fund, and limits tied to the Governor’s declaration of a budget emergency. LAO staff explained that California’s revenues are highly volatile, that current reserve rules are complicated by interactions with Proposition 98 and the Gann limit, and that under current law reserves would cover only about one-third of funding shortfalls in a benchmark scenario over 50 years. The LAO presented its report recommending a larger reserve target, including raising the cap to 50% by 2055 and pairing that with either broader, more flexible deposit rules or a simpler approach that deposits all excess capital gains. The Department of Finance described the Governor’s proposal to raise the cap from 10% to 20% and exempt BSA deposits from the state appropriations limit, while Assembly Member Valencia presented ACA 1, which would make similar changes and was described as an evolving proposal. Testimony generally supported saving more during boom years, but differed on how much to hardwire into the Constitution versus leave flexible, and on whether to broaden the deposit formulas beyond capital gains. Public witnesses and committee members raised additional issues, including whether reserve reforms should also address debt repayment, the treatment of unemployment insurance fund debt, and whether the Gann limit should be adjusted to better allow reserve growth. Supporters argued that stronger reserves would protect Californians from cuts during downturns and help the state weather volatility and federal funding threats. Some advocates warned that reforms should not come at the expense of current public needs, while taxpayer representatives cautioned against turning the BSA into a pass-through account that weakens constitutional spending limits. The hearing ended without a vote, with the committee chair noting the complexity of the issue and adjourning after public comment.

Transcript Highlights:

• CDCR's budget was 9% of the state budget 10 years ago; it's 5.6% now.
• Well, just in general, the budget, the 2024 budget act assumed $190 million in efficiency savings.
• I will point out again, too, that our share of the budget continues to go down, and our budget on the
• we were 9% of the budget 10 years ago, we're 5.6 now, our percentage of the budget is, in fact, going
• So what you have happen is that there's dollars in the budget that are budgeted for positions, but in

Transcript Highlights:

• Then we can set our budget.
• That's our budget.
• We get the budget submissions, we set the budget, and we see how it goes.
• So we will become part of your budget instead of their budget? That's correct.
• So we will become part of your budget instead of their budget? That's correct.

Summary: JFAC began with a presentation from Legislative Services on the general fund and the “green sheet,” explaining how the committee tracks starting cash, revenue forecasts, transfers, appropriations, and ending balances. The analyst walked through general fund revenue sources, the difference between transfers and expenditures, structural balance, and how the green sheet is used to compare current-year collections against forecasts. Members asked about continuously appropriated funds, federal dollars, sales tax exemptions, and cash reconciliation issues tied to the state’s new Luma finance system and interest allocations. The discussion also covered the revenue monitor and how the committee can use it to track collections against forecasted amounts. The committee then moved into the Department of Health and Welfare’s overall budget overview. Legislative Services reviewed the department’s size, organizational structure, vacancy rate, five-year spending trends, and the role of continuously appropriated funds such as the Idaho Children’s Trust Fund and Rural Physician Fund. Members asked about personnel vacancy rates, reverted funds, and whether the department could provide a list of subgrants and trustee-and-benefit payments. Department officials explained that some vacancies reflected a department-wide review, hiring freeze, and FTP realignment, including moving positions to State Hospital South and reverting some federal spending authority. They also said the department was actively filling funded positions and would provide additional information on grants and other payments. The committee then heard the first division-level budget presentation for Indirect Support Services. The analyst described the division’s role in centralized administration, IT, legal, communications, and management support, along with its staffing, historical expenditures, and base budget changes. The division’s budget request included a one-time irrigation system project at State Hospital West, a fund adjustment for the background check unit, the transfer of 58 FTP and related costs to the Office of Information Technology as part of modernization, and a request to remove restrictive budget language on personnel and trustee-and-benefit transfers. The governor’s recommendation also included support for some replacement items and a major new item tied to Idaho’s Rural Health Transformation Program, including 12 limited-service FTP in 2026, ongoing FTP in 2027, and $294 million in one-time operating funds. Members questioned the need for the new FTP, the use of AI, the definition of “rural,” and the mechanics of the IT transfer; department and ITS officials explained the transfer was a budget shift of personnel and operating costs, not a net increase in staffing. The committee adjourned after members also raised broader concerns about public input on Health and Welfare budgets and suggested a joint public meeting with the Health and Welfare committees.

Transcript Highlights:

• budget.
• Real vision is in this budget.
• Members, what you have in front of you is the previous budget request and the current budget request.
• Members, what you have in front of you is the previous budget request and the current budget request.
• So we requested historical budget information, like I said, including the five-year budget history, a

Summary: The Agriculture and Natural Resources Budget Subcommittee met to hear member-led presentations on agency budget requests after prior meetings with the agencies. Representative Barnaby summarized the Florida Department of Agriculture and Consumer Services’ fiscal year 2025-26 request, highlighting major funding for the Rural and Family Lands Protection Program, Florida Forest Service wildfire and land management needs, citrus disease and research efforts, a new Conner Complex facility and lab, agricultural water and BMP projects, agricultural law enforcement staffing and equipment, maintenance and vehicle needs, and federal grant-related spending. No vote was taken on the department’s request during the meeting. Representative Bartleman presented the Department of Environmental Protection request and said the subcommittee supported it fully. The request emphasized Everglades restoration, water quality grants, springs, harmful algal bloom and red tide response, alternate water supplies, resilience and flood prevention, beach and coral reef restoration, land acquisition and state parks, and cleanup of petroleum, dry cleaning, and hazardous waste sites. Representative Alvarez asked DEP to provide a list of the most contaminated lakes, along with estimated costs, so the committee could prioritize cleanup efforts. Representative Black summarized the Florida Fish and Wildlife Conservation Commission request, which included additional law enforcement funding in high-demand areas, oyster and reef restoration, habitat restoration, heavy equipment for land management and prescribed burning, a water survival training center, and red snapper data research. Representative Salzman then presented the Department of Citrus request, describing a lean agency budget focused on operations, PALM readiness, marketing and consumer awareness, greening-resistant plant material, and building repairs; the workgroup recommended fully funding the request. The meeting ended with members thanking the chair and staff for the more member-driven budget process, and the subcommittee adjourned without objection.

Transcript Highlights:

• Additionally, the fourth-year compact deferral, consistent with the 2025 Budget Act, the Governor's budget
• Our state budget discussions are taking place during historic uncertainty for the budget.
• Even the Governor's budget talks about a massive budget structural deficit, which if we continue that
• were not in the final budget.
• of the Governor's budget.

Transcript Highlights:

• General Fund budget.
• From a budget perspective.
• From a budget perspective, how would we be demonstrating that mission from a budget perspective?
• Specific line item in CDCR's budget.
• The budget appropriate budget committee in last year's process.

Summary: The Assembly Budget Subcommittee on Accountability and Oversight held a hearing on the California Department of Corrections and Rehabilitation (CDCR) budget, with a focus on prison population trends, spending, facility closures, and efforts to find savings. The Legislative Analyst’s Office (LAO) presented data showing the prison and parole populations have fallen sharply over the past 20 years while CDCR spending has remained high, driven largely by security, health care, litigation-related requirements, and aging infrastructure. The LAO also said the state is likely to have several thousand empty beds by 2030 and recommended closing another prison, identifying the Correctional Training Facility in Soledad as the strongest candidate, while also urging more transparency around facility deactivations and the Boston Consulting Group (BCG) efficiency contract. CDCR Secretary Jeff McCumber said the department faces structural budget pressures from retirement payouts, workers’ compensation, overtime, medical transport, aging facilities, and violence in prisons, but emphasized declining recidivism, expanding reentry beds, and the need for more single-celling and rehabilitation. Department of Finance representative Anthony Franzoa said the administration is not proposing another prison closure at this time, opposed new reporting requirements on deactivations, and said the BCG contract is intended to produce long-term savings even if near-term estimates are being revised downward. Amber Rose Howard of California United for Responsible Budget argued the state should close more prisons, redirect funds to community services, and stop spending on excess prison capacity. Members questioned why CDCR still relies on vacancy savings, why rehabilitation is only a small share of the budget, and whether the department should be more transparent about capacity reductions and legal liabilities. Several members criticized the $20 million BCG contract and the lack of competitive bidding, while others pressed CDCR on staffing levels, single-celling, suicide prevention, and health care costs for older incarcerated people. The hearing did not take a formal vote, but it ended with clear committee concern about CDCR’s budget transparency, the pace of prison closures, and the need to align spending more closely with the declining prison population and the department’s stated rehabilitation mission.

Transcript Highlights:

• We did the operating budget on Saturday. We were here for about seven hours debating that budget.
• Also, on the bills like I guess... ...state budget.
• They're watching the budget and saying, are they doing anything to get the budget into control, which
• Both the House and the Senate passed their budget, or their respective operating budgets, on Friday and
• And here we are today, facing another budget shortfall, with another budget proposal that has increased

Summary: Senate and House Republican leaders held a media availability in Olympia as the 2026 session entered its final full week, focusing heavily on affordability, taxes, and the state operating budget. Senators Braun and Gildon, along with House Republicans Connors and Abbarno, criticized the House and Senate budget proposals as spending billions more than forecast revenue, relying on one-time money, the rainy day fund, and what they called unrealistic assumptions. They argued the budgets would worsen a future deficit and said Democrats were prioritizing special interests over fiscal restraint. A major topic was the proposed income tax on high earners, which Republicans said would likely expand over time and drive businesses and wealthy residents out of Washington. They also discussed other tax proposals they said would hurt affordability, including changes affecting data centers, nicotine products, prescription drug warehousing, retail bags, and bottles. House Republicans said they were working with some Democrats to oppose the income tax and urged the governor to veto it if it reaches his desk. They also said the budget process has excluded Republican input and relied on closed-door negotiations. Republicans also raised several policy issues they said were stalled or killed this session, including juvenile rehabilitation reform, child endangerment and fatality reporting, tort reform, and housing and energy policy. They criticized the House for not advancing measures they said would help with child safety, juvenile justice, housing supply, and energy diversity, and they opposed a data center tax/clawback bill they said could discourage investment and jobs, especially in rural communities. In response to questions, Braun said he planned to raise the income tax, the budget, juvenile rehabilitation, child endangerment, and tort reform in an upcoming meeting with the governor. No votes were taken during the availability.

Transcript Highlights:

• transportation budget come out and we will be hearing on the We've also had the transportation budget
• So the big part, Simone, with the operating budget, as opposed to the other two budgets, is...
• With the operating budget, as opposed to the other two budgets, as Senator McEwen pointed out, are kind
• The operating budget, it's just majority-party Democrat budget writers in the room.
• It's that kind of fiscal irresponsibility that is leading Democrat budget writers to make the budget

Summary: House and Senate Republican leaders held a media availability focused on the final stretch of the legislative session, with repeated criticism of Democratic budget proposals and several policy bills. They said they were especially concerned about an environmental crimes bill they argued would impose excessive penalties for workplace mistakes, as well as bills they described as anti-law-enforcement, including measures related to police face coverings and sheriff qualifications. They also discussed a proposed income tax, calling it unconstitutional and urging that it be sent to referendum if it advances. A major topic was the operating, transportation, and capital budgets. Republicans said the operating budget relies on one-time fund sweeps, raids the rainy day fund and pension assets, and assumes future income-tax revenue while cutting Medicaid, child care, schools, and other services. They said the transportation budget has some positive emphasis on road preservation but criticized ferry funding and the proposed sweep of the Public Works Trust. On the capital budget, they were less specific and described it as generally bipartisan. The lawmakers also addressed reports of fraudulent or duplicate sign-ins on the income-tax bill, saying any abuse should be investigated but that many duplicate entries may have been accidental rather than malicious. They said the system should be improved with better verification, but maintained that more than 100,000 unique people had signed in opposition. Other issues discussed included opposition to using pension funds to balance the budget, criticism of a Sound Transit proposal for 75-year bonds, concerns about a bill requiring arbitration before lawsuits against the state or local governments, and objections to child care budget changes they said would hurt rural and property-poor communities without broader regulatory reform.

Transcript Highlights:

• Welcome to the joint budget hearing on Governor Healey's proposed FY27 budget.
• A budget proposed...
• state budgets work.
• HHS budget already represents 17% of our total budget.
• on a yearly budget.

Committee: Joint Joint Committee on Ways and Means

Transcript Highlights:

• CDCR's budget was 9% of the state budget 10 years ago. It's 5.6% now.
• Well, just in general, the budget, the 2024 budget act assumed $190 million in efficiency savings.
• I will point out again, too, that our share of the budget continues to go down, and our budget on the
• the budget is, in fact, going down.
• So what you have happen is that there's dollars in the budget that are budgeted for positions, but in

Summary: The subcommittee heard an overview from the Board of State and Community Corrections on its budget change proposal for 11 additional permanent positions, which BSCC said are needed to manage a rapidly expanded grant workload, increase technical assistance, and strengthen oversight and audits. BSCC also updated members on its new In Custody Death Review Division, created under SB 519, reporting that it has begun collecting and reviewing local jail death investigations, has hired about one-third of its staff, and has received access to medical records and related documents. Members raised concerns about family notification practices, local jail deaths, and whether BSCC’s increased administrative use would reduce grant dollars; BSCC said the change is intended to be permanent but should not substantially affect local assistance. The LAO supported the position authority request but flagged a methodological issue in the administration’s Proposition 47 savings estimate, and Finance said it would update the estimate by May Revision. The committee then reviewed CDCR’s overall budget, population, and facility issues. The Secretary said the incarcerated population is holding around 90,000, parole around 33,000, and described major cost pressures from retirements, workers’ compensation, medical transport, violence, and aging infrastructure lacking air conditioning and ADA features. He defended prison closures as creating overcrowding and reducing programming capacity, while also highlighting successes such as declining recidivism, expanded college and reentry programming, and the completion of the San Quentin Rehabilitation Center. Members pressed CDCR on fiscal discipline, the effect of closures on savings, community impacts from prison shutdowns, vacancy and staffing issues, and climate-related facility needs. CDCR said it clusters medically vulnerable and ADA-needing populations at more suitable facilities, uses heat plans and temperature monitoring, and is developing a 20-year infrastructure plan. A separate item addressed CDCR’s request for $91 million ongoing for lump-sum leave payouts for correctional officers and nurses. CDCR said these costs have historically been covered by vacancy savings, but declining vacancies and facility closures have reduced that source. The LAO said the funding is reasonable in the near term but recommended limited-term approval with reporting, and urged the Legislature to scrutinize unallocated savings assumptions and the ongoing Boston Consulting Group efficiency contract. Finance argued the lump-sum request should be ongoing because the costs are recurring and vacancy savings are less reliable. Members questioned whether CDCR is doing enough to reduce leave liability and whether the department will actually achieve the budgeted savings from the consultant work. Finally, CDCR presented updated population projections through June 2030, estimating a 6.5 percent decline in the institution population and a 10.4 percent decline in parole, while revising its Proposition 36 methodology based on actual admissions data. CDCR said Prop. 36 admissions are increasing but at a lower level than previously projected, and that the law’s long-term effects remain uncertain. On the California Rehabilitation Center closure, CDCR projected about $99.6 million in net General Fund savings next year and roughly $150 million ongoing, with 522 positions eliminated. The LAO said the state could close another prison within a few years and identified the Correctional Training Facility in Soledad as a strong candidate, recommending against approving new capital projects there unless another closure is identified. Finance said the administration has not proposed any additional closure at this time.

Transcript Highlights:

• This budget does just that. If you factor in the managed This budget does just that.
• This budget steps up.
• The budget in front of us is indeed an imperfectly good budget—imperfectly good.
• Voting yes for this budget is voting yes to protect the taxpayers of this budget.
• Today, this chamber passed another state budget. Budgets are all about priorities.

Summary: The Senate opened with prayer, the Pledge of Allegiance, communications, committee reports, and leaves of absence. The journal was approved 50-0. The chamber then took up House Bill 1505, which drew extended debate over school funding and adequacy/tax equity. Senators Coleman and Keefer argued the bill continued to pour money into districts like Allentown without accountability or improved results, while Senators Costa, Miller, Haywood, and Anthony Williams defended the funding as a response to historic underfunding and the Commonwealth Court decision. A motion allowing Senator Coleman a third speaking turn was adopted 27-23, and the bill ultimately passed 45-5. The Senate then considered House Bill 2400, the General Appropriation Act. Supporters, including Senators Martin, Dush, Phillips-Hill, Costa, Ward, Street, Hughes, and Pittman, emphasized that the budget was balanced without using the rainy day fund or raising taxes, reduced the governor’s proposal, increased education and child care funding, supported nursing homes, rape crisis centers, infrastructure, and workforce programs, and shifted money from lapsed or unused accounts to current priorities. Opponents, including Senators Saval and Muth, said the budget failed to address structural deficits and omitted new revenue options, emergency services funding, and other major issues. The bill passed 44-6 with amendments and was returned to the House for concurrence. The Senate also passed a series of other bills, including House Bills 2412, 2413, 96, 858, 1042, 1286, 1646, 1851, 1862, 2017, 2024, 2401, and 2559, with varying margins, and sent them to the House, some with amendments. House Bill 1042 drew a negative recommendation from Senator Costa over a late amendment involving second-degree murder/felony language, but after reconsideration and vote changes it passed 30-20 with amendments. House Bill 1862, creating an Ignition Interlock Driver’s License, passed 45-5 after support from Senator Judy Ward. House Bill 1248 passed 43-7 and designates Pennsylvania rye whiskey as the official state spirit, with Senators Bartolotta and Robinson speaking in support. The chamber also adopted Senate Resolution 216, after defeating Senator Haywood’s amendment to narrow the scope of a proposed Legislative Budget and Finance Committee study of managed care organizations; the resolution passed 31-19. Several other bills were held over in their order, and the Senate later moved toward a condolence resolution.

Transcript Highlights:

• So for those reasons, I support the budget. Support a 2002 budget. Thank you.
• So for those reasons, I support the budget, support a 2002 budget. Thank you.
• Speaker, to inquire the budget chair. Thank you, Mr. Speaker, to inquire the budget chair.
• Within MoDOT's budget, there's a lot of programs included here within MoDOT's budget.
• I've appreciated working alongside the budget chair and all members of the budget committee.

Transcript Highlights:

• So the budget, I should say, required deposits into the Budget Stabilization Account would occur until
• By suspending the budget, adding the emergency ordinance to the budget, we did not do the deposit of
• On every expenditure in the budget.
• We should be prioritizing making sure, especially when we've built our budget on boom-or-bust budgeting
• And so I appreciate the work of my colleagues, the budget chair, and all the budget subcommittee chairs

Summary: The Assembly Budget Subcommittee on Accountability and Oversight heard ACA 20, the Safe for California Futures Act, a constitutional amendment to strengthen the state’s Budget Stabilization Account (rainy day fund). The authors, Assembly Members Gabriel and Valencia, said the measure would raise the reserve cap from 10% to 20% of General Fund revenues, change how reserve deposits are treated under the Gann limit so deposits would not count against the spending cap until withdrawn, and update eligible debt repayments to include items such as budget loans, Proposition 98 settle-up obligations, and unemployment insurance debt. They emphasized that the proposal was intended to protect schools and core public services and to help California better withstand revenue volatility and future downturns. Committee discussion focused heavily on the technical effects of the measure, especially its interaction with Proposition 98 and the Gann limit. LAO and Department of Finance staff explained that Prop. 98 funding would not be changed directly, that the reserve deposits would be treated as exclusions from the appropriations limit, and that withdrawals would count when spent. Members asked about current reserve levels, mandatory deposits, and whether the measure would create more room for discretionary spending; supporters argued it would simply allow the state to save more in good years, while one member expressed concern that it could function as a slush fund and expand spending opportunities. Several members cited recent budget volatility, record revenues, and the need for stronger reserves, while others stressed that the measure should be understood as a future-oriented savings reform rather than a response to this year’s budget choices. Public testimony was uniformly supportive. California Forward, Elevate California, and the California Chamber of Commerce all backed the proposal, with the Chamber noting support for the policy and highlighting the importance of addressing unemployment insurance debt for small businesses. The chair concluded by thanking the authors, staff, and witnesses, and said ACA 20 was expected to move to the Assembly floor the next day.

Transcript Highlights:

• Well, the good news is that the budget we have, including for the biennium we're setting the budget for
• </c> that I think we could balance the budget that I think we could balance the budget problem<00:04:
• We kept a strong budget reserve. We kept a balanced budget.
• We kept a strong budget reserve. We kept a balanced budget.
• We kept a strong budget reserve. We kept a balanced budget.

Transcript Highlights:

• </c> to make sure we have a balanced budget. to make sure we have a balanced budget.
• And will you have to come back after May in order to pass a revised budget following the budget that
• that</c> budget following the budget that budget following the budget that Congress<00:07:43.360><c>
• Have these budget federal decisions factored into your conversations about a state budget?
• We have not had a ton of budget?

Transcript Highlights:

• Becker, and state budget director Anam Mingi.
• I also want to thank Anam Mingi and our budget team for their work developing the budget outlook, as
• </c> turn the briefing over to state budget turn the briefing over to state budget direct<00:22:15.880
• Now let me turn to changes in the education forecast. budget in fiscal year 2029 as you can budget in
• </c><00:32:19.799><c> is</c> extent to which our state budget is extent to which our state budget is

Summary: Minnesota Management and Budget presented the February 2025 budget and economic forecast, with Commissioner Aon Campbell, State Economist Anthony Becker, and Budget Director Anam Mingi outlining updated revenue, spending, and long-term balance projections. The state’s FY 2026-27 general fund outlook remains positive but weaker than in November, with an ending balance of $456 million, down $160 million from the prior forecast. Looking ahead, the planning years FY 2028-29 show a projected deficit of just under $6 billion, driven largely by spending growth outpacing revenues. Officials emphasized that discretionary inflation is a major factor in the forecast, but also noted that those amounts are not automatically appropriated and would require legislative action. Becker said the national outlook has changed since November, with higher expected inflation, higher interest rates for longer, and slower growth in later years. He highlighted uncertainty around tariffs, trade policy, immigration policy, federal spending, and possible changes to tax and debt-ceiling policy, all of which could affect Minnesota’s economy and revenues. Minnesota’s labor market remains tight, with low unemployment and rising wages, and the revenue forecast was revised upward overall for FY 2026-27, including higher income and sales tax receipts, though corporate tax revenue was slightly lower than previously projected. Mingi said projected general fund spending is up $79 million in FY 2026-27 and $960 million in FY 2028-29 compared with November. The largest increases are in education and health and human services, especially due to inflation, higher pupil counts, special education costs, long-term care, and higher Medical Assistance spending. She noted that higher utilization of weight-loss drugs also raises Medicaid costs, and that a smaller assumed bonding bill helps offset some debt service costs. The commissioner and staff repeatedly warned that federal policy changes, especially possible Medicaid reductions, pose a major risk; they said Minnesota could face billions in lost federal funding, including a potential $2.4 billion hit if the enhanced Medicaid match for adults without children were eliminated. No votes or legislative actions were taken in the presentation.