Transcript Highlights:

• sight of the fact that a lot of what we are experiencing now is because of the impacts of inflation
• Very much appreciated the highlighting of the impacts of both inflation and these tariffs on the everyday
• Trying to pass off the impacts of these tariffs on top of inflation, on top of trying to recover from
• Thank you, and I also just want to thank you for the great overview on inflation, the impacts both of
• What is the impact?

Committee: House Economic Development, Growth, and Household Impact

Transcript Highlights:

• These are not for inflation.
• This is before the impact of inflation and so when we looked at these numbers two years ago you can see
• They get the combined statewide impact of the small and midsize average impact on schools throughout
• Because of the adverse impact of inflation, they've adopted Deficit budgets drawn from their reserve
• You've heard a lot about inflation today, and so I'll give you our inflation fact. from last time.

Bills: HB2 , HB2

Committee: House Public Education

Transcript Highlights:

• But now at loved and has impacted lives.
• And I'm thinking, making so much impact.
• That will be inflated at 1.5% per year.
• </c> That will be inflated at 1.5% per year. That will be inflated at 1.5% per year.
• The Inflation Reduction Act bottom.

Summary: The meeting opened with roll call, a quorum was confirmed, and the minutes were approved. The committee then heard testimony on Senate Bill 9, which concerns TRS sick leave audit requirements and process. Auditor Allison Ball’s staff said the audit is an information-gathering review of how teacher sick leave is accumulated, current balances, how many employers use the sick leave function, and the policies and procedures governing sick leave. Members discussed how unused sick leave affects retirement calculations, the distinction between the state’s financial responsibility and school districts’ responsibility, and whether the audit would also examine related leave categories such as personal leave, annual leave, and leave of absence. Committee members emphasized that Senate Bill 9 was intended to add accountability and standardize reporting, including preventing annual leave from being rolled into sick leave. Several members asked for clarification on how sick leave is factored into retirement benefits. Witnesses and members explained that, under the system described, accumulated sick leave can be converted into retirement credit based on a teacher’s daily rate and then multiplied by a percentage, with the school district often bearing the cost. Members also noted nuances in the law, including different accumulation limits by hire date and tier, and that the audit may help the public better understand why some educators retire relatively young. The auditor’s office said it is still early in the process, has met with TRS leadership, and will report back once the audit progresses. The committee also asked whether maternity leave would be included; the auditor’s office said it was not specifically mandated but could be examined if the body requests it. The committee then received an overview of Senate Bill 10 from KPA representatives Ryan Barrow and Rebecca Atkins. They explained that the bill enhances retiree health insurance benefits for certain CRS members who are non-Medicare participants and meet specified career thresholds, with different rules for hazardous and non-hazardous service. They described the benefit as $40 per month per year of service for non-hazardous service and $50 per month per year for hazardous service, both inflated annually, and clarified that these amounts are not cumulative with prior benefit formulas. Members asked about the interaction between the new amounts and existing benefits, and the presenters explained that the bill also changes current employee health insurance contribution rates effective July 1, 2026, with different impacts by tier and hazardous status. The committee discussed the need for clear communication to affected employees and reviewed example calculations showing how the new contribution structure would work.

Transcript Highlights:

• of inflation over time.
• Really, I very much appreciated the highlighting of the impacts of both inflation and these tariffs on
• Trying to pass off the impacts of these tariffs on top of inflation, on top of trying to recover from
• And I also just want to thank you for the great overview on inflation, the impacts both of inflation
• and economic impacts.

Summary: The committee held an information hearing on California’s economy and household affordability, with the first panel focusing on inflation, housing, energy, wages, and the likely effects of new federal tariff policy. PPIC’s Sarah Bone said Californians remain deeply pessimistic about the economy, with inflation the main driver of concern; she noted prices are still about 23% higher than in January 2020, with especially large increases in food, energy, and housing costs. LAO’s Brian Euler emphasized that housing is the largest household expense and pointed to insurance, electricity, gasoline, and health care as other major cost pressures, urging the Legislature to review whether existing policies are actually reducing costs and to consider studies of why recent housing laws have not produced more units. UC Davis economist Catherine Russ warned that tariffs on China, Canada, Mexico, and potentially broader imports could raise consumer prices, disrupt supply chains, and hurt California exporters, farmers, and small businesses; she suggested monitoring prices, strengthening food assistance, and preparing transition support for affected workers and producers. Members pressed the panelists for concrete, near-term policy ideas, especially on housing and tariffs. Questions centered on whether accessory dwelling units are making a meaningful dent in affordability, how to improve implementation of pro-housing laws at the local level, and how to measure the impact of tariffs on consumers, health care, and agriculture. Panelists said ADUs help but are limited, that state laws can be undermined by local implementation and litigation, and that tariff effects may show up quickly in prices and later in hiring and investment. Several members stressed that the tariff issue is not a minor disruption for constituents and asked for more data on consumer impacts, food aid needs, and crop-specific farm losses. The second panel shifted to regional economic development and small business support. Go-Biz’s Derek Kirk described California Jobs First and the state economic blueprint as a first-in-decades, regionally informed strategy to create good-paying jobs, support key sectors, and align workforce and business development across 13 regions. The California Association for Local Economic Development’s Gerbach Sahota argued that local governments need practical tools, stable policy, and stronger partnerships with the state, while warning that prosperity is not always perceived as shared and that rural communities can be left behind. He urged the Legislature to use hearings, local input, and existing funding streams more effectively, including for recovery and infrastructure. David Fitzgerald of the Small Business Development Centers said California’s SBDC network serves hundreds of thousands of clients, many of them women and historically underrepresented entrepreneurs, and has generated billions in economic impact, capital access, revenue, and jobs. He said the biggest gaps are outreach to the state’s many self-employed businesses with no employees, better labor data on those workers, and more flexible support for direct services. Committee members then asked what small businesses need most in the face of inflation and tariff shocks, including lower licensing costs and other relief, and the discussion continued on how to better target state support to businesses and households under pressure.

Transcript Highlights:

• </c><00:09:52.000><c> in</c><00:09:52.880><c> uh</c> tie to inflation in uh tie to inflation in uh 2030
• um inflation will in this proposal inflation<00:10:08.160><c> will</c><00:10:08.480><c> not</c><00:10
• </c> what that decoupling from inflation what that decoupling from inflation actually<00:26:04.799><c
• </c> um from the uh inflation. um from the uh inflation.
• Those are the two most impactful.

Committee: Senate Taxes

Transcript Highlights:

• That fiscal note portion does not concern the revenue impact of bills, but rather the impact of that
• I mentioned inflation a little bit already.
• I mentioned inflation a little bit already.
• I mentioned inflation. This is our forecast for inflation.
• So we have elevated inflation.

Summary: House Finance met in work session on January 13, 2026, beginning with the introduction of new member Rep. Janice Zahn and a reminder about short-session amendment deadlines. The committee then heard JLARC’s 2025 tax preference performance reviews, covering nine preferences. JLARC recommended continuing several preferences, including natural gas transportation fuel exemptions, reduced B&O rates for travel agents and tour operators, a property tax exemption for nonprofit low-income housing developers, a property tax exemption for multipurpose senior centers, a sales and use tax remittance for disabled veteran adapted housing, a trade convention attendance nexus exemption, a B&O exemption for agricultural fertilizer and seed sales, and a hazardous substance tax exemption for certain pesticides. JLARC also recommended allowing unused silicon smelter-related preferences to expire. Members asked about legislative intent, data limitations, and how performance metrics should be tied more clearly to policy objectives; committee leaders and JLARC staff discussed a new standardized rubric for future tax preference performance statements and fiscal note review. The committee also noted that bills related to some of the reviewed preferences were already introduced. For the low-income housing exemption, JLARC said nonprofit developers were building homes as intended but that the current spending-based metric did not fully reflect the policy goal, and it recommended the legislature decide whether to continue or modify the preference. For multipurpose senior centers, JLARC said the exemption met its inferred objective and recommended continuation, with possible consideration of making it permanent. For the disabled veteran adapted housing remittance, JLARC said few eligible veterans were claiming the benefit and recommended continuation with changes to improve access and consultation with the Department of Veterans Affairs. On the trade convention attendance exemption, JLARC said use was unknown but the preference likely helped keep Washington competitive with other states and recommended continuation, though members questioned the lack of direct evidence and the administrative-burden rationale. The committee then received an update from the Economic and Revenue Forecast Council. The forecast showed the U.S. economy slowing but still growing, with Washington expected to have modest growth, weak employment gains, continued personal income growth, and slow construction. ERFC said tariffs and trade policy remained the biggest risks, inflation was expected to stay elevated in the near term, and the Federal Reserve had cut rates three times in 2025 with two more cuts projected in 2026. State revenues were up $105 million in the current biennium compared with the November forecast, but down $185 million in the next biennium, with growth driven in part by recent legislative changes and improved estate tax collections. Members asked about sector-specific employment trends, the impact of high-income households on retail sales, and how state revenues compare with personal income over time. The meeting adjourned after the forecast presentation.

Transcript Highlights:

• This is an attempt to show how that inflation is impacting school districts, because remember that you're
• This is an attempt to show how that inflation is impacting school districts, because remember that you're
• This is an attempt to show how that inflation is impacting school districts, because remember that you're
• </c> including those not linked to inflation including those not linked to inflation it<01:32:01.040>
• inflation.

Committee: House Education Finance

Transcript Highlights:

• </c> revenue impacts have been? revenue impacts have been?
• impact local communities. Um, we also impact local communities.
• Inflation does not matter. Um your are. Inflation does not matter.
• Inflation is a thing. So in everywhere. Inflation is a thing.
• you know if inflation is if inflation you know if inflation was<03:18:00.399><c> up</c><03:18:00.720

Committee: Joint Revenue

Transcript Highlights:

• So, that'll have an impact.
• </c><00:04:10.480><c> us</c> recession, how would that impact us recession, how would that impact us
• So, that'll have an impact. The states. So, that'll have an impact.
• , which we're not going to cut things so that we can inflate them later.
• , which we're not going to cut things so that we can inflate them later.

Transcript Highlights:

• But about inflation. Mm-hmm.
• Does it catch you up to inflation from 2019? Are you getting enough to account for inflation?
• , will this bill still lead to inflation?
• So it really impacts families. It does.
• by steep inflation.

Bills: HB2 , HB2

Committee: House Public Education

Transcript Highlights:

• If you reduce that impact fee, the impact fee should be at cost and therefore you would hurt the city's
• SB 14, as I understand, only will impact those political subdivisions that are already paying an impact
• We're going to impact public education. We're going to impact public safety.
• So it's fair to say the rhetoric criticized inflation is inflated. I would say so.
• This will impact our economy; it will impact our local businesses, and that is concerning.

Bills: HB26 , HB73 , SB 14 , HB46

Committee: House Intergovernmental Affairs

Transcript Highlights:

• This shows the impact.
• The impact, this top chart, is the impact of that gas tax increase going all the way back to 1923.
• And then the impact of the legislation in 2020, those two five-cent increases, and then the impact of
• the CPI-U inflation factor.
• Yeah, and then it was indexed to whatever inflation the inflation rate is.

Summary: The Assembly Transportation Committee first took up three highway naming resolutions on its consent calendar: ACR 109, SCR 78, and SCR 90. The committee approved the consent calendar with 11 aye votes and no no votes, then adjourned the bill-hearing portion. Members also recognized committee science fellow AJ Mendeola for his service, noting his contributions to bill analysis and staff support. The committee then held an informational hearing on alternatives to the gas tax, focused on the projected decline in fuel-tax revenue and the need for a more sustainable transportation funding model. The chair and invited experts described how inflation, improved fuel efficiency, and growth in electric and other alternative-fuel vehicles are eroding gas-tax revenues. Presenters from the National Conference of State Legislatures and the University of California discussed state options such as higher or indexed gas taxes, EV registration fees, road usage charges, delivery fees, public EV charging fees, transportation network company fees, and managed lanes, emphasizing tradeoffs among revenue adequacy, fairness, administrative cost, and public acceptance. Committee members raised concerns that mileage-based fees or EV fees could function as new taxes on commuters and lower-income drivers, especially if the gas tax is not repealed. Presenters responded that road usage charges are generally intended as replacements for the gas tax, not additions, and argued that mileage-based systems better preserve the user-pays principle while being less tied to vehicle fuel efficiency. They also noted that flat EV registration fees are easy to administer but can be less equitable because they are not linked to actual road use. Officials from Hawaii, Utah, and Oregon described their state programs and policy choices. Hawaii said its new road usage charge began July 1, 2025, for EVs, offers a choice between a per-mile charge and a flat annual fee through 2028, and will transition to mandatory EV participation before expanding to all light-duty vehicles by 2033. Utah described its voluntary EV road usage charge program, quarterly reporting, privacy protections, and legislative scenarios for removing the cap or making participation mandatory. Oregon outlined its constitutional cost-responsibility framework and broader transportation funding challenges, including reliance on user fees and limited use of general-fund support.

Transcript Highlights:

• </c> little bit in terms of the inflation little bit in terms of the inflation adjustment<00:09:15.680
• </c><00:11:51.200><c> Uh</c> change in inflation is above 3%. Uh change in inflation is above 3%.
• Uh had grown at the rate of inflation.
• </c> regarding the estimated budgetary impact regarding the estimated budgetary impact of<00:21:17.760
• </c> big increase under the word inflation? big increase under the word inflation?

Summary: The committee met for its fifth and final Interim Joint Budget Review Subcommittee on Education meeting, but did not initially have a quorum and approved the minutes later when enough members were present. The Council on Postsecondary Education, represented by President Aaron Thompson and Vice President Bill Payne, opened with condolences for the UPS crash victims and then presented higher education budget recommendations for the 2026-2028 biennium. Thompson emphasized the return on investment from state support for higher education, citing gains in retention, enrollment, persistence, graduation, reduced time to degree, lower student debt, and expanded dual credit participation, while noting that affordability and access remain priorities. Payne outlined CPE’s operating funds request, including $43.3 million in the first year and $86.6 million in the second year for inflation adjustments, plus $30 million and $45 million for performance funding. He said the inflation request would apply across the board to institutions to offset rising costs, and that the KSU land grant match would not need additional funding because the state has already met the matching requirement. He also explained that state support for educating students has not kept pace with inflation over time, creating pressure on institutional budgets and tuition, though tuition increases have been held to historic lows in recent years. A major portion of the discussion focused on the performance funding model and how it affects smaller institutions. CPE proposed two approaches to address institutions that have received little or no performance funding, especially Kentucky State University and Morehead State University. The first approach would create a $20 million minimum distribution pool, providing $1.95 million to each university and $4.4 million to KCTCS, with the goal of giving smaller and rural institutions a base level of support. The second approach would provide direct appropriations totaling a little over $5.6 million to Kentucky State, Morehead State, and five community colleges that have not been receiving performance funding. Members, especially Representative Tipton and Senator West, questioned how the model had treated small schools over time, and CPE officials explained that the original small school adjustment was not large enough to prevent KSU and Morehead from effectively being left out of the distribution. No votes were taken.

Transcript Highlights:

• , how their business might be impacted.
• And also... ...how their employees are impacted, how the business might be impacted.
• , how the business might be impacted.
• path. ...which is the least impactful path forward.
• There's also an impact on traffic.

Committee: Joint Joint Oregon-Washington Legislative Action Committee

Summary: The Joint Oregon-Washington Legislative Action Committee met for a work session and public hearing on the Interstate 5 bridge replacement program. Program staff outlined major milestones, including the recent biological opinion, the Coast Guard’s opening of a public comment period on the Navigation Impact Report, expected decisions in early 2026 on navigational clearance and the final supplemental environmental impact statement, and a possible amended record of decision in 2026. They also discussed the Bridge Investment Program grant amendment deadline, the need for an initial finance plan, and ongoing community outreach and contractor engagement. Greg Johnson announced he was stepping down as program administrator, and Carly Francis introduced herself as interim administrator. A large portion of the meeting focused on design and cost questions. Staff said the program is studying fixed and movable spans, single- and double-deck configurations, and one versus two auxiliary lanes, with final recommendations to be made through the federal environmental process. They said the Coast Guard’s decision is central to what bridge configuration is permittable and to the timing of the updated cost estimate, which has not yet been released. Members pressed for more detail on cost drivers, potential impacts to businesses upriver, and whether the states would need to seek additional funding. Staff said they had reached agreements with four impacted river users, but the underlying evaluation materials are protected and not publicly releasable. The committee also reviewed transit-related questions. Staff explained that light rail remains part of the modified locally preferred alternative and that ridership and operations estimates are being updated using federal modeling methods. They said projected opening-day transit operations and maintenance costs have dropped from an earlier estimate of $21.8 million to about $10.3 million annually because the current model assumes lower frequency, with Oregon and Washington shares split by geography and fare recovery. Members raised concerns about TriMet’s financial stability and the need for a funding plan by fall 2027, ahead of a planned federal transit funding application in fall 2028. During public testimony, several speakers criticized the delay in releasing a new cost estimate and argued the project scope should be reduced if costs continue to rise. Testifiers from City Observatory and the Just Crossing Alliance said the project appears to be avoiding bad news, urged the committee to consider scope reductions, and questioned whether the active transportation and freeway components align with the project’s core purpose. The meeting ended with thanks to Johnson for his service and a transition to public hearing testimony.

Transcript Highlights:

• So, what is the impact of that gap?
• Also, to help districts keep pace with inflation in the future...
• By that time, inflation would be 20%, roughly.
• Inflation is up by 25.
• Again, 25% inflation. That's. should be $1.25 now.

Committee: House Appropriations - S/C on Article III

Transcript Highlights:

• inflation by the legislature.
• for basic care providers as the appropriated inflation.
• So when we make a provider adjustment, it impacts providers in the same way.
• So, Sarah, on, it kind of explains the rate inflate for inflation.
• You have another additional inflators.

Committee: Senate Appropriations - Human Resources Division

Summary: The Senate Appropriations HR Division met with all members present to review the medical services portion of the HHS budget. Sarah Aker, Executive Director of Medical Services, walked the committee through several budget items, including HCBS cost-to-continue adjustments, the DD bed assessment, expansion of value-based purchasing, targeted rate increases for home health and QSP services, and the cross-disability waiver. Members generally supported the targeted increases for home health and QSP, and Aker explained that the cross-disability waiver funding would support startup work, service design, and infrastructure ahead of a planned July 1, 2028 implementation. The committee spent significant time on rate-setting and provider payment issues. Members discussed ambulance rate rebasing, with several senators expressing concern that the proposed increase was too high relative to peer states; the committee ultimately moved toward reducing that item to $1 million rather than zero so it could be revisited in conference committee. They also discussed a House-added critical access hospital networking grant and similarly leaned toward reducing it to $1 million. Aker explained the department’s value-based purchasing plans, including use of a vendor selected through RFP, and clarified how the department’s existing Medicaid managed care and hospital value-based programs work. A major portion of the meeting focused on long-term care and basic care payments, including a House-added extension of the $5 per day basic care add-on and a proposed shift in nursing facility incentive grants toward a withhold-based model. Senator Mathern indicated he would bring an amendment to delay or modify the withhold change, and Aker said the department would prefer language that directly addresses whether a withhold may be implemented. Members also discussed 1915(i) services, FMAP changes, the Medicaid legacy system modernization carryover, and a House-added legislative intent section on medical assistance. The committee adjourned for the morning with plans to return later to continue Human Services budget work and revisit unresolved items in conference committee.

Transcript Highlights:

• That's the impact of House Bill The first one is line seven.
• That's the impact of House Bill 559 being signed into law.
• Since then, we’ve seen the impact statements. You’ve all seen those.
• It included contract inflation. It included...
• But it's also the impact... ...with our compliance officer.

Summary: The committee first received updates from LSO on the latest green sheet, including the revenue impact of House Bill 559, recent cash transfers, and the Idaho Budget Rescissions Act for FY 2026. Members then moved through a series of FY 2027 maintenance budgets, beginning with the legislative branch. The committee discussed the statewide 2% reduction layered on top of the governor’s recommendation, benefit-cost adjustments, and how those decisions were being built into the maintenance budgets. The legislative branch budget passed, followed by unanimous-consent adoption of related language. The committee next considered public safety, natural resources, health and human services, economic development, judicial branch, constitutional officers, and general government budgets. In each case, analysts explained how rescissions, ongoing base reductions, and statewide adjustments were incorporated. Several members objected to the across-the-board cuts, arguing they would reduce staffing or services in corrections, juvenile corrections, environmental quality, health and welfare, public defender services, crime victims compensation, tax administration, and treatment courts, while supporters said the committee needed a target and would revisit details in enhancement work groups. Most budget motions passed on divided votes and were forwarded with do-pass recommendations. The committee also adopted multiple sections of standard and nonstandard language, including cash transfers, reporting requirements, and agency-specific provisions. In Health and Human Services, members debated language requiring reporting on large acquisitions and transfers, and in Economic Development and General Government they adopted language affecting the State Public Defender, the Department of Insurance, and group insurance premiums. The meeting ended while the committee was still working through a disputed general government language item about funding employee health insurance premiums from reserve accounts, with members debating whether the language should reference specific reserve funds or broader reserve funding and whether the proposal was properly within JFAC’s scope.

Transcript Highlights:

• But if you process the plant, there are going to be some impacts.
• So alkaloids are just natural products that may have some sort of active impact within the body.
• Locally, we have seen negative impacts from kratom use within the city.
• It requires the inflation adjustment to the maximum loan amount. This makes several changes.
• However, that limit should be adjusted as inflation and salaries and prices go up.

Bills: HB2291 , HB2629 , HB2439 , HB1078 , HB1701 , HB2207 , HB2501 , HB2361 , HB1932

Committee: House Consumer Protection & Business

Keywords: kratom, consumer protection, regulation, health safety, substance control, infrastructure, protection, safety, security, state regulations, public health, tobacco regulation, smoking cessation, vapor products, health policy, youth prevention, pet insurance, insurance regulation, animal welfare, claims processes

Transcript Highlights:

• Adjusted for inflation, that $250,000 is equivalent to about $350,000.
• And ensures it keeps pace with inflation by tying it to the CPI.
• And to clarify also, even for goods as well as services, inflation is significantly impacting the cost
• So by not increasing that cap in today's... ...significantly impacting the cost of goods.
• These investments include the Inflation Reduction Act, and for sure.

Committee: House Economic Development, Growth, and Household Impact

Transcript Highlights:

• grant would have, for inflation, medical inflation, $10,000, it would take $78,000 today to make that
• ,<00:07:00.160><c> medical</c><00:07:00.479><c> inflation,</c><00:07:01.520><c> $10,000,</c> inflation
• , medical inflation, $10,000, inflation, medical inflation, $10,000, it<00:07:03.120><c> would</c><00
• But then couple that with the inflation.
• </c><00:10:45.200><c> and</c> have not kept up with the inflation and have not kept up with the inflation

Summary: The Kentucky Board of EMS presented an additional budget request focused on grant funding for local EMS agencies, not agency operations. Officials said the board has 13 full-time staff after losing employees in the 2022 transition back to state government, and that the request would be a 100% pass-through to providers. They initially described two requests totaling $12.91 million: $10.8 million for the EMS block grant and $2.1 million for workforce education tied to House Bill 484, but later said they would withdraw the $2.1 million request because rural health transformation funding appears likely to cover those education needs. Most of the testimony explained why the EMS block grant should be increased. The board said the grant began in 1980 at about $1.2 million and has remained largely unchanged while EMS costs have risen sharply. They cited higher prices for ambulances, stretchers, and cardiac monitors, along with increased labor and reimbursement pressures. Board members emphasized that modern EMS now provides much more advanced care in the field, especially in rural areas, and argued that equipment such as 12-lead cardiac monitors can significantly improve patient outcomes. They said the current grant provides about $10,000 per county, while the request would raise funding to about $100,000 per county and increase the per-capita amount from roughly 26 cents to $2.60. Members also discussed whether the block grant statute should be reformed to target need more directly. Board officials said they had considered making the grant more competitive, but decided against it for now because many counties rely on the annual funding and shifting money away from some areas would create hardship. In response to questions, they said Kentucky has about 160 class one EMS agencies providing 911 response across 120 counties, and that grant awards in recent years reached 91 counties, then 108, then 110 counties. They also highlighted the cost and safety benefits of power loading systems for stretchers, saying they can reduce back injuries and help retain EMS workers, but are often unaffordable for smaller departments. No votes were taken on the budget request during the hearing. After the testimony and questions, the committee approved the minutes from the prior meeting by motion and second, with no opposition, and then adjourned.