Shortly after Gov. Patrick Morrisey came into office early this year, his administration warned of a possible $400 million budget gap up ahead.
Today, entering a new budget season, representatives of his administration painted a far more Goldilocks scenario. It’s not that there aren’t financial pressures, but officials said the state is in reasonable position to handle them.
Senator Ben Queen, a member of his chamber’s finance committee, wanted further explanation of how the outlook could have changed so significantly.
“Every time I come into this building, I’m confused whether we’re in a healthy place or not. Nine months ago, I felt like we were going to go through some pretty tough budget cuts, but today, I feel like we’re in a pretty good healthy position,” said Queen, R-Harrison.
He then asked, “What has happened over the last several months to seem like we’re in a pretty healthy spot today?”
Revenue Secretary Eric Nelson responded the relatively firm footing is mainly a matter of timing. In other ways, he described earlier caution as having paid off.
From the time Morrisey and his administration forecast the potential $400 million budget gap, officials made a range of budgetary adjustments to try to close it.
The state ended this past fiscal year June 30 bringing in about $250 million more than officials had anticipated, much of which had already been spoken for as long the money was there.
Over the first couple of months of this fiscal year, the state is off to a solid but not spectacular start.
For the new fiscal year that started July 1, collections exceed the state’s official estimate by about $17 million. That’s 6.2% ahead of prior year collections so far.
After Nelson’s response, Queen then sought assurances that the state would not be up against an unanticipated budget catastrophe.
Referring to the start of the Legislature’s consideration of the budget in January, Queen asked, “You don’t believe, as of right now, we’re going to have some surprise budget deficit to solve again, do you?”
Nelson responded that the administration has reinstituted six-year financial outlooks as an effort to look ahead effectively.
“So you’re we’re always looking ahead,” Nelson said, referring more specifically to potential financial pressures from the Public Employees Insurance Agency and the Hope Scholarship for students outside the public school system, along with the possibility of pay raises for state workers.
“We’ve got to have a balancing act,” he said.
Nelson said state agencies are already preparing their budget proposals for next fiscal year. He said those proposals will be more detailed than usual.
“So not only were the agencies asked to give us their ’27 request, it as a standard, they were asked for ’27 supplementals. These are the one-time spends that they have immediate needs for that they have not been funded in the past, or special things that have come forward,” he said.
“Also this year, each agency is being asked for a five year plan. Let’s look out five years and what do we see? What do we anticipate?”
Finally, he said state officials are examining the potential financial effects of the Big Beautiful Bill Act that Congress passed earlier this summer.
“And as changes happen in DC, we have these changes all the time, so we’ve got to be flexible, and that’s part of our budgeting process right now,” he said.