OMB lays out FY2027 plan aimed at closing structural deficit; revenue bills referenced

Brian Maxwell, director of the Office of Management and Budget, told the Joint Committee on Capital Improvements that the governor's FY2027 financial plan rests on two principles: "Efficiency and transparency," and "responsible budgeting." He said the plan assumes appropriating 98% of available revenues, fully funding the rainy-day fund at 5% of gross revenues, and maintaining a budget stabilization fund of roughly $469.3 million.

Maxwell said the administration identified $524.5 million in "cost drivers"—with Medicaid personnel and the education unit accounting for about two-thirds of that total—and began the budget process with a $511.6 million starting appropriation deficit. He described four solutions that together produced $554.4 million to close that gap: agency cost-driver reviews ($107.8 million), a balanced 1% across-government reduction and 1% switch funding ($131 million), reprogramming cash-to-capital ($168.7 million), and a conservative 98% revenue package (~$146.9 million).

The director tied elements of the revenue package to pending legislation. He referenced a business-formation fee modernization that appeared in the governor's revenue package and has been introduced as House Bill 400, saying the fiscal note on the bill now stands at about $142.6 million rather than the $81 million originally estimated. He also noted tax adjustments that have been included in a house substitute to HB215 and the administration's proposal to establish a state film tax credit carried in HB364.

Why it matters: Maxwell said the package narrows projected operating-budget growth (4.99% in FY27) closer to expected revenue growth (3.52%), reducing projected imbalance and allowing the administration to protect core services. Committee members pressed OMB about the assumptions and how later revenue updates (March and beyond) could affect available bonding authority.

On details and next steps: Maxwell noted a March update increased the appropriation limit by about $34 million from the December projection and that the bond bill and appropriation language will be the locus for technical adjustments as revenues evolve. He concluded by offering to answer committee questions on specific program requests and legislative changes.

The committee followed with questions about collective bargaining, school construction requests and specific bond-line priorities. The hearing continued with OMB's capital presentation and department requests.