The Economic and Revenue Forecast Council (ERFC) estimates that revenues from funds subject to the outlook (NGFO) will total $76.237 billion in 2025–27, $82.164 billion in 2027–29, and $91.739 billion in 2029–31. The new revenue forecast incorporates all the legislative changes made during the 2026 session, including the adoption of the income tax.

Economic changes in the June forecast (i.e., revenue changes that were not assumed in the enacted 2026 supplemental budget) are expected to reduce NGFO revenues by $427 million in 2025–27, $450 million in 2027–29, and $123 million in 2029–31. As the ERFC notes, “The June state economic forecast generally indicates reduced economic activity compared with the February 2026 forecast.”

However, the reduction in 2025–27 is offset by higher-than-expected capital gains tax revenues for tax year 2025. The supplemental budget (Sec. 940) amended the capital gains tax statute to direct all capital gains tax revenues in 2025–27 to the education legacy trust account (ELTA, a fund subject to the outlook). Without that change, any collections over $539 million in FY 2026 and $555 million in FY 2027 would have been deposited in the common school construction fund (not a fund subject to the outlook). (This is a way to manage the volatility of capital gains taxes.) The 2026 supplemental assumed that this temporary change would increase NGFO revenues by $394.6 million in 2025–27.

Now the ERFC is estimating that this redirection of capital gains tax revenues will add $1.385 billion to the NGFO. The ERFC classifies this as a legislative change because absent the legislative redirection, all the upside would have gone to the common school construction fund. Effectively, though, this gives the Legislature about $991 million more to work with than expected for 2025–27. Along with the economic change of -$427 million, NGFO resources increased by $564 million.

Altogether, the June forecast improves the outlook. After the 2026 session, the unrestricted NGFO ending balance was $277 million in 2025–27 and $653 million in 2027–29. I estimate that the ending balance is now $841 million in 2025–27 and $780 million in 2027–29. But, if you remove assumptions for prior period adjustments and reversions, the ending balance is -$246 million in 2025–27 and -$1.325 billion in 2027–29.

At the end of the Legislative session, enacted appropriations for 2025–27 exceeded expected NGFO revenues by $4.9 billion. With the June revenue forecast, that gap is now $4.0 billion.