As part of the budget instructions for 2027–29, the Office of Financial Management (OFM) warned agencies about “significant budget shortfalls” expected for the biennium and directed agencies to “focus only on addressing mandatory increases while not expanding existing programs and services.” OFM also asked agencies to “provide reduction options for efficiencies, program reforms, and other savings in non-essential services and programs.”

Based on my review of the agency budget requests, this was largely ignored—at least in the publicly-available documents. Not all agencies have submitted requests, but the ones that have account for about 98% of general fund–state (GFS) appropriations in the enacted budget for 2025–27. Altogether, the requests would increase GFS appropriations by $5.7 billion (8%) in 2027–29. The requested maintenance level alone would increase GFS appropriations by $2.3 billion (3.2%). (The requests for the 2027 supplemental budget would increase 2025–27 appropriations by $562.4 million.)

That said, agency requests do not generally provide a good estimate of what the maintenance level for the next biennium will be:

• There are two more caseload forecasts before the Legislature writes the budget.
• Some agencies include an estimate of caseload changes based on the June forecast (e.g., the Department of Social and Health Services) and some agencies don’t include any estimate (e.g., the Health Care Authority).
• Agencies often misclassify policy level items as maintenance level, or vice-versa. (For example, the Health Care Authority includes $142 million to restore Medicaid program integrity savings as maintenance level, but such restorations have always been classified as new policy by the Legislature.)

Further, there are some major holes in the policy level requests. For example, the GFS requests don’t include:

• Funding for the collective bargaining agreements negotiated with state and non-state employees. These are estimated to cost $589.0 million in 2027–29.
• The cost of proposed rates for individual providers of in-home care (and agency parity), which are estimated to cost $124.0 million.

Additionally, some requests for non-GFS funding would have GFS impacts that are not included in the GFS totals. For example:

• The Health Care Authority (HCA) requests $80.0 million from the health care affordability account for the Cascade Care Savings program. The health care affordability account is funded with GFS appropriations.
• The Department of Enterprise Services is requesting $1.274 billion from the self-insurance liability account. The account is funded by premiums paid by agencies. It’s not clear exactly how much would come from the GFS; based on prior years, the GFS would fund a high percentage of the premiums.
• The amount requested by the Department of Revenue does not include any funding for the expansion of the Working Families Tax Credit. The fiscal note for the income tax bill, which included the expansion, had estimated that the expansion would increase spending by $226.0 million in 2027–29.

Note, too, that the Legislature is not obligated to fund any agency request.

The requests include only relatively minor proposals to reduce spending. The 2027 supplemental requests include $5.9 million in savings, and the 2027–29 requests include $94.6 million in savings. Of these, $45.5 million is from a proposed change in functional eligibility criteria for developmental disabilities and long-term care services.

To its credit, the HCA followed the instructions from OFM and provided a list of 25 potential reductions, but the $245.6 million identified by the HCA is not included in the overall $94.6 million savings figure. Instead, the HCA presents them as a menu of options the state might choose from, as needed.

(Previous posts on the 2027–29 budget requests are available here.)