Blog

Paid family and medical leave tax rate will increase to 1.2% in 2027

The paid family and medical leave (PFML) tax rate will increase from 1.13% to 1.2% beginning Jan. 1, 2027. By statute, responsibility for the premiums is split between employers and employees. In 2026, employers are statutorily responsible for 28.57% of the premium; in 2027, they will be responsible for 29.3%. (Employers may choose to cover […]

Agency requests include few proposals to reduce spending

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 […]

Advanced computing surcharge revenue forecast increased

The advanced computing surcharge is imposed on “select advanced computing businesses” to help fund the workforce education investment account (WEIA). The surcharge is on top of other business and occupation (B&O) taxes. As part of ESHB 2081 (adopted in 2025), the surcharge rate increased from 1.22% to 7.5%, effective Jan. 1, 2026. At the same […]

Based on agency requests for 2027–29, the impact of H.R. 1 on the state budget will be small relative to overall state spending

In 2025, the federal government enacted H.R. 1, which made various changes to Medicaid and Supplemental Nutrition Assistance Program (SNAP) eligibility and funding. Many of these changes have not yet taken effect. Some result in direct costs for the state, but others would have only indirect impacts to the state budget, depending on legislative choices. […]

New collective bargaining agreements would increase general fund spending by $589 million in 2027–29

The collective bargaining agreements (CBAs) that the Office of Financial Management (OFM) negotiates with state and non-state employees would increase general fund–state (GFS) appropriations by $589.0 million in 2027–29. According to OFM, they would cost $772.9 million in 2029–31. These agreements have all been ratified. Notably, the estimated costs of the CBAs are substantially lower […]

The budget problem could be short-term, if the Legislature chooses

Following the revenue forecast last week, Sen. Robinson and Rep. Ormsby talked about the state having just a “short-term” budget problem. Similarly, Gov. Ferguson said, “Our state continues to face significant short-term budget challenges.” Whether or not the problem is “short-term” will depend on legislative action. The comments made by Sen. Robinson and Rep. Ormsby […]

Budget request odds and ends

As I’ve reviewed the 2027–29 budget requests from state agencies, I’ve written about the full requests of several major state agencies. (Previous posts on the 2027–29 budget requests are available here.) But there are also interesting policy proposals scattered among smaller agencies. For example, some notable policy proposals include: Finally, note that the Employment Security […]

DSHS requests a 15.6% increase in appropriations, mainly due to estimated caseload changes

The Department of Social and Health Services (DSHS) is requesting general fund–state (GFS) appropriations of $14.354 billion for 2027–29. If funded, that would be an increase of $1.936 billion (15.6%) over enacted appropriations for 2025–27. (The requests are provided by program within DSHS: Mental Health, Developmental Disabilities, Long-Term Care, Economic Services Administration, Vocational Rehabilitation, Administration, […]

Transportation revenue forecast decreased

Transportation revenues are now expected to total $8.704 billion in 2025–27, $10.491 billion in 2027–29, and $9.965 billion in 2029–31. For 2025–27, the forecast is just $971,741 lower than was forecasted in June. However, compared to the February forecast, on which the 2026 supplemental transportation budget was based, the new forecast for 2025–27 is down […]

Revenues for 2025–27 and 2027–29 are still lower than expected when 2026 budget was adopted, but income tax revenue estimates are increased going forward

Revenues to funds subject to the outlook (NGFO) are now forecasted to total $76.258 billion in 2025–27, $82.594 billion in 2027–29, and $94.121 billion in 2029–31. Compared to the June forecast, revenues are now estimated to be $22 million higher in 2025–27, $430 million higher in 2027–29, and $2.382 billion higher in 2029–31. The increases […]