Jeff, secretary of the Office of Policy and Management, told the Appropriations Committee that the governor's proposed two-year budget is narrowly balanced and would require a legislative change to the volatility-cap threshold to provide added spending room. "We had to make up 2 years of growth in 1 year in fiscal 26," he said, describing the pressure on the first year of the biennium.

The proposal would move some previously off-budget items into other funds, rely on carry-forward revenue and one-time surplus deposits to seed new initiatives, and asks the General Assembly to use "implementer" language to adjust the volatility cap's starting point. The secretary said the volatility threshold, originally set using 2017 estimates, could be reset using a five-year average; doing so would require a three-fifths vote in the legislature.

Why it matters: OPM officials described large near-term fiscal pressures, including an estimated current-year Medicaid deficiency and fast-growing current-services costs that consume most of available cap growth in fiscal 2026. The administration said it is proposing most new spending in the second year of the biennium to accommodate those first-year constraints.

Key budget mechanics: The presentation cited roughly $304 million in first-year "revenue cap savings" and $317 million in the second year as buffers. Officials proposed moving Town Aid Road funding back into the capital budget (where it historically resided) to balance the Special Transportation Fund, and flagged transfers between funds to preserve operating balance. The administration also said it would use the Office of Policy and Management's implementer language to reflect the volatility-cap change and that the change would preserve a smaller buffer in exchange for additional general-fund spending.

Lawmakers questioned whether the proposal could be enacted without adjusting the volatility cap. Representative Nuccio asked directly whether the budget could be enacted without the $300 million change; the secretary answered, "No. We'd be 300,000,000 out of balance." Several members emphasized that shifting one-time federal ARPA dollars and other non-recurring funds into ongoing obligations would be constrained by the spending cap and could require future trade-offs.

Looking ahead: The administration said detailed slides, agency breakouts and a capital-bond package online provide the specific program and bond-authority numbers. Officials urged the committee to consider both short-term balancing steps and longer-term guardrail changes that would require a supermajority vote to implement.