As the Legislature begins its budget development, one of the first steps is to set targets which are allocations of the total revenues available. An overall target is established for the entire budget that may not exceed the revenue estimate set by the REC and must account for any prior commitments the state has obligated itself to pay. Subsequently, each subcommittee is assigned a sub-target to be allocated for appropriations on items within its purview.

Several factors may have an impact on the overall target and subsequent subcommittee sub-targets. For example, in 1997 the 10% income tax cut reduced available revenues by approximately $200 million. The spending targets were then adjusted to compensate for the reduction. An additional factor that heavily influences the targets is built-in increases the state has obligated itself to pay. These are increases in appropriations that have already been determined by previous actions of the Legislature and Governor. For example, the increase in the K-12 school aid formula is determined a year in advance. Therefore, that increase must be calculated into available revenues that may be appropriated.

The amount of total funding that is available in a year is a function of total receipts available adjusted for any tax cuts or increases as well as any prior obligations made by the state that must also be paid.