|S.F. No. 1481 - Budget Process Changes (As Amended by the State Government Budget Division Report)|
|Author:||Senator Richard Cohen|
|Prepared by:||Thomas S. Bottern, Senate Counsel (651/296-3810)|
|Date:||April 28, 2009|
This bill contains a number of the policy changes recommended by the Budget Trends Study Commission established under Laws 2007, chapter 147, article 2. The bill makes a variety of changes that will affect the content of budget documents and the treatment of the budget reserve account.
Section 1 [Forecast Parameters] requires that expenditure estimates provided in the forecast must include those projected to occur as a result of inflation.
Section 2 [Forecast Variable] requires the Commissioner of Finance to consult with certain legislative chairs when determining the rate of inflation and the application of inflation to be included in the expenditure portion of the forecast.
Section 3 [Demographic Trends Analysis] requires each November forecast to include an analysis of projected demographic changes with implications for the ten and 20-year period beyond the forecast, beginning in November 2010.
Section 4 [Revisions to Proposed Budget] amends the requirements in existing law concerning the preparation of the budget in odd-numbered years to include a two-week time limit for the inclusion of revisions to the proposed budget to deal with changes in the forecast.
Section 5 [Structurally Balanced Budget] requires that the budget submitted by the Governor must include recommendations to eliminate any shortfall between projected revenues and spending for the following biennium. This section is made effective the day following final enactment.
Section 6 [Additional Revenues; Priority] adjusts the allocation of a positive unrestricted budgetary general fund balance required for the budget reserve account from $653 million to an amount equal to two percent of the general fund expenditures and transfers for the proceeding biennium. Also contains an additional requirement to allocate any positive unrestricted general fund balance at the close of the biennium to the budget reserve account until the amount in the account is equal to five percent of general fund expenditures and transfers for the previous biennium.
Section 7 [Report on Budget Reserve Percentage] requires the Commissioner of Finance to periodically review the formula developed by the Budget Trends Study Commission to estimate the percentage of the general fund expenditures and transfers from the previous biennium that should be recommended as a budget reserve. The commissioner is required to periodically update the formula used to derive that recommendation and to provide a report to legislative chairs concerning the commissioner's recommendations for budget reserve amounts.
Section 8 [Cash Flow Study] requires the Commissioner of Finance to submit a report to certain legislative chairs concerning the cash flow condition of the general fund for the 2010-2011 biennium, together with an assessment of options for improving long-term cash flow management. The report is due January 15, 2010.
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