Arkansas Budget and Appropriation Process

Bureau of Legislative Research, 2008

The Budget Process

Preparation

Review/Revise

Authorization

Funding

THE BUDGET PROCESS

Preparation

The Preparation Phase

Budget Calendar

The State Fiscal Year Begins on July 1 and Ends on June 30.

A Biennial Period or Biennium is a two year period that usually begins July 1 of

the odd-numbered year and ends June 30 of the next odd-numbered year.

Jun Jul Sep Oct Nov Dec Jan Mar Apr May JunAug Feb

Budget Requests Prepared

ExecutiveReview

ALC/JBC Hearings

Session Convenes

JointBudget Meetings

Legislature Adjourns

OperatingBudgetsPrepared

Official RevenueForecast

Regular Session Budget Calendar

Fiscal Legislative Session • On November 4, 2008 Arkansas voters

approved a proposed constitutional amendment that becomes effective January 1, 2009 that in-part provides:

• The General Assembly shall meet every year• The General Assembly shall meet in Regular

Session on the second Monday in January• Beginning in 2010, the General Assembly shall

meet in Fiscal Session on the second Monday in February

• A bill other than an appropriation bill may be considered in a Fiscal Session if two-thirds (2/3) of the members of each house of the General Assembly approve consideration of the bill

Fiscal Legislative Session• A Regular biennial session shall not exceed sixty

(60) calendar days unless extended by a two-thirds (2/3) vote of the members of each house of the General Assembly and shall not exceed seventy-five days (75) days in duration, unless extended by a three-fourths (3/4) vote of the members of each house of the General Assembly

• A Fiscal Session shall not exceed thirty (30) calendar days in duration, except that by a vote of three-fourths (3/4) of the members of each house of the General Assembly a Fiscal Session may be extended one (1) time by no more than fifteen (15) calendar days.

• No appropriation made by the General Assembly after December 31, 2008 shall be for a longer period than one (1) fiscal year

• In making appropriations for any fiscal year the General Assembly shall first pass the General Appropriation Bill

The Preparation Phase

Budget Requests

A Budget Request - Commitment Item Format

Title Actual Budgeted Base TotalRegular Salaries $200,000 $352,000 $361,856 $486,856 No. Positions 12 16 16 22 Personal Svs Match 42,000 73,920 75,990 102,240 Operating Expenses 665,000 541,530 529,604 728,354 Conf Fee & Travel 58,776 60,000 60,000 78,000 Capital Outlay 123,241 101,000 - 300,000

Prof. Fees & Services 82,150 71,550 71,550 171,550 Advertising - - - 300,000

Total $1,171,167 $1,200,000 $1,099,000 $2,167,000

FUNDINGFund Balances $2,100,000 $1,365,833 $689,833 $689,833General Revenue 400,000 474,000 474,000 474,000 Special Revenue 37,000 50,000 61,000 61,000 Federal Funds - Total Funding $2,537,000 $1,889,833 $1,224,833 $1,224,833

The Preparation Phase

Roles In Budget Preparation

“In state budgeting, gubernatorial leadership is a dominant consideration.”(Changing State Budgeting: S. Kenneth Howard, 1973)

Roles in Budget Preparation Phase

• Set Policy for Agency Requests

• Forecast State Revenue

• Recommend Budget to ALC/JBC

• Recommend Added Revenues as Needed

Governor/DFA

Roles in Budget Preparation Phase• Consider Agency

Requests & Governor’s Recommendation

• Recommend Budgets to General Assembly

• Recommend State Employee Salary Levels

• Have Bills Prepared for Introduction

Legislative Council / Joint

Budget

83 Members

Roles in Budget Preparation Phase• Consider ALC/JBC

Recommendations • Consider Governor’s

Revisions and New Programs

• Consider Member-Sponsored Bills

• Recommend Fiscal Bills and Pay Levels to General Assembly

• Prepare Revenue Stabilization Amendment

56 Members

Joint Budget Committee

“Legislators get caught spending inordinate amounts of time trying to save relatively trifling sums.”(Changing State Budgeting: S. Kenneth Howard, 1973)

Legislature

THE BUDGET PROCESS

Authorization

AN APPROPRIATION GIVES THE AGENCY THE AUTHORITY TO SPEND MONEY IF AND WHEN IT BECOMES AVAILABLE.

=

The Authorization Phase

The Constitutional Requirements

1 Year Limit on Appropriations

Single Subject

General Appropriation Bill must "embrace nothing but appropriations for the ordinary expenses of the executive, legislative and judicial departments of the state” & be passed first

Appropriations must be in dollars and cents

Appropriations (except for education, highways, and debt of the state) must be approved by 3/4 affirmative vote

Constitutional Restrictions

The Authorization Phase

Types of Appropriation Bills

528

691

922

1163

1326

309 348 370429 475

1496

0

200

400

600

800

1000

1200

1400

1600

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Introduced Appropriation Bills

Types of Appropriation Bills

• Regular Agency Operating Appropriation– 1-year period– Effective July 1

• Supplemental Appropriation– Effective before July 1 & usually immediately– Usually adds to an existing authority– State Funds usually come from an Accumulated

Surplus or recovered Fund Balances

• Construction– State Funds usually from General

Improvement Fund (Surplus & Interest Earnings)

• Reappropriations– Allows the Agency to spend the

balance of an appropriation provided by another General Assembly.

– Not new authority to spend– Usually for old construction projects

The Authorization Phase

Elements of an Appropriation Bill

SECTION 2. APPROPRIATION - OPERATIONS. There is hereby appropriated, to the Abstracters' Board of Examiners, to be payable from the Abstracters' Examining Board Fund, for personal services and operating expenses of the Abstracters' Board of Examiners for the 2008-09 fiscal year, the following: ITEM FISCAL YEAR NO. 2008-2009 (01) REGULAR SALARIES $ 20,193 (02) PERSONAL SERVICES MATCHING 8,264 (03) MAINT. & GEN. OPERATION (A) OPER. EXPENSE 2,567 (B) CONF. & TRAVEL 0 (C) PROF. FEES 0 (D) CAP. OUTLAY 0 (E) DATA PROC. 0 TOTAL AMOUNT APPROPRIATED $ 31,024

HOW MUCH?

FOR WHAT?

WHO? FROM WHERE?

The Authorization Phase

FROM WHERE?

The Budget Process

Funding

TOTAL STATE REVENUEFY 2008

General Revenue $ 5,618,456,330

Special Revenue 1,691,902,903

Cash Funds 3,748,891,979

Federal Funds 4,246,431,485

Trust & Other Non Revenue 2,732,221,175

TOTAL STATE REVENUE$18,037,903,873

TOTAL STATE REVENUE – 2008

$18 Billion

General Revenue

31%

Trust & Other

Non Revenue

15%

Federal

24% Cash

21%

Special

10%

Insurance2%

Income Taxes56%

Sales/ Use38%

Other1%

Luxury3%

GENERAL REVENUE - 2008$5.6 Billion

SPECIAL REVENUES - 2008 $ 1.7 Billion

Property Tax Relief14%

Finance6%

Natural Resources

3%

Highway Users37%

Game & Fish5%

Other35%

SPENDING IS LIMITED BY THE AVAILABLE APPROPRIATION OR THE AVAILABLE MONEY - WHICHEVER IS LESS!

A Program must have

both an appropriation

and a means of getting money to it.

If one or the other is

missing, the program cannot exist.

•DEDICATED SOURCE

•GENERAL IMPROVEMENT FUND

•REVENUE STABILIZATION LAW

Three Methods of Funding Available

•DEDICATED SOURCE

Three Methods of Funding Available

The Constitution says “…no moneys arising from a tax levied for one purpose shall be used for any other purpose.”

•State Dedicated Tax or Fee (Special Revenue)

•Federal Grant-in-Aid

•Cash Funds

•Trust Funds

•Non-revenue Receipts

DEDICATED SOURCES OF FUNDS

Arkansas Biosciences

Institute Program Account

Prevention and Cessation Program

Account

Tobacco Settlement Program Fund(Remainder of 2001 after Healthy Century Transfer

and remainder after Debt Service Fund Transfer Thereafter)

Medicaid Expansion Program

Account

Targeted State Needs Program Account

Healthy Century Trust Fund(First $100 Million +

Interest+ Unneeded Funds in Debt Service Fund)

Tobacco Settlement Cash Holding Fund

Tobacco Settlement Debt Service Fund

($5 million/year)

Tobacco Commission Fund

InterestInterest

InterestInterest

31.6%

22.8%

29.8

15.8

Interest

UAMS Biosciences $2.2 M

ASU Biosciences $1.8 M

School of Public Health $1 M

33% School of Public Health

22% Delta AHEC

22% Center on Aging;

23% Minority Health Initiative

•DEDICATED SOURCE

Three Methods of Funding Available

•GENERAL IMPROVEMENT FUND

$-

$100.0

$200.0

$300.0

$400.0

$500.0

Mill

ions

1991-93

1993-95

1995-97

1997-99

1999-01

2001-03

2003-05

2005-07

2007-09

General Improvement FundIncome and Authorized Funding

IncomeAuthorized Funding

•DEDICATED SOURCE

•GENERAL IMPROVEMENT FUND

Three Methods of Funding Available

•REVENUE STABILIZATION LAW

ACT 311 of 1945

The Revenue Stabilization

Law

Revenue Stabilization Law

Revenue Flow

The Budget Process

Review/Revise

“...since the practice of review and advice violates the separation of powers doctrine, [it] is unconstitutional.”

CHAFFIN v. ARK. GAME & FISH COMM'N, 296 Ark. 431 (1988)

CAUTION!!!

•Contracts

•Methods of Finance

•LeasesREVIEW

•Budget Adjustments

•Misc. Federal Grants

•Interagency Contracts

Legislative Council SubCommittees

PEER

RULES & REGULATIONS

•Special Entry Rates

•Titles & Grade Changes

•Personnel Policy Changes

•Pay Plan

Rules & Regulations

PERSONNEL

LITIGATION

•Approved Claims Against the State

•Appealed Claims

•Lawsuits Against the State•Out-of-Court Settlements

CLAIMS REVIEW

CHARITABLE, PENAL & CORRECTIONAL INSTITUTIONS

•Correctional Institutions•Other State Institutions•Purchased Institutional Services

The Budget Process

Preparation

Review/Revise

Authorization

Funding

Arkansas Budget and Appropriation Process

Bureau of Legislative Research, 2008