Bill Text: HI SB2276 | 2014 | Regular Session | Introduced
Bill Title: State Financial Administration; State Budget; Zero Based Budgeting
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-02-05 - The committee on WAM deferred the measure. [SB2276 Detail]
Download: Hawaii-2014-SB2276-Introduced.html
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THE SENATE |
S.B. NO. |
2276 |
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TWENTY-SEVENTH LEGISLATURE, 2014 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to state financial administration.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that although the State's financial plans and executive budgets are fairly detailed, they continue to fall short of adequately explaining and justifying the State's expenditures. A new approach to the budgeting process is required to ensure that the State expends taxpayer funds effectively and efficiently.
Zero based budgeting involves formulating a financial plan or budget based on the initial premise that no funds have been authorized for any programs. This requires state agencies to evaluate their entire operations and justify each program, activity, and expense every fiscal year. The legislature finds that including this approach into the current budgeting process will assist in reducing economic waste and ensuring that worthwhile programs continue.
The purpose of this Act is to incorporate zero based budgeting principles into the State's current financial planning and budgeting processes beginning with fiscal biennium 2015-2017 and thereafter.
SECTION 2. Section 37-68, Hawaii Revised Statutes, is amended to read as follows:
"§37-68 Responsibilities of agencies. Under such rules as may be prescribed by the director of finance with the approval of the governor:
(1) Every agency assigned the task of developing programs and preparing program and financial plans, budgetary requests, and program performance reports shall develop such programs and prepare such plans, requests, and reports and submit the same to the director of finance at such times, on such forms, and in such manner as the director may prescribe. For informational purposes, the University of Hawaii shall submit its program and financial plans, budgetary requests, and program performance reports to the legislature at the same time the university submits them to the director of finance. Where new programs are being proposed, every agency shall demonstrate that the program:
(A) Is an appropriate function of state government; and, as applicable;
(B) Can be implemented by the public sector as cost-effectively as the private sector while meeting the same plans, goals, objectives, standards, measures of effectiveness, wage, salary, conditions of employment, and employee benefit programs of the State;
(2) In addition to the requirements of this chapter, every agency assigned the task of developing programs and preparing program and financial plans, budgetary requests, and program performance reports shall develop such programs and prepare such plans, requests, and reports by:
(A) First assuming that the agency has no authorized funds;
(B) Enumerating the goals and objectives of the agency; and
(C) Enumerating each specific activity required to accomplish the goals and objectives of the agency, including a justification of each activity, the cost of each activity, and the number of personnel required to conduct each activity;
[(2)] (3) Every
agency administering state programs and every agency responsible for the
formulation of programs and the preparation of program and financial plans,
budgetary requests, and program performance reports, shall furnish the
department of budget and finance all such documents and information as the
department may from time to time require. Each agency shall make available to
the legislature and any member or committee of either house of the legislature,
all documents and information as may be requested; and
[(3)] (4) The director of finance or any
employee of the department of budget and finance, when duly authorized, for the
purpose of securing information, shall have access to and may examine any
books, documents, papers, or records of any agency."
SECTION 3. Section 37-69, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) The financial plan for the ensuing six fiscal years shall more specifically include:
(1) Economic data for the State and the counties of the following kinds:
(A) Population: Including historical, current, and projected population count; population distribution by age and sex; estimated increases and decreases, including increases and decreases by immigration;
(B) Employment: Including magnitude of labor force by age and sex; labor force participation rates; employment by age and sex; industry and occupational surpluses and shortages; effects of government programs on employment rate;
(C) Income: Including per capita and per family income; disposable income; income distribution;
(D) Wages and prices: Including wages by industry and occupational groups; prices for government procurement items; construction costs; cost of living index; price indices for components of personal consumption;
(E) Industry and business trends; and
(F) Effects of national economic and financial policies and conditions;
(2) Brief statements disclosing the basis upon which the revenue estimates in the plan were made, including for each specific tax and nontax revenue source:
(A) The previous projections for the last completed fiscal year and the fiscal year in progress;
(B) The variance between the projections and the actual or revised estimate, and the reasons for the variances;
(C) Tax or source base and rates;
(D) Yield projections of existing revenue sources and existing taxes at authorized rates;
(E) Assumptions made and methodology used in projections;
(F) Changes recommended; and
(G) Projected yields if changes are adopted; etc.;
(3) At the lowest level on the state program structure, for each program:
(A) A justification for the program that:
(i) Assumes there are no authorized funds for the program;
(ii) Describes how the program fulfills the goals and objectives of the agency implementing the program; and
(iii) Specifies each specific activity of the program required to fulfill the goals and objectives, the number of personnel required to conduct each activity, and the cost of each activity;
[(A)] (B) The total actual
program cost for the last completed fiscal year, the estimated cost for the
fiscal year in progress, and the estimated cost for each of the next six fiscal
years; research and development, operating, and capital costs shall be included
and the means of financing shall be identified. The number of personnel
positions and all lease payments shall be shown for the program, identified by
their means of financing;
[(B)] (C) The program size
indicators; the actual size attained in the last completed fiscal year, the
estimated size for the fiscal year in progress, and the estimated size for each
of the next six fiscal years; and
[(C)] (D) The effectiveness
measures; the actual level of effectiveness attained in the last completed
fiscal year, the estimated level of effectiveness for the fiscal year in
progress, and the estimated level for each of the next six fiscal years;
(4) Appropriate displays of paragraph [(3)(A)]
(3)(B) and [(C),] (D), at every level of the state program
structure above the lowest level, by the major groupings of programs
encompassed within the level. The displays of [[]paragraph[] (3)(A)]
(3)(B) shall appropriately identify the means of financing and the
number of positions included in the level;
(5) Financial summaries displaying the State's financial condition, actual for the last completed fiscal year, and estimated for the fiscal year in progress and each of the next six fiscal years, including:
(A) A display of the programmed, total state expenditures, by cost categories, the total state resources anticipated from existing tax and nontax sources at existing rates, by resource categories, including the fund balance or deficit at the beginning of the fiscal year and bond receipts, and the resulting fund balance or deficit at the close of each fiscal year. Lease payments in each cost category shall be stated separately; and
(B) The changes proposed to the existing tax and nontax rates, sources or structure, and the estimated increases or reductions in revenues, the estimated cumulative increases or reductions, and the estimated fund balance or deficit in each of the next six fiscal years as a result of such proposed changes. Proposals for changes in the existing tax and nontax rates, sources or structure shall be made in every case where the proposed, total state expenditures exceed the total resources anticipated from existing tax and nontax sources at existing rates.
Such financial summaries shall be prepared for the total state expenditures and resources and for the general fund and special fund portions thereof;
(6) A summary of the balance of each special fund, actual for the last completed fiscal year and estimated for the fiscal year in progress and estimated for each of the next six fiscal years;
(7) A summary of the State's total bond fund required to carry out the recommended programs and the kinds of bonds and amounts thereof through which the requirements were met in the last completed fiscal year, are to be met in the fiscal year in progress, and are proposed to be met in each of the next six fiscal years. The summary shall detail, for each fiscal year:
(A) Of the total bond fund requirements, the amount, by cost categories, requiring new bond issuance authorization and the kinds and amounts of bonds planned for issuance under such new authorizations;
(B) By bond categories, the total, cumulative balance of bonds authorized in prior years but unissued and the amount thereof proposed to be issued; and
(C) A recapitulation of the total bonds to be issued, including both new authorizations and prior authorizations, by bond categories;
(8) Separately for general fund tax revenues, special fund tax revenues, general fund nontax revenues, and special fund nontax revenues:
(A) By kinds of taxes or sources, the amount of revenue from existing, authorized taxes or sources at existing rates received in the last completed fiscal year and estimated to be received in the fiscal year in progress and in each of the next six fiscal years;
(B) A summary of the proposed changes in the existing taxes or sources or rates, and the estimated increases or reductions in revenues in each of the next six fiscal years resulting from such changes; and
(C) The total estimated revenues with and without the proposed changes in each of the next six fiscal years; and
(9) A summary of the State's total payments due under financing agreements required to carry out the recommended programs and the kinds of financing agreements and amounts thereof through which the requirements were met in the last completed fiscal year, are to be met in the fiscal year in progress, and are proposed to be met in each of the next six fiscal years. The summary shall detail, for each fiscal year:
(A) Of the total financing agreement requirements, the amount, by cost categories, requiring new financing agreement authorizations and the kinds and amounts of financing agreements planned for execution and delivery under such new authorizations;
(B) By cost category, the cumulative balance of financing agreements authorized in prior years but not executed and delivered and the amount proposed to be executed and delivered; and
(C) A recapitulation of the total financing agreements to be executed and delivered, including both new authorizations and prior authorizations, by cost categories."
SECTION 4. Section 37-71, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) The display of financial requirements for the ensuing two fiscal years shall more specifically include:
(1) At the lowest level on the state program structure, for each program:
(A) A justification for the program that:
(i) Assumes there are no authorized funds for the program;
(ii) Describes how the program fulfills the goals and objectives of the agency implementing the program; and
(iii) Specifies each specific activity of the program required to fulfill the goals and objectives, the number of personnel required to conduct each activity, and the cost of each activity;
[(A)] (B) The total recommended
expenditures, including research and development, capital and operating costs,
by cost categories and cost elements for the ensuing biennium; the planned
allocation of the total biennial request, by cost categories, and cost
elements, between the two fiscal years of the biennium. The means of financing
and the number of positions included in any cost category amount shall be
appropriately identified;
[(B)] (C) A summary showing means
of financing the total recommended expenditures, those amounts requiring and
those amounts not requiring legislative appropriation or authorization for
spending in each fiscal year of the biennium;
[(C)] (D) A crosswalk of the
total proposed biennial expenditures between the program and expending
agencies. The means of financing the number of positions and the lease
payments included in any cost amount, and the net amount requiring
appropriation or authorization shall be appropriately identified for each
expending agency; and
[(D)] (E) The proposed changes in
the levels of expenditures, by cost categories, between the biennium in
progress and the ensuing biennium, together with a brief explanation of the
major reasons for each change. The reasons shall include, as appropriate, the
following:
(i) Salary adjustments to existing positions of personnel;
(ii) The addition or deletion of positions;
(iii) Changes in the number of persons being served or to be served by the program;
(iv) Changes in the program implementation schedule;
(v) Changes in the actual or planned level of program effectiveness;
(vi) Increases due to the establishment of a program not previously included in the State's program structure;
(vii) Decreases due to the phasing out of a program previously included in the State's program structure; and
(viii) Changes in the purchase price of goods or services;
As appropriate, references to the program and financial plan shall be noted for an explanation of the changes. Notwithstanding the provisions of subsection (b)(5), the proposed changes in the levels of expenditures may be shown to the nearest thousand dollars;
(2) Appropriate summaries of paragraph [(1)(A)]
(1)(B) and [(C)] (D) immediately above at every level of
the state program structure above the lowest level. Such summaries shall be by
the major groupings of programs encompassed within the level. The summaries of
paragraph [(1)(A)] (1)(B) shall identify the means of financing
and the number of positions and the lease payments included in any cost
category amount; and
(3) A summary listing of all capital improvement projects included in the proposed capital investment costs for the ensuing biennium. The listing shall be by programs at the lowest level of the state program structure and shall show for each project, by investment cost elements:
(A) The cost of the project;
(B) The amount of funds previously appropriated and authorized by the legislature; and
(C) The amount of new appropriations and authorizations proposed in each of the two fiscal years of the ensuing biennium and in each of the succeeding four years. The amount of the new appropriations and authorizations proposed shall constitute the proposed new requests for the project in each of the fiscal bienniums.
In every instance, the means of financing shall be noted."
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect on July 1, 2014; provided that sections 2, 3, and 4 shall apply to the state financial plans and budgets for fiscal biennium 2015-2017 and thereafter.
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INTRODUCED BY: |
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Report Title:
State Financial Administration; State Budget; Zero Based Budgeting
Description:
Requires that the state financial plan and budget be developed under the assumption that no funds have been authorized and that each expenditure be justified. Applies to the 2015-2017 fiscal biennium and thereafter.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
