Hawaii-2016-SB2728-Introduced

SECTION 1. The legislature finds that the state budgeting process does not comply with best practices for financial transparency. The inability of the public and of legislators to access the state's financial information inhibits civic engagement, and makes fiscal oversight problematic.

Furthermore, adherence to a long-term financial plan is not only statutorily and constitutionally mandated, but also integral to sound decision-making regarding the sustainability of state programs and initiatives. It is of utmost importance that the state's long term financial plan is based on reliable data, continually updated, and taken into account in budget deliberations. The compound annual growth rate is an accurate measure to project the long-term costs of programs because it is not prone to volatility and represents the annualized average rate of growth for a given period of time.

The purpose of this act is to foster openness in the state budgeting process, and to make a commitment to the timely publication of fiscal information by reforming the Executive Budget Act.

SECTION 2. Section 37-62, Hawaii Revised Statutes, is amended by adding two new definitions to be appropriately inserted and to read as follows:

""Assumption" means any justification, formula, method of calculation, reason, or data relied on in making a projection of expenditures, costs or revenues.

"Compound annual growth rate" means the mean annual growth rate over a period of time longer than one year."

SECTION 3. Section 37-66, Hawaii Revised Statutes, is amended to read as follows:

"[§37-66] Responsibilities of the legislature. The legislature shall:

(1) Consider the long-range plans, including the proposed objectives and policies, the six-year state program and financial plan, and the budget and revenue proposals recommended by the governor and any alternatives thereto.

(2) Foster civic engagement and fiscal oversight by making the legislative budget worksheets available to the public no fewer than three days prior to a floor vote in each chamber of the legislature on its respective draft of the budget bill. Along with the budget worksheets, the legislature shall also publish a six-year financial plan updated with the most recent council on revenues growth forecast and that takes into consideration all appropriations. The legislature's six-year plan shall disclose any and all assumptions made in the projection of expenditures that extend beyond the fiscal biennium in which the legislature submits its financial plan. Any estimates or assumptions used to project expenditures shall use the compound annual growth rate. If projections of expenditures are arrived at by means other than use of the compound annual growth rate, the alternative means and reason for deviation from the compound annual growth rate shall be disclosed in the financial plan.

[~~(2)~~] (3) Adopt programs and the state budget, and appropriate moneys to implement the programs it deems appropriate.

[~~(3)~~] (4) Adopt such other legislation as necessary to implement state programs.

[~~(4)~~] (5) Review the implementation of the state budget and program accomplishments and execution of legislative policy direction. Implementation of the state budget and program management, execution, and performance shall be subject to post-audits by the auditor who shall report the auditor's findings and recommendations to the legislature as provided in chapter 23."

SECTION 4. Section 37-69, Hawaii Revised Statutes, is amended to read as follows:

"§37-69 The six-year program and financial plan. (a) The governor shall prepare a state six-year program and financial plan encompassing all state programs. Not fewer than thirty days before the legislature convenes in every odd-numbered year, the governor shall submit to the legislature and to each member thereof the six-year program and financial plan. The program and financial plan shall be annually and continually updated and maintained. The program and financial plan, in general, shall contain:

(1) The state program structure;

(2) Statements of statewide objectives and program objectives;

(3) Program plans that describe the programs recommended to implement the statewide and program objectives and the manner in which the recommended programs are proposed to be implemented over the next six fiscal years; and

(4) A financial plan that shows the fiscal implications of the recommended programs for the next six fiscal years.

(5) A financial plan that discloses any and all assumptions made in the projection of expenditures that extend beyond the fiscal biennium in which the financial plan is submitted to the legislature. Any estimates or assumptions used to project expenditures shall use the compound annual growth rate. If projections of expenditures are arrived at by means other than use of the compound annual growth rate, the alternative means and reason for deviation from the compound annual growth rate shall be disclosed in the financial plan.

(b) The information contained in the program and financial plan shall be presented generally in the following manner:

(1) Information shall be displayed by programs, or groups of programs.

(2) Programs shall be appropriately crosswalked to expending agencies.

(3) Data shall be appropriately summarized at each level of the program structure.

(4) Program costs shall include all costs, including research and development, operating and capital, regardless of the means of financing except that the means of financing shall be expressly identified; all costs shall be displayed in the year of their anticipated expenditure, regardless of whether such costs have been authorized to be expended by prior appropriations acts or are authorized to be expended by existing law, or require new appropriations or authorizations.

(5) Any assumptions used to project the growth of program costs beyond the current fiscal biennium shall be disclosed.

[~~(5)~~](6) Cost data shall be presented in units of thousands of dollars or less.

[~~(6)~~](7) Comparative data for the last completed fiscal year and the fiscal year in progress shall be shown.

(c) [Subsection effective until June 30, 2016. For subsection effective July 1, 2016, see below.] 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;

(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;

(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) 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[;], and any assumptions used to project the growth of program costs beyond the current fiscal biennium; 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) 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) 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) and (C), 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) 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

(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.

(c) [Subsection effective July 1, 2016. For subsection effective until June 30, 2016, see above.] 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:

(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;

(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) 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[;], and the assumptions used to estimate costs; research and development, operating, and capital costs shall be included and the means of financing shall be identified. The position ceiling and all lease payments shall be shown for the program, identified by their means of financing;

(4) Appropriate displays of paragraph (3)(A) and (C), 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) shall appropriately identify the means of financing and position ceiling included in the level;

The 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;

(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 the 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:

(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; and

(10) A summary of the state government's pension liability and other post-employment benefit liability for which the most current information is available, including:

(A) Unfunded actuarial accrued liability specified in the latest actuarial valuation report available in the pertinent fiscal year;

(B) Funded ratio specified in the latest actuarial valuation report available in the pertinent fiscal year;

(D) Annual required contribution for the pertinent fiscal year and the proportion of the annual required contribution budgeted to be paid in that fiscal year.

(d) [Subsection effective until June 30, 2016. For subsection effective July 1, 2016, see below.] The program plans for the ensuing six fiscal years shall more specifically include:

(1) At the lowest level on the state program structure, for each program:

(A) A statement of its objectives;

(B) Measures by which the effectiveness in attaining the objectives is to be assessed;

(D) A brief description of the activities encompassed;

(E) The program size indicators;

(F) The program size planned for each of the next six fiscal years;

(G) A narrative explanation of the plans for the program. It shall contain, and in general be limited to, the following:

(i) A description of the kinds of activities carried out or unusual technologies employed;

(ii) A statement of key policies pursued;

(iii) Identification of important program or organizational relationships involved;

(iv) A description of major external trends affecting the program;

(v) A discussion of significant discrepancies between previously planned cost, effectiveness, and program size levels and those actually achieved;

(vi) Comments on, and an interpretation of, cost, effectiveness, and program size data over the upcoming budget period, with special attention devoted to changes from the current budget period;

(vii) Comments on, and an interpretation of, cost, effectiveness, and program size data over the four years of the planning period and how they relate to the corresponding data for the budget period; and

(viii) A summary of the special analytic study, program evaluation, or other analytic report supporting a substantial change in the program where such a major program change recommendation has been made;

(H) The full cost implications of the recommended programs, by cost categories and cost elements, actually experienced in the last completed fiscal year, estimated for the fiscal year in progress, and estimated for each of the next six fiscal years. Any assumptions used in the projection of program cost implications shall be disclosed. The means of financing shall be identified for each cost category. The personal services cost element and the lease payments cost element shall be shown separately; the cost elements of other current expenses, equipment, and motor vehicles may be combined. The number of positions included in the program shall be appropriately identified by means of financing;

(I) A recapitulation of subparagraph (H) for the last completed fiscal year, the fiscal year in progress and each of the next six fiscal years, by means of financing grouped under each cost category. The number of positions included in any program shall be appropriately identified;

(J) An identification of the revenues generated in the last completed fiscal year and estimated to be generated in the fiscal year in progress and in each of the next six fiscal years, and the fund into which such revenues are deposited;

(K) Details of implementation of each capital improvement project included in the total program cost, including:

(i) A description of the project, location, and scope;

(ii) The initially estimated, currently estimated, and final cost of the project, by investment cost elements and by means of financing;

(iii) The amounts previously appropriated by the legislature for the project, by cost elements and by means of financing specified in the acts appropriating the sums, and an identification of the acts so appropriating;

(iv) The costs incurred in the last completed fiscal year and the estimated costs to be incurred in the fiscal year in progress and in each of the next six fiscal years, by cost elements and by means of financing; and

(v) A commencement and completion schedule, by month and year, of the various phases of the capital improvement project (i.e., land acquisition, design, construction, and occupancy) as originally intended, as currently estimated, and as actually experienced; and

(L) A crosswalk of the program expenditures, by cost categories and cost elements between the program and expending agencies for the next two fiscal years. The means of financing and the number of positions included in the program costs to be expended by each agency shall be specified; and

(2) Appropriate displays at every level of the state program structure above the lowest level. The displays shall include:

(A) A listing of all major groupings of programs included within the level, together with the objectives, measures of effectiveness, and planned levels of effectiveness for each of the ensuing six fiscal years for each such major groupings of programs; and

(B) A summary of the total cost of each cost category by the major groupings of programs encompassed within the level, actual for the last completed fiscal year and estimated for the fiscal year in progress and for each of the next six fiscal years.

(d) [Subsection effective July 1, 2016. For subsection effective until June 30, 2016, see above.] The program plans for the ensuing six fiscal years shall more specifically include:

(1) At the lowest level on the state program structure, for each program:

(A) A statement of its objectives;

(B) Measures by which the effectiveness in attaining the objectives is to be assessed;

(D) A brief description of the activities encompassed;

(E) The program size indicators;

(F) The program size planned for each of the next six fiscal years;

(G) A narrative explanation of the plans for the program. It shall contain, and in general be limited to, the following:

(i) A description of the kinds of activities carried out or unusual technologies employed;

(ii) A statement of key policies pursued;

(iii) Identification of important program or organizational relationships involved;

(iv) A description of major external trends affecting the program;

(v) A discussion of significant discrepancies between previously planned cost, effectiveness, and program size levels and those actually achieved;

(vi) Comments on, and an interpretation of, cost, effectiveness, and program size data over the upcoming budget period, with special attention devoted to changes from the current budget period;

(H) The full cost implications of the recommended programs, by cost categories and cost elements, actually experienced in the last completed fiscal year, estimated for the fiscal year in progress, and estimated for each of the next six fiscal years. Any assumptions used in the projection of program cost implications shall be disclosed. The means of financing shall be identified for each cost category. The personal services cost element and the lease payments cost element shall be shown separately; the cost elements of other current expenses, equipment, and motor vehicles may be combined. The position ceiling for the program shall be appropriately identified by means of financing;

(I) A recapitulation of subparagraph (H) for the last completed fiscal year, the fiscal year in progress and each of the next six fiscal years, by means of financing grouped under each cost category. The position ceiling for any program shall be appropriately identified;

(K) Details of implementation of each capital improvement project included in the total program cost, including:

(i) A description of the project, location, and scope;

(ii) The initially estimated, currently estimated, and final cost of the project, by investment cost elements and by means of financing;

(L) A crosswalk of the program expenditures, by cost categories and cost elements between the program and expending agencies for the next two fiscal years. The means of financing for the program costs to be expended by, and position ceiling for, each agency shall be specified; and

(2) Appropriate displays at every level of the state program structure above the lowest level. The displays shall include:

(e) Not more than 30 days after the deadline for the

Governor to veto legislation, the department of budget and

finance shall publish and make accessible to the general public

an updated six year financial plan that takes into account all

appropriations included in the final version of the state

operating budget as signed into law."

SECTION 5. Section 37-70, Hawaii Revised Statutes, is amended to read as follows:

"§37-70 Program memoranda. (a) Not later than the third Wednesday of January of each odd-numbered year, the governor shall submit to the legislature and to each member thereof, a program memorandum covering each of the major programs in the statewide program structure. Each program memorandum will include:

(1) An overview of the program as a whole including a discussion of:

(A) Objectives.

(B) Component programs.

(D) Relationships to other agencies and jurisdictions.

(E) Major activities.

(F) Important external developments affecting the program.

(G) Significant discrepancies between previously planned cost and effectiveness levels and those actually achieved.

(H) Trends and comparisons in costs, effectiveness, or activity data over the budget and planning period.

(I) Assumptions used to project growth of program costs beyond the fiscal biennium in which the program memorandum is submitted to the legislature. Projections of growth of program costs shall use the compound annual growth rate. If projections of growth of program costs are arrived at by means other than use of the compound annual growth rate, the alternative means and reason for deviation from use of the compound annual growth rate shall be disclosed.

(2) A statement of the major program changes being recommended for the budget and planning period to include for each proposed change:

(A) A brief statement of the recommended change.

(B) The cost and program performance consequences of the change over the budget and planning period.

(3) A discussion of emerging conditions, trends and issues including:

(A) Actual or potential impact on the State and its programs.

(B) Possible alternatives for dealing with the specific problems occasioned by the emerging conditions, trends, and issues.

(4) Appendices as needed to include appropriate issue papers, special analytic studies, other reports, and crucial source data.

(b) If it is deemed more desirable, the program memoranda and the six-year program and financial plan may be combined into a single document containing all the information required for each separate document."

SECTION 6. Section 37-71, Hawaii Revised Statutes, is amended to read as follows:

"§37-71 The budget. (a) Not fewer than thirty days before the legislature convenes in every odd-numbered year, the governor shall submit to the legislature and to each member thereof a budget that shall contain the program and budget recommendations of the governor for the succeeding two fiscal years. The budget, in general, shall contain:

(1) The state program structure;

(2) Statements of statewide objectives;

(3) The financial requirements for the next two fiscal years to carry out the recommended programs; and

(4) A summary of state receipts and revenues in the last completed fiscal year, a revised estimate for the fiscal year in progress, [~~and~~] an estimate for the succeeding biennium[.], including any assumptions used in formulating estimates.

(b) The information contained in the budget shall be presented generally in the following manner:

(1) Information shall be displayed by programs or groups of programs.

(2) Program financial requirements shall be appropriately crosswalked between the programs and expending agencies.

(3) Data shall be appropriately summarized at each level of the program structure.

(4) Program costs shall include all costs, including research and development, operating and capital, regardless of the means of financing, except that the means of financing shall be expressly identified, and regardless of whether the expenditure of any sum was authorized by prior appropriations acts, is authorized by existing law, or requires new authorization, except that the amounts requiring new authorization shall be appropriately identified.

(5) Financial requirements shall be presented to the nearest dollar, omitting cents; and the summary of state receipts and revenues shall be presented to the nearest thousand dollars.

(6) The budget shall reflect the ensuing first two fiscal year program costs contained in the six-year program and financial plan.

(c) [Subsection effective until June 30, 2016. For subsection effective July 1, 2016, see below.] 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) 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) 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) 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) 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) and (C) 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) 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.

(c) [Subsection effective July 1, 2016. For subsection effective until June 30, 2016, see above.] 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) 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 position ceiling included in any cost category amount shall be appropriately identified;

(C) A crosswalk of the total proposed biennial expenditures between the program and expending agencies. The means of financing, position ceiling, 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

(i) Salary adjustments to existing positions of personnel;

(ii) The addition or deletion of positions to or from the position ceiling;

(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[.]

(2) Appropriate summaries of paragraph (1)(A) and (C) immediately above at every level of the state program structure above the lowest level. The summaries shall be by the major groupings of programs encompassed within the level. The summaries of paragraph (1)(A) shall identify the means of financing, position ceiling, and lease payments included in any cost category amount; and

(A) The cost of the project;

(B) The amount of funds previously appropriated and authorized by the legislature; and

In every instance, the means of financing shall be noted.

(d) [Subsection effective until June 30, 2016. For subsection effective July 1, 2016, see below.] The summaries of the state receipts and revenues shall more specifically include:

(1) Financial summaries displaying the State's financial condition, to-wit:

(A) A display of the proposed, total state expenditures, by cost categories, the total state resources anticipated from existing taxes and nontax sources at existing rates, by resource categories (including the available fund balances or deficits and anticipated bond receipts), and the fund balance or deficit resulting therefrom for the biennium in progress, for the ensuing biennium, and for each of the two fiscal years of the ensuing biennium; and

(B) The changes proposed to the existing tax and nontax rates, sources, or structure, and the estimated cumulative increases or reductions, and the estimated fund balance or deficit in the ensuing biennium and in each of the two fiscal years of the biennium 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 state 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;

(2) A summary of the balances of each special fund, actual for the last completed fiscal year and estimated for the fiscal year in progress and for each of the two fiscal years in the ensuing biennium;

(3) 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 such requirements are to be met in the biennium in progress and in each of the two fiscal years in the ensuing biennium. The summary shall detail for the biennium in progress and for each of the two years of the ensuing biennium:

(A) Of the total requirements, the amount, by cost categories, requiring new bond issuance authorization and the kinds and amounts of bonds planned for issuance under such new authorization;

(B) By bond categories, the total, cumulative balance of bonds authorized in prior years but unissued and the amount thereof planned to be issued; and

(C) A recapitulation of the total bonds, both new authorizations and prior authorizations, by bond categories, proposed to be issued;

(4) A tentative schedule by quarter and fiscal year of the amount of general obligation bonds and the amount of revenue bonds proposed to be issued in the ensuing fiscal biennium;

(5) A schedule of projected debt service charges for general obligation bonds outstanding at the time of the submission of the budget and to be issued by the close of the budget biennium in progress and the close of the ensuing budget biennium. The projection shall be separately stated for:

(A) Bonds currently outstanding;

(B) Bonds to be issued during the remainder of the fiscal biennium in progress and during the ensuing fiscal biennium; and

In each case, the projection shall be categorized into debt service to be paid directly from the general fund, debt service to be paid through reimbursements, and total debt service. The projection shall extend at least five years beyond the close of the ensuing fiscal biennium. An explanation shall be appended to the schedule, which shall include among other things, the amount of bonds to be issued during the fiscal year in progress and in each of the two fiscal years of the ensuing biennium, the maturities of the bonds to be issued, the method of retirement, and the interest rate assumed in the projection;

(6) A schedule of the current state funded debt, legal debt limit, and the legal debt margin, including the details thereof. In any budget which proposes appropriations for which the source of funding is general obligation bonds, the schedule shall include a declaration by the director of finance and computations showing that the total amount of principal and interest, estimated for such proposed appropriations and for all bonds authorized and unissued and calculated for all bonds issued and outstanding, will not cause the debt limit to be exceeded at the time of issuance;

(7) Separately for general fund tax revenues, special fund tax revenues, general fund nontax revenues, and special fund nontax revenues:

(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 two years in the ensuing fiscal biennium resulting from such changes; and

(8) 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 such requirements are to be met in the biennium in progress and in each of the two fiscal years in the ensuing biennium. The summary shall detail for the biennium in progress and for each of the two years of the ensuing biennium:

(B) By cost category, the cumulative balance of financing agreements authorized in prior years but not executed and delivered and the amount thereof 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.

(d) [Subsection effective July 1, 2016. For subsection effective until June 30, 2016, see above.] The summaries of the state receipts and revenues shall more specifically include:

(1) Financial summaries displaying the State's financial condition, to-wit:

Such financial summaries shall be prepared for the total state expenditures and resources and for the general fund and special fund portions thereof;

(A) Of the total requirements, the amount, by cost categories, requiring new bond issuance authorization and the kinds and amounts of bonds planned for issuance under such new authorization;

(B) By bond categories, the total, cumulative balance of bonds authorized in prior years but unissued and the amount thereof planned to be issued; and

(C) A recapitulation of the total bonds, both new authorizations and prior authorizations, by bond categories, proposed to be issued;

(4) A tentative schedule by quarter and fiscal year of the amount of general obligation bonds and the amount of revenue bonds proposed to be issued in the ensuing fiscal biennium;

(A) Bonds currently outstanding;

(B) Bonds to be issued during the remainder of the fiscal biennium in progress and during the ensuing fiscal biennium; and

(7) Separately for general fund tax revenues, special fund tax revenues, general fund nontax revenues, and special fund nontax revenues:

(8) 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 those requirements are to be met in the biennium in progress and in each of the two fiscal years in the ensuing biennium. The summary shall detail for the biennium in progress and for each of the two years of the ensuing biennium:

(B) By cost category, the cumulative balance of financing agreements authorized in prior years but not executed and delivered and the amount thereof 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; and

(9) The same information required under section 37‑69(c)(10) for the state government's pension and other post-employment benefits liabilities.

(e) The proposed budget shall include:

(1) A statement of the percentage differences between the current biennium recommendations and the previous biennium appropriations for education programs. The information shall be displayed by programs or groups of programs, with corresponding amounts and percentage differences. If any component of an education program is added or removed, the governor shall provide an estimate of how the addition or removal affects the current biennium recommendations;

(2) A statement of the difference between the total amount proposed for the current biennium and the total amount expended in the previous biennium for education programs per pupil; and

(3) Other financial statements, information, and data that in the opinion of the governor are necessary or desirable in order to make known in all practical detail the programs, program plans, and financial conditions of the State.

As used in this subsection, "education programs" include instructional, personnel, transportation, facilities, facilities repair and maintenance, and other programs deemed appropriate by the department of education.

(f) The proposed budget shall contain an item to be known as the "contingent fund", which sum, upon approval by the legislature, shall be available for allocation by the governor during the ensuing fiscal biennium to meet contingencies as they arise.

(g) If it is deemed more practical, the six-year program and financial plan and the budget may be combined into a single document containing all the information required for each separate document."

SECTION 7. Section 37-112, Hawaii Revised Statutes, is amended to read as follows:

"[§37-112] Use of estimates. (a) The estimates prepared by the council shall be considered by the governor in preparing the budget, recommending appropriations and revenue measures, projecting revenues and controlling expenditures. The legislature shall consider these estimates in appropriating funds and enacting revenue measures. The governor and legislature shall use the latest council estimate as the base estimate against which their revenue estimates shall be compared.

(b) All estimates submitted by the council and any tangible materials used to arrive at those estimates shall be made public. If the legislature in appropriating funds, or if the governor in preparing the budget uses a revenue estimate which differs from the estimate prepared by the council, then the governor or the legislature shall make that fact public together with reasons for using the differing revenue estimates."

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2728
TWENTY-EIGHTH LEGISLATURE, 2016
STATE OF HAWAII