Floridas Budget Structure and Process

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Floridas Budget Structure and Process

• July 20, 2007

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Budget Powers in the Florida Constitution

• The Legislature The budget is product of the
  Legislature. Florida's Constitution gives the
  Legislature the exclusive power to appropriate
  state funds (Article VII, Section 1.(c)).
• The Governor The Constitution designates the
  Governor as the ... chief administrative officer
  of the state responsible for the planning and
  budgeting of the state. (Article IV, Section
  1.(a)).
• The Chief Financial Officer The chief financial
  officer shall serve as the chief fiscal officer
  of the state and shall settle and approve
  accounts against the state, and shall keep all
  state funds and securities. (Article IV,
  Section 4(c)).
• Constitution Requires Balanced Budget
  Provision shall be made by law for raising
  sufficient revenue to defray the expenses of the
  state for each fiscal period. (Article 7,
  Section 1(d)) See section 216.221 (1), Florida
  Statutes.

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Consensus Estimating Conference

• Major Projections Developed By Conferences
• amount of General Revenue available for
  appropriations
  
• amount of Lottery funds available for
  appropriations
  
• number of children to be enrolled in public
  schools
  
• number and caseload for Temporary Assistance to
  Needy Families
  
• amount of Public Education Capital Outlay (PECO)
  funds
  
• number of prisoners
• caseload and expenditures for Medicaid

Develop agreed-upon projections for certain
revenues and caseload/ workload data

Senate
House
Governor
Economic Demographic Research
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Fund Segregation

• General Revenue - Consists of all monies received
  by the state not earmarked by law for a specific
  purpose. The balance of funds in the General
  Revenue Fund which is in excess of the amount
  needed to meet General Revenue Fund
  appropriations for the current fiscal year is
  known as the working capital balance.
• Trust Funds - Consist of moneys received by the
  state which under law or under trust agreement
  are segregated for a purpose authorized by law.
  
• Budget Stabilization Fund - Consists of monies
  set aside equaling five percent of the General
  Revenue Fund. It is required by the Constitution
  and can only be used to cover General Revenue
  shortfalls and emergencies. The current balance
  is approximately 1.2 billion.

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Budget Stabilization Fund Requirements
Source Budget Stabilization Fund estimates are
based on the March, 2007 Revenue Estimating
Conference projections.
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Primary Funding Sources
TRUST FUNDS
GENERAL REVENUE

• State tax revenues available for any use
• These are the revenues that programs compete for
  and the Legislature must allocate between
  programs
  

Both have revenues that are recurring and
non-recurring

• Monies that are earmarked by law for specific
  purposes
  
• Legislature has little discretion in allocating
  among programs, unless the law is changed

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Agency Legislative Budget Request

• By October 15, Agencies provide the Legislature
  and Governor with a Legislative Budget Request
  (LBR), reflecting each agency heads independent
  assessment of needs.
• As early as October, the Senate and House
  Appropriations Committees begin developing their
  respective budget proposals.
  
• Committees hold hearings and workshops in which
  agencies and advocates request funding.

Agency Legislative Budget Request
SENATE
HOUSE
GOV
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Governors Recommended Budget

• 30 days prior to the Legislative Session, the
  Governor submits his recommended budget.
  
• The Governors budget must be balanced within
  available revenues or must include
  recommendations to increase revenues to
  sufficiently fund his budget recommendations.

Agency Legislative Budget Request
SENATE
HOUSE
GOV
Governors Recommended Budget
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House and Senate Budget Proposals

• Early in the Legislative Session, the
  Appropriations committees are given the policy
  guidelines and a funding allocation.
  
• The committees proceed to develop a budget
  proposal which funds specific programs that fall
  within those guidelines and allocations.
  
• Next, the proposed appropriations acts are
  considered by both the Senate and House.
  
• Since the Senate and House Appropriations bills
  are never identical, nor is there usually full
  agreement on the policy underlying their
  development, a Conference Committee is appointed
  to hammer out a compromise appropriations bill.

Agency Legislative Budget Request
SENATE
HOUSE
GOV
Governors Recommended Budget
Proposed House Bills
Proposed Senate Bills
House Bill
Senate Bill
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The Conference Report
Agency Legislative Budget Request

• The Conference Committee consists of Senate
  members appointed by the President and House
  members appointed by the Speaker.
  
• The compromise appropriations bill is known as
  the Conference Report.
  
• The Report may not be amended by the membership
  of the Senate or House, only accepted or
  rejected.
  
• The Constitution requires a 72-hour waiting
  period between distribution of a General
  Appropriations Bill Conference Report and its
  final passage.

Budget Workshops
Governors Recommended Budget
Proposed House Bills
Proposed Senate Bills
Senate Bill
House Bill
Conference Report
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Budget Instructions Guidelines (July 15)
Govs Budget Office
House
Agency Request (October 15)
Senate
Governor
House
Senate
Governors Recommended Budget (30 days prior to
Session)
Committee Hearings (Budget Workshop) October-Feb
ruary
Committee Hearings (Budget Workshop) October-Feb
ruary
Proposed House Bills (4th Week of Session)
Proposed Senate Bill (4th week of Session)
House Bills (5th week of Session)
Senate Bill (5th week of Session)
Conference Report
Operating Budget
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Key Budget Allocation Decisions

• Budget reductions
• Measures affecting revenues
• Amount of non-recurring revenues to be spent on
  recurring programs
  
• Must funds and specific program enhancement
  priorities
  
• Working capital balance
• Separate allocations developed for House/Senate
  bills and Conference
  

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Recent Budget Changes to the Constitution
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Long Range Financial Outlook

• Article III, Section 19(c)(1) provides
• No later than September 15 of each year, the
  joint legislative budget commission shall issue a
  long range financial outlook setting out
  recommended fiscal strategies for the state and
  its departments and agencies in order to assist
  the legislature in making decisions.
• Statute provides that the outlook shall be an
  annually updated 3 year plan

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Outlook Assumptions

• Revenue estimates reflect latest official Revenue
  Estimating Conference projections
  
• Expenditure estimates also reflect official
  Estimating Conference projections, where
  applicable, such as Prisons, Medicaid, and public
  school enrollment
• Historical spending averages are used for other
  key budget drivers, such as economic development
  and environmental projects

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Outlook Summary

• The comparison of projected revenues to
  expenditures is summarized to display the
  anticipated balance forward or deficit
  
• Summaries are provided for recurring and
  non-recurring General Revenue and the major trust
  funds such as Educational Enhancement (Lottery)
  and Tobacco Settlement Trust Fund
• Strategies are developed to address any negative
  balances

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Limits use of Non-recurring Funds for Recurring
Purposes

• Article III, section 19 (a)(2) provides
• Unless approved by a three-fifths vote of the
  membership of each house, appropriations made for
  recurring purposes from nonrecurring general
  revenue funds for any fiscal year shall not
  exceed three percent of the total general revenue
  funds estimated to be available at the time such
  appropriation is made.

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Current Budget Update

• FY 2006-07 actual revenues below March 2007
  official estimates by over 400 million
  
• August 1 General Revenue estimating conference
• Potential recurring revenue shortfall for FY
  2007-08 of over 800 million
  
• Although an actual cash deficit is not projected
  due to reserve balances, budget reductions are
  being considered to align recurring
  appropriations with new revenues
• Joint letter sent to agencies requesting proposed
  reductions by August 8
  
• Discussing special session to reduce agency
  budgets possibly in September