Budget Process and Related Statistics

Transcription

1 Budget Process and Related Statistics October 2015

2 Introduction Arkansas Government requires the development of both a Biennial Budget for all states agencies as well as an Annual Operations Plan for each fiscal year of the Biennium Amendment 86 to the Arkansas Constitution requires an annual fiscal session of the General Assembly in even-numbered years. This presentation provides an overview of the Arkansas Budget Process as authorized by et. Seq.

3 Biennial Budget Planning Cycle

4 Budget Authority State Constitution Title 19 of the Arkansas Code Annotated 1987 Other Statutory Law Special Language in the Appropriation Acts

5 Constitutional Restrictions No money shall be drawn from the state Treasury except in pursuance of specific appropriations made by law The purposes of which (appropriation) shall be distinctly stated in the bill and the maximum amount which may be drawn shall be specified in dollars and cents No appropriation shall be for a period longer than one year (as amended by Amendment 86, passed by the voters in 2008) All appropriations, excepting the ordinary expenses of the elective officials, shall be made by separate bills, embracing one subject

6 Budget Planning Periods Arkansas Government requires the development of a Biennial Budget for all state agencies and implementation of that budget through development of an Annual Operations Plan for each fiscal year of a Biennium. Amendment 86 added the requirement of an annual fiscal session in even-numbered years. Each state agency other than the elected constitutional officers, the legislative branch and its staff offices, the judicial branch and its staff offices, the Arkansas State Highway and Transportation Department, the state-supported institutions of higher education, and the Arkansas State Game and Fish Commission shall prepare an annual operations plan for the operation of each of its assigned programs for submission to the Chief Fiscal Officer of the State. The annual operations plan of each state agency shall contain a quarterly fiscal program indicating the proposed expenditures and anticipated resources for each quarter of the ensuing fiscal year. Anticipated resources shall be based upon forecasted resources estimated to be available.

7 Appropriation Maximum Authority to spend or obligate funds IF Funds are available

8 Appropriation Categories Operating / Miscellaneous Appropriations Appropriations made for the operations of State Agencies General Improvement Fund Appropriations Appropriations made for construction projects or other major capital expenditures.

9 Items of an Appropriation Regular Salaries - Full-time employees Extra Help Part-time or temporary employees Maintenance and General Operations 02 - Operating Expenses 09 - Conference Fees & Travel 10 Professional Fees & Services 11 Capital Outlay 12 Data Processing Services Special Line-Items

10 Biennial Budget Process Specific protocols in statutory law Line item based Constitutionally established Requirement of the Executive for a Balanced Budget Authorization by Appropriation Acts Funding by statutory tax and fee structure

11 Biennial Budget Process 3 Distinct Phases Agency Request Phase Executive Recommendation Phase Legislative Recommendation Phase

12 Agency Request Process Establish beginning numbers from AASIS Establish Base Level as defined by the Governor s Policy Letter Positions within CAP Agency makes requests above Base through Change Level Requests New Requests adhere to Policy Letter Reallocation of Existing Resources where possible Finalize Request with approval of Agency Director Request analyzed by DFA Budget Office for presentation to Governor

13 Executive Responsibilities Issues Governor s Policy Letter Influences Agency Requests Establishes Base Level Conducts Executive Budget Hearings Submits Final Executive Recommendation to ALC/JBC Committee in Hearings held in the Fall of even numbered years

14 Legislative Responsibilities Bills drafted from Legislative Recommendation Requires Do Pass from Joint Budget Committee Legislative & Gubernatorial Consensus for Appropriation Act (or Veto)

15 Legislative Pre-Session Hearings Executive Recommendation presented to ALC/JBC Hearing Committee Hearings conducted October to December of evennumbered years and January of odd-numbered years Anticipates Regular Session in January of oddnumbered year and Fiscal Session in February of even-numbered year

16 Infrastructure Budget Automated process Must be Appropriated Capital Projects Requests General Improvement Fund stabilization similar to General Revenue Allows for Reappropriation of previous Session s projects Appropriation of Other Revenue Sources

17 Budget Implementation DFA issues instructions to agencies to develop AOP Establishes operating budgets on state information system (AASIS) Insures deficit prohibition Provides management tool for agencies

18 Annual Budget Process Appropriation Acts contain maximum authorizations for Agencies Must be balanced to available funds & agencies certify income Revenue Stabilization Act provides for General Revenue

19 Annual Fiscal Sessions In the 2008 general election, Arkansas voters passed an amendment to the Arkansas Constitution providing for Annual Fiscal Sessions in even-numbered years (30 days) The Legislature convened its first fiscal session in February 2010 Based on rules adopted for the fiscal session by the Arkansas Legislative Council, budgets were only be presented for the Big 6 agencies. All other agencies had bills pre-filed based on 87th Session Recommendations

20 End of the Budget Process Development of an AOP for the odd numbered Fiscal Year after the Fiscal Session completes the Biennial Cycle.

21 Financing the State Budget State General Revenue Revenue Stabilization Law Federal Funds Special Revenues Cash Funds Non-Revenue Receipts

22 Revenue Stabilization Defines General Revenues of the State Prioritizes State budget by A, B, C allocations Provides for distribution through the Official Revenue Forecast Provides a rational reallocation in the event of economic expansion or recession Does not require action by General Assembly in the interim

23 General Revenue Collections FY14 Collections: Sales/Use 35% $6,242.5 (Millions) Corporate Income 7% Other 3% Alcohol/ Tobacco 5% Individual Income 50%

24 General Revenue Collections Arkansas two largest sources of general revenue are collected from a 6% state sales/use tax and from the individual income tax. Only one third of the state sales tax rate is applied to food. Arkansas income tax rate ranges from a low of 1% to a top rate of 7%, averaging 4.4% per individual. Other general revenue sources include: taxes on alcohol and tobacco products; gaming and parimutuel betting on horse and dog racing; severance taxes on oil, minerals, gravel, and natural gas; corporate franchises and corporate income; and real estate transfers. Arkansas voters approved Amendment 75 to the Arkansas Constitution, increasing the state sales/use tax by 1/8th cent to provide money for the state s parks, heritage, and game and fish programs as well as the Keep Arkansas Beautiful Program. The State of Arkansas is noted for its strong fiscal restraint. The Arkansas state budget must be balanced. Deficits are specifically prohibited by law. Tax collections are constantly monitored and government expenditures closely reviewed, and adjusted when necessary.

25 General Revenue Distribution Criminal Justice 9% Health/ Human Services 25% Remaining Government 4% General Education 45% Higher Education 17% 87 of every general revenue tax dollar is spent on education, health, and human services.

26 General Revenue Collections Included in the distribution of general revenues are funds earmarked for education, particularly for K - 12 students. The Educational Excellence Trust Fund established in 1987 and the Educational Adequacy Fund established in 2004, both provide specific revenue streams to insure adequacy and equity in funding for the state's K-12 education system. Arkansas' criminal justice agencies include Arkansas State Police, Crime Laboratory, Crime Information Center, correctional institutions, and innovative community correction and supervision programs. The remainder of each tax dollar goes to fund budgets in areas such as industrial development, environmental activities, and parks and tourism.

27 All Revenue Sources

28 All Revenue Sources Personal and Corporate Income Tax - revenues collected from citizens and corporate entities based upon their taxable income as defined by the Internal Revenue Service and Arkansas law. Revenue collected is distributed to State Agencies in accordance with the Revenue Stabilization Act and used to provide programs and services. Consumer Sales Tax revenues collected from consumers on the purchases of goods and services, as prescribed by Arkansas law. This revenue is also distributed to State Agencies in accordance with the Revenue Stabilization Act. Gas and Motor Carrier Tax special levies on the purchase of motor fuels and certain vehicle related transactions. This revenue is used to fund the Arkansas Highway and Transportation Department. Other Taxes all other tax revenue. Examples include cigarette and soft drink tax revenue.

29 All Revenue Sources Intergovernmental predominately federal revenue used to fund federally mandated programs or to support federal grants. Most federal funds utilized in Arkansas are matched by State funds in order to maximize resources. Other Revenues revenue collected through the sale of licenses, fees, permits, goods, services, investment income, fines and other items. The revenue is collected for the operation of specific State Agencies or programs. Enterprise Funds revenue generated from all sources by State Agencies classified as Enterprise Funds. Activities of the Workers Compensation Commission, Lottery Commission, Department of Workforce Services with the exception of TANF program which is reported as Intergovernmental and the State s Institutions of Higher Education are examples of such funds because a substantial amount of revenues is generated from user fees charged to external parties.

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