Chapter 06-246

ARTICLE 37 SUBSTITUTE A AS AMENDED

JOINT RESOLUTION

TO APPROVE AND PUBLISH AND SUBMIT TO THE ELECTORS A PROPOSITION OF AMENDMENT TO THE CONSTITUTION OF THE STATE (LIMITATIONS ON STATE SPENDING)

WHEREAS, The budget reserve account, also known as "the rainy day fund", was made part of the state constitution through voter referendum in 1992 to ensure adequate cash and budget reserves for unanticipated revenue shortfalls; and

WHEREAS, The constitution limits appropriations for any fiscal year to ninety-eight percent of estimated revenues and requires the two percent difference to be deposited into the budget reserve account until the account reaches three percent of said revenues; and

WHEREAS, The constitution further requires that excess funds available after the budget reserve account has been fully funded shall be transferred to the state capital bond fund for debt reduction, debt service, or capital projects; and

WHEREAS, In recent years state capital bond funds have been used increasingly to pay debt service, with the result that the budget reserve account cannot be used without jeopardizing the state's ability to meet its debt service obligations; and

WHEREAS, Experience since passage of the 1992 constitutional amendment has demonstrated that the three percent cap results in insufficient funding of the reserve account; and

WHEREAS, The viability of the reserve account will be restored by limiting the state capital bond fund to capital projects, limiting appropriations from ninety-eight percent of estimated revenues to ninety-seven percent of estimated revenues, and allowing the cap on the budget reserve account to be expanded from three percent to five percent of revenues; and, now, therefore be it

RESOLVED, That a majority of all members elected to each house of the general assembly voting therefore, an amendment to section 16 of Article IX of the Constitution of the state shall be proposed to the qualified electors of the state for their approval in accordance with the provisions of Article XIV of the Constitution, and upon such approval, the amended section 16 of Article IX, set forth below, shall be included in the Constitution; and that said proposition of amendment shall be submitted to the electors for their approval or rejection at the next statewide general election, and said proposition of amendment shall appear on the ballots and shall be preceded by the following explanation and space to "approve" or "reject", all of which shall be in substantially the following form:

CONSTITUTIONAL AMENDMENT – BUDGET RESERVE ACCOUNT

Approval of the amendment set forth below will increase the funding and restore the viability of the budget reserve account, also known as "the rainy day fund", by limiting the amount of estimated revenues that can be appropriated, increasing the cap on the reserve account, and limiting the use of capital funds to capital projects.

APPROVE_________

REJECT___________

ARTICLE IX

Section 16. Limitation on state spending [Effective from July 1, 2007 until July 1, 2012].

(a) No appropriation, supplemental appropriation or budget act shall cause the aggregate state general revenue appropriations enacted in any given fiscal year to exceed ninety-eight percent (98%) of the estimated state general revenues for such fiscal year from all sources, including estimated unencumbered general revenues to the new fiscal year remaining at the end of the previous fiscal year. Estimated unencumbered general revenues are calculated by taking the estimated general revenue cash balance at the end of the fiscal year less estimated revenue anticipation bonds or notes, estimated general revenue encumbrances, estimated continuing general revenue appropriations and the amount of the budget reserve account at the end of said fiscal year.

(b) The amount between the applicable percentage in (a) and one hundred percent (100%) of the estimated state general revenue for any fiscal year as estimated in accordance with subsection (a) of this section shall be appropriated in any given fiscal year into the budget reserve account; provided, however, that no such payment will be made which would increase the total of the budget reserve account to more than three percent (3%) of only the estimated state general revenues as set by subsection (a) of this section. In the event that the payment to be made into the budget reserve account would increase the amount in said account to more than three percent (3%) of estimated state general revenues that said amount shall be transferred to the ~~state bond capitol~~ Rhode Island Capital Plan fund to be used solely for ~~reduction of state indebtedness, payment of debt service, and/or~~ funding ~~of capitol~~ capital projects.

(c) Within forty-five (45) days after the close of any fiscal year, all unencumbered general revenue in the year end surplus account from the said fiscal year shall be transferred to the general fund.

Section 16. Limitation on state spending [Effective July 1, 2012].

(a) No appropriation, supplemental appropriation or budget act shall cause the aggregate state general revenue appropriations enacted in any given fiscal year to exceed ~~ninety-eight percent (98%)~~ ninety-seven percent (97%) of the estimated state general revenues for such fiscal year from all sources, including estimated unencumbered general revenues to the new fiscal year remaining at the end of the previous fiscal year. Estimated unencumbered general revenues are calculated by taking the estimated general revenue cash balance at the end of the fiscal year less estimated revenue anticipation bonds or notes, estimated general revenue encumbrances, estimated continuing general revenue appropriations and the amount of the budget reserve account at the end of said fiscal year.

(b) The amount between the applicable percentage in (a) and one hundred percent (100%) of the estimated state general revenue for any fiscal year as estimated in accordance with subsection (a) of this section shall be appropriated in any given fiscal year into the budget reserve account; provided, however, that no such payment will be made which would increase the total of the budget reserve account to more than ~~three percent (3%)~~ five percent (5%) of only the estimated state general revenues as set by subsection (a) of this section. In the event that the payment to be made into the budget reserve account would increase the amount in said account to more than ~~three percent (3%)~~ five percent (5%) of estimated state general revenues that said amount shall be transferred to the ~~state bond capitol~~ Rhode Island Capital Plan fund to be used solely for ~~reduction of state indebtedness, payment of debt service, and/or~~ funding ~~of capitol~~ capital projects.

RESOLVED, That the said proposition of amendment shall be submitted to the electors for their approval or rejection at the next statewide general election. The voting places in the several cities and towns shall be kept open during the hours required by law for voting therein; and be it further

RESOLVED, That the secretary of state shall cause said proposition of amendment to be published as a part of this resolution in the newspapers of the state prior to the date of the said meetings of the said electors; and the said proposition shall be inserted in the warrants or notices to be issued previous to said meetings of the electors for the purpose of warning the town, ward, or district meetings, and said proposition shall be read by the town, ward or district clerks to the electors in the town, ward, or district meetings to be held as aforesaid; and be it further

RESOLVED, That the town, ward, or district meetings to be held aforesaid shall be warned, and the list of voters shall be canvassed and made up, and the said town, ward, or district meetings shall be conducted in the same manner as now provided by law for the town, ward, and district meetings for the statewide general election.

This article shall take effect upon passage.