Chapter 07-073-08

ARTICLE 8 SUBSTITUTE A

Relating To PUBLIC FINANCE – sTATE bUDGET

SECTION 1. Sections 35-3-20 and 35-3-20.1 of the General Laws in Chapter 35-3 entitled "State Budget" are hereby amended to read as follows:

35-3-20. State budget reserve and cash stabilization account. [Effective until July 1, 2007.] -- (a) There is hereby created within the general fund a state budget reserve and cash stabilization account, which shall be administered by the state controller and which shall be used solely for the purpose of providing such sums as may be required to fund any unanticipated general revenue deficit caused by a general revenue shortfall as identified by the state controller at the close of any fiscal year as provided in subsection (d).

(b) In carrying out the provisions of section 35-3-20.1, the state controller shall initially, at fiscal year opening, transfer the amount identified as that fiscal year's projected estimate; the transfer shall be adjusted at the end of the fiscal year in order to conform to the requirements of section 35-3-20.1.

In carrying out the provisions of section 35-3-20.1, the state controller shall, based on that fiscal years estimate, transfer the amounts needed to fund cash requirements during the fiscal year; the transfer shall be adjusted at the end of the fiscal year in order to conform to the requirements of section 35-3-20.1. To the extent that funds so transferred are not needed by the state bond capital fund the funds may be loaned back to the general fund.

(c) Whenever the aggregate of the monies and securities held for the credit of the state budget reserve and cash stabilization account exceeds three percent (3%) of total fiscal year resources, consisting of the aggregate of (1) actual revenues from taxes and other departmental general revenue sources; and (2) the general revenue balance available for appropriations at the beginning of the fiscal year; the excess shall be transferred to the state's bond capital fund, to be used solely for the purposes of reduction of state indebtedness, payment of debt service, and/or funding of capital projects.

(d) (1) At any time ~~prior to June 1~~ after the third quarter of a fiscal year, ~~upon notification by the budget officer~~ that it is indicated that total resources which are defined to be the aggregate of estimated general revenue, general revenue receivables, ~~other financing sources~~ and available free surplus in the general fund will be less than the original estimates upon which current appropriations were based, the ~~governor may submit to the~~ general assembly ~~a resolution for proposed~~ may make appropriations from the state budget reserve and cash stabilization account for the difference between the estimated total resources and the original estimates upon which enacted appropriations were based, but only in the amount of the difference~~. The budget officer's notification shall be~~ based upon the revenues projected at latest state revenue estimating conference pursuant to chapter 16 of title 35 as reported by the chairperson of that conference. The general assembly shall adopt a resolution stating the amount of the total resources upon which the enacted appropriations were based in order to authorize the controller to make the transfer from the state budget reserve and cash stabilization account to achieve those total resources. The resolution shall be referred in the manner prescribed in section 35-3-9.

(2) ~~After~~ Once the general assembly has taken final action ~~by the general assembly~~ defining the total resources to be achieved through amounts to be withdrawn from the state budget reserve and cash stabilization account, the state controller shall transfer to the state's general fund balance available the exact amount necessary to achieve the total resources specified in the enacted resolution from the state budget reserve and cash stabilization account based upon the actual difference between the total resources and the original estimates upon which enacted appropriations were based.

(e) Whenever a transfer has been made pursuant to subsection (d), that transfer shall be considered as estimated general revenues for the purposes of determining the amount to be transferred to the Rhode Island Capital Plan fund for the purposes of subsection 35-3-20.1(b).

~~(e)~~(f) Whenever a transfer has been made pursuant to subsection (d), the amount of the transfer shall be ~~returned~~ transferred to the Rhode Island Capital Plan fund ~~budget reserve and cash stabilization account~~ from funds payable into the general revenue fund pursuant to section 35-3-20.1 in the ~~second~~ fiscal year following the fiscal year in which the transfer was made.~~, and, if necessary, in subsequent fiscal years.~~

35-3-20. State budget reserve and cash stabilization account. [Effective July 1, 2007; effective until July 1, 2008.] -- (a) There is hereby created within the general fund a state budget reserve and cash stabilization account, which shall be administered by the state controller and which shall be used solely for the purpose of providing such sums as may be required to fund any unanticipated general revenue deficit caused by a general revenue shortfall as identified by the state controller at the close of any fiscal year as provided in subsection (d).

In carrying out the provisions of section 35-3-20.1, the state controller shall, based on that fiscal years estimate, transfer the amounts needed to fund cash requirements during the fiscal year; the transfer shall be adjusted at the end of the fiscal year in order to conform to the requirements of section 35-3-20.1. To the extent that funds so transferred are not needed by the Rhode Island Capital Plan fund the funds may be loaned back to the general fund.

(c) Whenever the aggregate of the monies and securities held for the credit of the state budget reserve and cash stabilization account exceeds three percent (3%) of total fiscal year resources, consisting of the aggregate of (1) actual revenues from taxes and other departmental general revenue sources; and (2) the general revenue balance available for appropriations at the beginning of the fiscal year; the excess shall be transferred to the ~~state's bond capital~~ Rhode Island Capital Plan fund, to be used solely for ~~the purposes of reduction of state indebtedness, payment of debt service, and/or funding of~~ capital projects.

35-3-20. State budget reserve and cash stabilization account. [Effective July 1, 2008.] -- (a) There is hereby created within the general fund a state budget reserve and cash stabilization account, which shall be administered by the state controller and which shall be used solely for the purpose of providing such sums as may be required to fund any unanticipated general revenue deficit caused by a general revenue shortfall as identified by the state controller at the close of any fiscal year as provided in subsection (d).

In carrying out the provisions of section 35-3-20.1, the state controller shall, based on that fiscal years estimate, transfer the amounts needed to fund cash requirements during the fiscal year; the transfer shall be adjusted at the end of the fiscal year in order to conform to the requirements of section 35-3-20.1. To the extent that funds so transferred are not needed by the Rhode Island Capital Plan fund the funds may be loaned back to the general fund.

(c) For the fiscal year ending June 30, 2009, Wwhenever the aggregate of the monies and securities held for the credit of the state budget reserve and cash stabilization account exceeds ~~three percent (3%)~~ three and four tenths of one percent (3.4%) of total fiscal year resources, consisting of the aggregate of (1) actual revenues from taxes and other departmental general revenue sources; and (2) the general revenue balance available for appropriations at the beginning of the fiscal year; the excess shall be transferred to the ~~state's bond capital~~ Rhode Island Capital Plan fund, to be used solely for t~~he purposes of reduction of state indebtedness, payment of debt service, and/or funding of~~ capital projects. Provided further, the applicable percentage shall increase by four-tenths of one percent (.4%) for the succeeding four (4) fiscal years as follows:

Fiscal year ending June 30, 2010 3.8%

Fiscal year ending June 30, 2011 4.2%

Fiscal year ending June 30, 2012 4.6%

Fiscal years ending June 30, 2013 and thereafter 5.0%

35-3-20.1. Limitation on state spending. – [Effective until July 1, 2007.] (a) No appropriation, supplemental appropriation, or budget act shall cause the aggregate state general revenue appropriations enacted for the fiscal year to exceed ninety-eight percent (98%) of the estimated state general revenues for the fiscal year from all sources, including estimated unencumbered general revenues not continued or reappropriated 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 and cash stabilization account at the end of the fiscal year. The amount of the general revenue estimate and estimated unencumbered general revenue remaining shall be determined by the state controller and approved by the auditor general in conformance with accounting procedures currently in use. The excess of any unencumbered general revenue shall be determined by subtracting from the actual unencumbered general revenues at the end of any fiscal year an amount which together with the latest estimated general revenues is necessary to fund the ensuing fiscal year's general revenue budget, including the required estimated general revenue supplemental and annual appropriations.

(b) The amount between the applicable percentage in subsection (a) and one hundred percent (100%) of the estimated state general fund revenue for any fiscal year as estimated in accordance with subsection (a) shall be appropriated in any given fiscal year into the budget reserve and cash stabilization account; provided, that no payment will be made which would increase the total of the budget reserve and cash stabilization account to more than three percent (3%) of only the estimated state general fund revenues as set by subsection (a). In the event that the payment to be made into the budget reserve and cash stabilization account would increase the amount in the account to more than three percent (3%) of estimated state general revenues, the amount shall be transferred to the state bond capital fund, to be used solely for the purposes of reduction of state indebtedness, payment of debt service, and/or funding of capital projects. However, there shall be no expenditures of money under this section without passage of a specific appropriation by the general assembly.

(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 fiscal year shall be transferred to the general fund.

35-3-20.1. Limitation on state spending. – [Effective July 1, 2007; effective until July 1, 2008.] (a) No appropriation, supplemental appropriation, or budget act shall cause the aggregate state general revenue appropriations enacted for the fiscal year to exceed ninety-eight percent (98%) of the estimated state general revenues for the fiscal year from all sources, including estimated unencumbered general revenues not continued or reappropriated 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 and cash stabilization account at the end of the fiscal year. The amount of the general revenue estimate and estimated unencumbered general revenue remaining shall be determined by the state controller and approved by the auditor general in conformance with accounting procedures currently in use. The excess of any unencumbered general revenue shall be determined by subtracting from the actual unencumbered general revenues at the end of any fiscal year an amount which together with the latest estimated general revenues is necessary to fund the ensuing fiscal year's general revenue budget, including the required estimated general revenue supplemental and annual appropriations.

(b) The amount between the applicable percentage in subsection (a) and one hundred percent (100%) of the estimated state general fund revenue for any fiscal year as estimated in accordance with subsection (a) shall be appropriated in any given fiscal year into the budget reserve and cash stabilization account; provided, that no payment will be made which would increase the total of the budget reserve and cash stabilization account to more than three percent (3%) of only the estimated state general fund revenues as set by subsection (a). In the event that the payment to be made into the budget reserve and cash stabilization account would increase the amount in the account to more than three percent (3%) of estimated state general revenues, the amount shall be transferred to the ~~state bond capital~~ Rhode Island Capital Plan fund, to be used solely for ~~the purposes of reduction of state indebtedness, payment of debt service, and/or funding of~~ capital projects. However, there shall be no expenditures of money under this section without passage of a specific appropriation by the general assembly.

(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 fiscal year shall be transferred to the general fund.

35-3-20.1. Limitation on state spending. – [Effective July 1, 2008.] (a) No For the fiscal year ending June 30, 2009, no appropriation, supplemental appropriation, or budget act shall cause the aggregate state general revenue appropriations enacted for the fiscal year to exceed ~~ninety-eight percent (98%)~~ ninety-seven and eight tenths of one percent (97.8%) of the estimated state general revenues for the fiscal year from all sources, including estimated unencumbered general revenues not continued or reappropriated 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 and cash stabilization account at the end of the fiscal year. The amount of the general revenue estimate and estimated unencumbered general revenue remaining shall be determined by the state controller and approved by the auditor general in conformance with accounting procedures currently in use. The excess of any unencumbered general revenue shall be determined by subtracting from the actual unencumbered general revenues at the end of any fiscal year an amount which together with the latest estimated general revenues is necessary to fund the ensuing fiscal year's general revenue budget, including the required estimated general revenue supplemental and annual appropriations. Provided further, the applicable percentage shall decrease by two-tenths of one percent (.2%) for the succeeding four (4) fiscal years as follows:

Fiscal year ending June 30, 2010 97.6%

Fiscal year ending June 30, 2011 97.4%

Fiscal year ending June 30, 2012 97.2%

Fiscal years ending June 30, 2013 and thereafter 97.0%

(b) The amount between the applicable percentage in subsection (a) and one hundred percent (100%) of the estimated state general fund revenue for any fiscal year as estimated in accordance with subsection (a) shall be appropriated in any given fiscal year into the budget reserve and cash stabilization account; provided, that for the fiscal year ending June 30, 2009, no payment will be made which would increase the total of the budget reserve and cash stabilization account to more than ~~three percent (3%)~~ three and four-tenths of one percent (3.4%) of only the estimated state general fund revenues as set by subsection (a). In the event that the payment to be made into the budget reserve and cash stabilization account would increase the amount in the account to more than ~~three percent (3%)~~ three and four-tenths of one percent (3.4%) of estimated state general revenues, the amount shall be transferred to the ~~state bond capital~~ Rhode Island Capital Plan fund, to be used solely for ~~the purposes of reduction of state indebtedness, payment of debt service, and/or funding of~~ capital projects. Provided further the applicable percentage shall increase by four-tenths of one percent (.4%) for the four (4) succeeding fiscal years as follows:

Fiscal year ending June 30, 2010 3.8%

Fiscal year ending June 30, 2011 4.2%

Fiscal year ending June 30, 2012 4.6%

Fiscal years ending June 30, 2013 and thereafter 5.0%

However, there shall be no expenditures of money under this section without passage of a specific appropriation by the general assembly.

(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 fiscal year shall be transferred to the general fund.

SECTION 2. Section 35-6-1 of the General Laws in Chapter 35-6 entitled "Accounts and Control" is hereby amended to read as follows:

35-6-1. Controller -- Duties in general. -- (a) Within the department of administration there shall be a controller who shall be appointed by the director of administration pursuant to chapter 4 of title 36. The controller shall be responsible for accounting and expenditure control and shall be required to:

(1) Administer a comprehensive accounting and recording system which will classify the transactions of the state departments and agencies in accordance with the budget plan;

(2) Maintain control accounts for all supplies, materials, and equipment for all departments and agencies except as otherwise provided by law;

(3) Prescribe a financial, accounting, and cost accounting system for state departments and agencies;

(4) Preaudit all state receipts and expenditures;

(5) Prepare financial statements required by the several departments and agencies, by the governor, or by the general assembly;

(6) Approve the orders drawn on the general treasurer; provided, that the preaudit of all expenditures under authority of the legislative department and the judicial department by the state controller shall be purely ministerial, concerned only with the legality of the expenditure and availability of the funds, and in no event shall the state controller interpose his or her judgment regarding the wisdom or expediency of any item or items of expenditure;

(7) Prepare and timely file, on behalf of the state, any and all reports required by the United States, including, but not limited to, the internal revenue service, or required by any department or agency of the state, with respect to the state payroll; and

(8) Prepare a preliminary closing statement for each fiscal year. The controller shall forward the statement to the chairpersons of the house finance committee and the senate finance committee, with copies to the house fiscal advisor and the senate fiscal and policy advisor, by September 1 following the fiscal year ending the prior June 30 or thirty (30) days after enactment of the appropriations act, whichever is later. The report shall include but is not limited to:

(i) A report of all revenues received by the state in the completed fiscal year, together with the estimates adopted for that year as contained in the final enacted budget, and together with all deviations between estimated revenues and actual collections. The report shall also include cash collections and accrual adjustments;

(ii) A comparison of actual expenditures with each of the actual appropriations, including supplemental appropriations and other adjustments provided for in the Rhode Island General Laws;

(iii) A statement of the opening and closing surplus in the general revenue account; and

(iv) A statement of the opening surplus, activity, and closing surplus in the state budget reserve and cash stabilization account and the state bond capital fund.

(b) The controller shall provide supporting information on revenues, expenditures, capital projects, and debt service upon request of the house finance committee chairperson, senate finance committee chairperson, house fiscal advisor, or senate fiscal and policy advisor.

(c) Upon issuance of the audited annual financial statement, the controller shall provide a report of the differences between the preliminary financial report and the final report as contained in the audited annual financial statement.

(d) Upon issuance of the audited financial statement, the controller shall transfer all general revenues received in the completed fiscal year net of transfer to the state budget reserve and cash stabilization account as required by section 35-3-20 in excess of those estimates adopted for that year as contained in the final enacted budget to the employees' retirement system of the state of Rhode Island as defined in section 36-8-2.

SECTION 3. This article shall take effect upon passage.