HOUSE BILL REPORT

HB 1031

BYRepresentatives Fuhrman, Sayan, Silver, Holland, Heavey, Winsley and Betrozoff; by request of Legislative Budget Committee

Making changes to state budget requests.

House Committe on Capital Facilities & Financing

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (13)

      Signed by Representatives H. Sommers, Chair; Rasmussen, Vice Chair; Schoon, Ranking Republican Member; Beck, Betrozoff, Bowman, Braddock, Bristow, Fraser, Jacobsen, Peery, Wang and Winsley.

House Staff:Bill Robinson (786-7136)

AS REPORTED BY COMMITTEE ON CAPITAL FACILITIES & FINANCING

FEBRUARY 28, 1989

BACKGROUND:

The 1986 Legislature, in the supplemental budget, directed the Legislative Budget Committee to study the State's debt issuance practices.  The main objective of the study was to seek means of reducing the cost of capital projects by either, (1) reducing the bond issuance cost, or (2) using "pay as you go" financing rather than debt financing.

The Legislative Budget Committee completed its study in September, 1987, and forwarded its recommendations to the full Legislature.  Three of the recommendations from the committee involved transferring certain types of expenditures between the capital budget and the operating budget.  The committee recommended that routine maintenance expenses be clearly identified in the governor's operating budget document.

SUMMARY:

SUBSTITUTE BILL:  Five new provisions are added to the State Budget and Accounting Act:  (1)  Requires annual routine or ongoing maintenance costs be programmed in the state operating budget rather than the capital budget; (2)  Requires all debt financed pass through money to local governments to be programmed in the state capital budget; (3)  Directs the Office of Financial Management to conduct a technical and program analysis of all major buildings included in the governors budget recommendation.  The analysis shall include space requirements, construction costs, and other building features;  (4)  Requires the governor's budget document to identify the amount of general fund obligations for debt service and other transfers that would otherwise be available for legislative appropriation;  (5)  Requires the governor's budget document to identify the purpose and amount of lease purchase contracts.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The requirement for the Office of Financial Management to develop space construction standards was replaced with the technical review and analysis process.  The requirement for identification of losses to the general fund as a result of debt service was expanded to include all transfers.  The requirement was added to include the identification of lease purchase contracts.

Fiscal Note:      Available.

House Committee ‑ Testified For:    Frank Hensley, Legislative Budget Committee.

House Committee - Testified Against:      Len McComb, Office of Financial Management.

House Committee - Testimony For:    This bill is the result of a Legislative Budget Committee study and it will clarify the distinction between capital and operating types of expenses, give more visibility to state debt service payments, and improve the capital budget analysis process.

House Committee - Testimony Against:      The governor's budget currently includes three of the four elements of this legislation.  The fourth requiring building and space standards is better addressed by more modern value engineering and life cycle analysis.