BILL REQ. #:  H-4734.1 

Read first time 04/03/12.   Referred to Committee on Ways & Means.

     AN ACT Relating to improving state budgeting and planning by requiring a balanced state operating budget for the current biennium and developing a process for balancing the budget over a two-biennium period; amending RCW 82.33.010; adding new sections to chapter 43.88 RCW; adding new sections to chapter 82.33 RCW; creating a new section; and providing an expiration date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   A new section is added to chapter 43.88 RCW to read as follows:
     BALANCED LEGISLATIVE BUDGET REQUIRED FOR CURRENT FISCAL BIENNIUM; LEGISLATIVE BUDGETS MUST INCLUDE UPDATED BUDGET OUTLOOK. (1) When the legislature enacts any bill that makes appropriations from the state general fund or related funds, the legislature must prepare and publish a balance sheet which demonstrates that total proposed appropriations from the state general fund and related funds for that biennium will leave, in total, a positive ending fund balance.
     (2) When either house of the legislature approves or reports from committee any bill that makes appropriations from the general fund or related funds, it must prepare and publish an updated legislative budget outlook for the ensuing fiscal biennium. The legislative budget outlook must estimate how the revenue and expenditure decisions assumed or funded in the bill will change the most recent budget outlook prepared by the economic and revenue forecast council under section 2 of this act. The legislative budget outlook must also reflect the estimated fiscal impact of assumed or enacted legislation with future implementation dates.
     (3) Balance sheets and legislative budget outlooks required under this section must be prepared and published by senate committee services for bills approved by the senate or reported from its committees, by the office of program research for bills approved by or reported from the house of representatives or its committees, and jointly by senate committee services and the office of program research for conference committee reports and acts enacted by the legislature.
     (4) The requirements of this section apply to any bill that makes appropriations from the general fund or related funds for the 2013-2015 fiscal biennium or for any fiscal period thereafter. "Related funds," as used in this section, means the Washington opportunity pathways account and the education legacy trust account.
     (5) Subsection (1) of this section does not apply to an appropriations bill that (a) either makes net reductions in total general fund or related funds appropriations or increases the ending fund balance in the general fund or related funds, or both, and (b) is enacted between July 1st and February 15th of any fiscal year.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.33 RCW to read as follows:
     ECONOMIC AND REVENUE FORECAST COUNCIL MUST PREPARE AN OPERATING BUDGET OUTLOOK. (1) Each January, the economic and revenue forecast council established in RCW 82.33.010 must prepare and publish on its web site a multibiennium budget outlook for state operating budget revenues and expenditures. The purpose of the outlook is to inform policymakers and the public by projecting and comparing estimates of revenues and expenditures for ensuing fiscal biennia.
     (2) The revenue and caseload projections used in the outlook must be based on the most recent official forecasts adopted by the council under RCW 82.33.010 and the caseload forecast council under chapter 43.88C RCW for the years for which those forecasts are available.
     (3) The outlook must:
     (a) Estimate revenues to and expenditures from the state general fund and related funds. The estimate of ensuing biennium expenditures must focus on maintenance items including, but not limited to, continuation of current programs, forecasted growth of current entitlement programs, and actions required by law, including legislation with a future implementation date. Estimates of ensuing biennium expenditures must exclude policy items including, but not limited to, legislation not yet enacted by the legislature, collective bargaining agreements not yet approved by the legislature, and changes to levels of funding for employee salaries and benefits unless those changes are required by statute;
     (b) Address major budget and revenue drivers, including trends and variability in these drivers;
     (c) Clearly state the assumptions used in the estimates of baseline and projected expenditures and any adjustments made to those estimates;
     (d) Clearly state the assumptions used in the baseline revenue estimates and any adjustments to those estimates;
     (e) Include the impact of previously enacted legislation with a future implementation date; and
     (f) Address other major fiscal factors, such as pension funding status and state general obligation debt.
     (4) The outlook must also separately include projections based on the revenues and expenditures proposed in the governor's budget documents submitted to the legislature under RCW 43.88.030.
     (5) By the later of June 30th or thirty days after the enactment of the legislative biennial or supplemental operating budget, the council must update the outlook to reflect the enacted budget and other relevant enacted legislation.
     (6) In odd-numbered years, the period covered by the January outlook is the next two ensuing fiscal biennia. In even-numbered years, the period covered by the January outlook is the current biennium and the ensuing biennium.
     (7) All state agencies must provide the council with immediate access to all information relating to revenues, caseload forecasts, and expenditures.
     (8) "Related funds," as used in this chapter, means the Washington opportunity pathways account and the education legacy trust account.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.33 RCW to read as follows:
     ECONOMIC AND REVENUE FORECAST COUNCIL MUST DEVELOP AND REPORT ON METHODOLOGY FOR PREPARING AN OPERATING BUDGET OUTLOOK. (1) By December 1, 2012, the economic and revenue forecast council established in RCW 82.33.010 must develop and report on a proposed methodology for preparing the operating budget outlook required under section 2 of this act.
     (2) The report must include an illustrative application of the proposed methodology to fiscal data and forecasts from fiscal years 2000 through 2011, including analysis of the accuracy of the methodology as applied to projections of revenue, caseloads, and expenditures.
     (3) The council must provide the proposed methodology and its report to the office of financial management and the appropriate fiscal committees of the legislature and must make the proposed methodology publicly available on its web site.

NEW SECTION.  Sec. 4   A new section is added to chapter 82.33 RCW to read as follows:
     ECONOMIC AND REVENUE FORECAST COUNCIL MUST DEVELOP PROPOSAL FOR ENACTING BUDGETS THAT ARE BALANCED IN ENSUING BIENNIA. (1) By December 1, 2013, the economic and revenue forecast council established in RCW 82.33.010 must prepare and present to the legislature for its consideration a proposed methodology for determining whether state operating and related funds appropriations and revenues are balanced for the ensuing as well as the current fiscal biennium.
     (2)(a) The proposed methodology must build on the outlook process established in section 2 of this act. In estimating ensuing fiscal biennium expenditures, the methodology must focus on maintenance items, including, but not limited to, continuation of current programs, forecasted growth of current entitlement programs, and actions required by law, including legislation with a future implementation date. Estimates of ensuing fiscal biennium expenditures must exclude policy items including, but not limited to, legislation not yet enacted by the legislature, collective bargaining agreements not yet approved by the legislature, and changes to levels of funding for employee salaries and benefits unless those changes are required by statute.
     (b) The council must include an analysis of whether and the extent to which the proposed methodology for projecting revenues and expenditures for ensuing fiscal biennia may reliably be used to determine the future impact of pending appropriations and revenue legislation, and whether this information is sufficiently reliable to permit a conclusion that revenues and expenditures are in balance in ensuing fiscal biennia.
     (c) The council may present more than one proposed methodology to the legislature. The methodologies may include, but are not limited to, use of a probability range within a stated confidence interval for revenues, caseloads, and expenditures.
     (3) By December 1, 2013, the council must provide the proposed methodology to the office of financial management and the appropriate fiscal committees of the legislature, and it must publish the proposed methodology on its web site.

NEW SECTION.  Sec. 5   A new section is added to chapter 43.88 RCW to read as follows:
     GOVERNOR MUST SUBMIT OUTLOOK WITH BUDGET DOCUMENTS. When submitting operating budget documents to the legislature under RCW 43.88.030, the governor must also submit an operating budget outlook based on the governor's operating budget proposal. The governor must use revenue, caseload, and budget outlook assumptions as used in the most recent forecasts of the economic and revenue forecast council under chapter 82.33 RCW and the caseload forecast council under chapter 43.88C RCW. When the governor proposes new legislation that affects expenditures or revenues, the outlook submitted by the governor must indicate how these changes affect the outlook prepared by the economic and revenue forecast council under section 2 of this act. The outlook must also reflect the estimated fiscal impact of assumed or enacted legislation with future implementation dates. This requirement applies beginning with the budget documents submitted in December 2013.

NEW SECTION.  Sec. 6   A new section is added to chapter 82.33 RCW to read as follows:
     BUDGET OUTLOOK WORK GROUP. (1) To promote the free flow of information and to promote legislative input in the preparation of budget outlooks under section 2 of this act, immediate access to all information relating to the budget outlook process must be available to the budget outlook work group hereby created. Revenue collection information must be available to the budget outlook work group on the first business day following the conclusion of each collection period. The budget outlook work group consists of staff members selected by the executive head or chair of each of the following agencies or committees:
     (a) Department of revenue, one member;
     (b) Office of financial management, two members;
     (c) Office of the state treasurer, one member;
     (d) Caseload forecast council, one member;
     (e) Ways and means committee of the senate, two committee staff members; and
     (f) Ways and means committee of the house of representatives, two committee staff members.
     (2) The budget outlook work group shall provide technical support to the economic and revenue forecast council in preparing the budget outlook under section 2 of this act. Meetings of the budget outlook work group may be called by any member of the group for the purposes of assisting the economic and revenue forecast council, reviewing the state economic and revenue and caseload forecasts, reviewing monthly revenue collection or expenditure data, or for any other purpose which may assist the council in preparing budget outlooks.

Sec. 7   RCW 82.33.010 and 1990 c 229 s 1 are each amended to read as follows:
     STATE TREASURER ADDED TO ECONOMIC AND REVENUE FORECAST COUNCIL MEMBERSHIP; COUNCIL DUTIES REVISED. (1) The economic and revenue forecast council is hereby created. The council shall consist of the state treasurer or his or her designee, two individuals appointed by the governor, and four individuals, one of whom is appointed by the chairperson of each of the two largest political caucuses in the senate and house of representatives. The chair of the council shall be selected from among the four caucus appointees. The council may select such other officers as the members deem necessary.
     (2) The council shall employ an economic and revenue forecast supervisor to supervise the preparation of all economic and revenue forecasts and state budget outlooks. As used in this chapter, "supervisor" means the economic and revenue forecast supervisor. Approval by an affirmative vote of at least five members of the council is required for any decisions regarding employment of the supervisor. Employment of the supervisor shall terminate after each term of three years. At the end of the first year of each three-year term the council shall consider extension of the supervisor's term by one year. The council may fix the compensation of the supervisor. The supervisor shall employ staff sufficient to accomplish the purposes of this section.
     (3) The economic and revenue forecast council shall oversee the preparation of and approve, by an affirmative vote of at least four members, the official, optimistic, and pessimistic state economic and revenue forecasts prepared under RCW 82.33.020. If the council is unable to approve a forecast before a date required in RCW 82.33.020, the supervisor shall submit the forecast without approval and the forecast shall have the same effect as if approved by the council.
     (4) The economic and revenue forecast council shall oversee the preparation of and approve, by an affirmative vote of at least four members, the state budget outlook prepared under section 2 of this act. If the council is unable to approve a state budget outlook before a date required in section 2 of this act, the supervisor shall submit the outlook without approval and the outlook has the same effect as if approved by the council.
     (5) A councilmember who does not cast an affirmative vote for approval of the official economic and revenue forecast or the state budget outlook may request, and the supervisor shall provide, an alternative economic and revenue forecast or state budget outlook based on assumptions specified by the member.
     (((5))) (6) Members of the economic and revenue forecast council shall serve without additional compensation but shall be reimbursed for travel expenses in accordance with RCW 44.04.120 while attending sessions of the council or on official business authorized by the council. Nonlegislative members of the council shall be reimbursed for travel expenses in accordance with RCW 43.03.050 and 43.03.060.

NEW SECTION.  Sec. 8   JOINT LEGISLATIVE AUDIT AND REVIEW COMMITTEE REVIEW. The joint legislative audit and review committee must review and report on the implementation and effectiveness of the budget outlook process established in sections 1, 2, and 5 of this act. The review must include, but is not limited to, the accuracy of budget outlook projections when compared to actual revenues, caseloads, and expenditures. The committee must provide the report to the appropriate committees of the legislature by December 1, 2022.

NEW SECTION.  Sec. 9   SEVERABILITY. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 10   EXPIRATION DATE. This act expires July 1, 2023.