BILL REQ. #:  S-5375.2 

Read first time 04/10/12.   Referred to Committee on Ways & Means.

     AN ACT Relating to across-the-board reductions to state appropriations; amending RCW 43.88.110; and declaring an emergency.

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

Sec. 1   RCW 43.88.110 and 2009 c 518 s 3 are each amended to read as follows:
     This section sets forth the expenditure programs and the allotment and reserve procedures to be followed by the executive branch for public funds.
     (1) Allotments of an appropriation for any fiscal period shall conform to the terms, limits, or conditions of the appropriation.
     (2) The director of financial management shall provide all agencies with a complete set of operating and capital instructions for preparing a statement of proposed expenditures at least thirty days before the beginning of a fiscal period. The set of instructions need not include specific appropriation amounts for the agency.
     (3) Within forty-five days after the beginning of the fiscal period or within forty-five days after the governor signs the omnibus biennial appropriations act, whichever is later, all agencies shall submit to the governor a statement of proposed expenditures at such times and in such form as may be required by the governor.
     (4) The office of financial management shall develop a method for monitoring capital appropriations and expenditures that will capture at least the following elements:
     (a) Appropriations made for capital projects including transportation projects;
     (b) Estimates of total project costs including past, current, ensuing, and future biennial costs;
     (c) Comparisons of actual costs to estimated costs;
     (d) Comparisons of estimated construction start and completion dates with actual dates;
     (e) Documentation of fund shifts between projects.
     This data may be incorporated into the existing accounting system or into a separate project management system, as deemed appropriate by the office of financial management.
     (5) The office of financial management, prior to approving allotments for major capital construction projects valued over five million dollars, shall institute procedures for reviewing such projects at the predesign stage that will reduce long-term costs and increase facility efficiency. The procedures shall include, but not be limited to, the following elements:
     (a) Evaluation of facility program requirements and consistency with long-range plans;
     (b) Utilization of a system of cost, quality, and performance standards to compare major capital construction projects; and
     (c) A requirement to incorporate value-engineering analysis and constructability review into the project schedule.
     (6) No expenditure may be incurred or obligation entered into for such major capital construction projects including, without exception, land acquisition, site development, predesign, design, construction, and equipment acquisition and installation, until the allotment of the funds to be expended has been approved by the office of financial management. This limitation does not prohibit the continuation of expenditures and obligations into the succeeding biennium for projects for which allotments have been approved in the immediate prior biennium.
     (7)(a) Beginning January 1, 2013, if at any time during the fiscal period the governor projects a cash deficit in a particular fund or account as defined by RCW 43.88.050, the governor shall make across-the-board reductions in allotments for that particular fund or account so as to prevent a cash deficit, unless the legislature has directed the liquidation of the cash deficit over one or more fiscal periods.
     (b)(i) From the effective date of this section until January 1, 2013, if at any time during the fiscal period the governor projects a cash deficit in a particular fund or account as defined by RCW 43.88.050, then as set forth in (b) of this subsection the governor shall make across-the-board reductions in the total amount allotted to each agency from each appropriation from that fund or account so as to prevent a cash deficit, unless the legislature has directed the liquidation of the cash deficit over one or more fiscal periods.
     (ii) The percentage reduction applied to individual allotments of an agency's total allotments from each appropriation from that fund or account may vary, but each agency's total allotments from each appropriation from that fund or account must be uniformly reduced by the percentage necessary to prevent a cash deficit. Where a portion of an appropriation is provided solely for a particular purpose, allotments of that portion of the appropriation may be reduced only by the same percentage as the overall appropriation.
     (iii) Allotments for the following programs may be reduced only by a percentage equal to one-third of the percentage reduction applied to total allotments of appropriations under (b)(ii) of this subsection:
     (A) Direct custody in the department of corrections and the juvenile rehabilitation administration;
     (B) The special commitment center of the department of social and health services; and
     (C) State institutions of higher education and state appropriations for financial aid.
     (iv) Basic education programs, debt service on state bonds, state contributions to retirement systems, and programs for which a defined benefit is specifically mandated in statute are exempt from across-the-board allotment reductions under this subsection (7)(b) and allotments for these purposes shall not be included when calculating the allotment reductions.
     (8) Except for the legislative and judicial branches and other agencies headed by elective officials, the governor shall review the statement of proposed operating expenditures for reasonableness and conformance with legislative intent. The governor may request corrections of proposed allotments submitted by the legislative and judicial branches and agencies headed by elective officials if those proposed allotments contain significant technical errors.
     (9) Once the governor approves the proposed allotments, further revisions may at the request of the office of financial management or upon the agency's initiative be made on a quarterly basis and must be accompanied by an explanation of the reasons for significant changes. If the governor initiates across-the-board allotment revisions under subsection (7)(b) of this section, the office of financial management shall provide notice to the appropriate legislative fiscal committees of the proposed revisions, including the explanation for the significant changes, and the revisions may not take effect until ten days after this notice is provided. However, changes in appropriation level authorized by the legislature, changes required by across-the-board reductions mandated by the governor, changes caused by executive increases to spending authority, and changes caused by executive decreases to spending authority for failure to comply with the provisions of chapter 36.70A RCW may require additional revisions. Revisions shall not be made retroactively. However, the governor may assign to a reserve status any portion of an agency appropriation withheld as part of across-the-board reductions made by the governor and any portion of an agency appropriation conditioned on a contingent event by the appropriations act. The governor may remove these amounts from reserve status if the across-the-board reductions are subsequently modified or if the contingent event occurs. The director of financial management shall enter approved statements of proposed expenditures into the state budgeting, accounting, and reporting system within forty-five days after receipt of the proposed statements from the agencies. If an agency or the director of financial management is unable to meet these requirements, the director of financial management shall provide a timely explanation in writing to the legislative fiscal committees.
     (((8))) (10) It is expressly provided that all agencies shall be required to maintain accounting records and to report thereon in the manner prescribed in this chapter and under the regulations issued pursuant to this chapter. Within ninety days of the end of the fiscal year, all agencies shall submit to the director of financial management their final adjustments to close their books for the fiscal year. Prior to submitting fiscal data, written or oral, to committees of the legislature, it is the responsibility of the agency submitting the data to reconcile it with the budget and accounting data reported by the agency to the director of financial management.
     (((9))) (11) The director of financial management may exempt certain public funds from the allotment controls established under this chapter if it is not practical or necessary to allot the funds. Allotment control exemptions expire at the end of the fiscal biennium for which they are granted. The director of financial management shall report any exemptions granted under this subsection to the legislative fiscal committees.

NEW SECTION.  Sec. 2   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.