Relating to state finance; creating new provisions; amending ORS 171.559, 291.002, 291.200, 291.216 and 293.190; repealing ORS 291.120; and appropriating money.

 
 
 
     72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
 
NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .
 
LC 1267
 
                           A-Engrossed
 
                         House Bill 2148
                  Ordered by the House April 22
            Including House Amendments dated April 22
 
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
  Presession filed (at the request of House Interim Committee on
  General Government)
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
 
  Establishes additional procedures for preparation of state
budget by executive branch.
    { - Requires creation of five-year strategic financial
plan. - }
    { - Requires development of capital improvement program as
part of strategic financial plan. - }
  Establishes revenue management and debt management policies.
    { - Creates Capital Asset Replacement Fund. - }
   { +  Requires unobligated reserve in General Fund to avoid
cash flow interruptions and reduce short term borrowing.
  Establishes operating contingency reserve for unanticipated or
nonrecurring expenses or unexpected increases in costs.
  Directs Joint Legislative Committee on Ways and Means to
examine state agency budgets.
  Requires biennial reports on certain capital construction
projects. Modifies requirements for agency budget requests. + }
 
                        A BILL FOR AN ACT
Relating to state finance; creating new provisions; amending ORS
  171.559, 291.002, 291.200, 291.216 and 293.190; repealing ORS
  291.120; and appropriating money.
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + ORS 291.200 is added to and made a part of ORS
291.201 to 291.222. + }
  SECTION 2. ORS 291.200 is amended to read:
  291.200. (1) It is the intent of the Legislative Assembly to
require the Governor, in the preparation of the biennial budget,
to state as precisely as possible what programs the Governor
recommends be approved for funding under estimated revenues under
ORS 291.342. If estimated revenues are inadequate  { + to fund
the programs the Governor recommends + }, the Legislative
Assembly intends that it be advised by the Governor as precisely
as possible how the Legislative Assembly might proceed to raise
the additional funds. It is also the intent of the Legislative
Assembly, in the event that the additional funding is not
possible, to be informed by the Governor precisely what programs
or portions thereof the Governor recommends be reduced
accordingly. Finally, if the Governor chooses to recommend
additional new programs or program enhancements, the Legislative
Assembly intends that the Governor specify how the additional
funding might be achieved { +  in the biennium for which the
budget report is issued and for the two following biennia + }.
   { +  (2) + } The Legislative Assembly believes that the state
government must allocate its resources for effective and
efficient delivery of public services by:
  (a) Clearly identifying desired results;
  (b) Setting priorities;
  (c) Assigning accountability; and
  (d) Measuring, reporting and evaluating outcomes to determine
future allocation.
    { - (2) - }  { +  (3) + } To achieve the intentions of
 { - subsection (1) - }  { + subsections (1) and (2) + } of this
section, it is the budget policy of this state to create and
administer programs and services designed to attain societal
outcomes such as the Oregon benchmarks and to promote the
efficient and measured use of resources.
    { - (3) - }  { +  (4) + } To effect the policy stated in
subsection   { - (2) - }   { + (3) + } of this section, state
government shall:
  (a) Allocate resources to achieve desired outcomes;
  (b) Express program outcomes in measurable terms;
  (c) Measure progress toward desired outcomes;
  (d) Encourage savings;
  (e) Promote investments that reduce or avoid future costs;
  (f) Plan for the short term and long term using consistent
assumptions for major demographic and other trends; and
  (g) Require accountability at all levels for meeting program
outcomes.
  SECTION 3. ORS 291.216 is amended to read:
  291.216. (1) Not later than November 10 of each even-numbered
year the Governor shall cause the budget report to be compiled
and prepared for printing.
  (2) The budget report shall include a budget message prepared
by the Governor, including recommendations of the Governor with
reference to the fiscal policy of the state government for the
coming biennium, describing the important features of the budget
plan, embracing a general budget summary setting forth the
aggregate figures of the budget report so as to show a balanced
relation between the total proposed expenditures and the total
anticipated income, with the basis and factors on which the
estimates are made, the amount to be borrowed, and other means of
financing the estimated expenditures for the ensuing biennium,
compared with the corresponding figures for at least the last
completed biennium and the current biennium. { +  The budget
message shall also include the amount of contingency reserves
proposed for the budget and an explanation of the methodology
used to determine the amount. + }
  (3) The budget plan shall be supported by explanatory schedules
or statements, classifying the expenditures reported therein,
both past and proposed, by organization units, objects and funds,
and the income by organization units, sources and funds, and the
proposed amount of new borrowing as well as proposed new tax or
revenue sources, including a single comprehensive list of all
proposed increases in fees, licenses and assessments assumed in
the budget plan. { +  The list of proposed increases described in
this subsection shall be accompanied by an explanation of the
methodology used to determine the amounts of the proposed
increases. + }
  (4) The budget plan shall be submitted for all dedicated funds,
as well as the state General Fund, and shall include the
estimated amounts of federal and other aids or grants to state
 
agencies or activities provided for any purpose whatever,
together with estimated expenditures therefrom.
  (5) The budget report shall embrace the detailed estimates of
expenditures and revenues. It shall include statements of the
bonded indebtedness of the state government, showing the actual
amount of the debt service for at least the past biennium, and
the estimated amount for the current biennium and the ensuing
biennium, the debt authorized and unissued, the condition of the
sinking funds and the borrowing capacity. It shall contain the
Governor's recommendations concerning tax expenditures identified
under ORS 291.214. It shall also contain any statements relative
to the financial plan which the Governor may deem desirable or
which may be required by the legislature.
  (6) The budget plan shall use the estimated revenues under ORS
291.342 for the fiscal year in which the plan is submitted as the
basis for total anticipated income under subsection (2) of this
section, subject to such adjustment as may be necessary to
reflect accurately projections for the next biennium.
  (7) As supplemental information to the budget report, the
Governor shall publish an existing level tentative budget plan
for the two fiscal years for which the budget report is required.
This summary budget shall reflect only existing revenues
estimated under subsection (6) of this section; subject to such
adjustment as may be necessary to reflect accurately projections
for the next biennium. The supplemental information to the budget
report shall be submitted at the same time as the budget report.
  (8)(a) The budget report shall present information regarding
the expenses of the state in the following categories:
  (A) Personnel expenses, including compensation and benefits for
state employees, but excluding costs of services contracted out
and temporary service costs.
  (B) Supplies, equipment and the costs of services contracted
out.
  (C) Capital construction.
  (D) Capital outlay.
  (E) Debt service.
  (b) For each category described in paragraph (a) of this
subsection, the report shall show actual expenditures to date.
  (c) For each category described in paragraph (a) of this
subsection, the report shall show:
  (A) The amount of merit increases for the existing workforce.
  (B) Increases for the cost of replacement and repair of
supplies and equipment.
  (C) Increases for the costs of new construction or major
remodeling.
  (D) Increases for the cost of inflation.
  (d) The report shall show the total increase in the cost of
salaries and benefits for all state positions.
  (9) The budget report shall include:
  (a) The total number of positions included in the budget.
  (b) The average vacancy rate in the present biennium.
  (c) The number of permanent, full-time equivalent vacancies,
excluding academics, as of July 1 of even-numbered years.
  (10) The budget report shall include computations showing
budget figures as a percentage of the total General Fund, federal
fund, fee or other source category, as may be appropriate.
  (11) The budget report shall include, in a format that provides
side-by-side comparison with the State Debt Policy Advisory
Commission report of net debt capacity, a six-year forecast, by
debt type and repayment source, of:
  (a) That portion of the capital construction program required
to be reported by ORS 291.224 that will be financed by debt
issuance.
  (b) The acquisition of equipment or technology in excess of
$500,000 that will be financed by debt issuance.
 
  (c) Other state agency debt issuance for grant or loan
purposes.
  (12) As supplemental information to the budget report, the
Governor shall prepare an alternative budget plan for the two
fiscal years for which the budget report is required and shall
provide the alternative budget plan to the President of the
Senate, the Speaker of the House of Representatives and the
majority and minority leaders in the Senate and the House of
Representatives. The alternative budget plan shall establish
funding for each state agency's programs and activities at 90
percent of the appropriations requested for the state agency in
the budget report, excluding appropriations that are not made to
fund recurring activities. For each state agency, the Governor
shall describe the 10 percent reduction in appropriated moneys in
terms of the activities or programs that the agency will not
undertake. The activities or programs that are not undertaken as
a result of the reductions in appropriated moneys made in the
alternative budget plan shall be ranked in order of importance
and priority on the basis of lowest cost for benefit obtained.
   { +  (13) The budget report shall include a budget plan that:
  (a) Leaves unobligated an amount that is not less than five
percent of the General Fund revenues, including net proceeds from
the Oregon State Lottery, for the immediately preceding biennium.
The unobligated reserve required by this paragraph may be used to
avoid cash flow interruptions and reduce the need for short-term
borrowing.
  (b) Establishes an operating contingency reserve for state
funds and accounts other than the General Fund to provide for
unanticipated and nonrecurring expenditures or to meet unexpected
increases in service delivery costs. An operating contingency
reserve described in this paragraph may not be more than five
percent of the original revenue estimate for the fund or account
for the biennium. + }
  SECTION 4.  { + (1) At least once every two years, the director
or other head of each state agency that is involved in a capital
construction project, including but not limited to the Chancellor
of the Oregon University System, shall, for each active capital
construction project, provide a report on the progress of the
project. This subsection does not apply to a capital construction
project that has an estimated total cost of less than $20
million.
  (2) The report required under this section shall:
  (a) Identify problems affecting a capital construction project
as early as possible in the project's development; and
  (b) Be submitted to the Governor, the Director of the Oregon
Department of Administrative Services and the Legislative Fiscal
Officer.
  (3) When a capital construction project is completed, the
project manager shall evaluate and report on the actual
performance of work on the project. The project manager shall
submit a final report within the time specified in the project
plan. + }
  SECTION 5.  { + (1) The Governor shall require the director or
other head of each state agency to integrate performance measures
for operating efficiency, operating effectiveness, citizen
satisfaction and human resource efficiency into the budget
request for the state agency.
  (2) The Oregon Department of Administrative Services shall
maintain a budget control system to ensure adherence to budgets
approved for state agencies by the Legislative Assembly. In each
calendar quarter, the department shall prepare summary reports
that compare actual revenues and expenditures to the amounts
appropriated for expenditure. The summary reports prepared under
this subsection shall be sent to the Legislative Fiscal
Officer. + }
 
  SECTION 6.  { + When establishing revenue management policies
for the state, the Legislative Assembly and the Governor shall
ensure, to the extent practicable, that:
  (1) Moneys in dedicated funds or trust funds are expended only
for the purposes for which they are collected.
  (2) One-time resources are not used to fund continuing
activities of the state.
  (3) The state carefully and efficiently manages the collection
of revenues. When necessary, private collection agencies,
foreclosures, liens, discontinuation of services and other
methods to ensure collections shall be used.
  (4) The Legislative Assembly diversifies the revenue system of
the state so as to safeguard the operations and programs of the
state from undue reliance on any single revenue source. + }
  SECTION 7.  { + (1) Except as authorized by the Oregon
Constitution and ORS 288.165, the State of Oregon may not incur
debt for the purpose of paying the operating expenses of state
agencies or programs.
  (2) The Legislative Assembly shall develop and maintain a plan
that allows the state to respond to significant shortfalls in
future anticipated state revenues. The plan shall describe an
appropriate course of action to take in response to significant
differences between revenues and expenditures. + }
  SECTION 8.  { + The budget enacted by the Legislative Assembly
during a regular session shall:
  (1) Leave unobligated an amount that is not less than five
percent of General Fund revenues, including net proceeds from the
Oregon State Lottery, for the biennium immediately preceding the
biennium for which the budget is enacted. The unobligated reserve
required by this subsection may be used to avoid cash flow
interruptions and reduce the need for short-term borrowing.
  (2) Establish an operating contingency reserve for state funds
and accounts other than the General Fund to provide for
unanticipated and nonrecurring expenditures or to meet unexpected
increases in service delivery costs. An operating contingency
reserve described in this subsection may not be more than five
percent of the original revenue estimate for the fund or account
for the biennium for which the budget is enacted. + }
  SECTION 9.  { + (1) By May 30 of each odd-numbered year, the
Oregon Department of Administrative Services shall estimate the
amount of General Fund moneys that a state agency has saved in
the current biennium due to agency actions rather than changes in
service demands or reductions in legislatively authorized
programs. For purposes of this section, the amount of savings is
the difference between the total amount of General Fund moneys
appropriated to the agency in the biennium and the total amount
actually spent. The department shall certify the amount to the
Legislative Assembly.
  (2) The Legislative Assembly shall, for the biennium following
the biennium for which savings are certified, appropriate 50
percent of the certified amount to the agency for purposes
described in subsection (3) of this section and appropriate the
remaining 50 percent of the certified amount to the Emergency
Board, for allocation to the agency.
  (3) The Emergency Board shall, in the biennium following the
biennium for which savings are certified, upon request of the
agency, allocate any moneys appropriated to the Emergency Board
under subsection (2) of this section to the agency on behalf of
which the moneys were appropriated. The Emergency Board need not
allocate all moneys appropriated to the board for an agency if
the actual savings of the agency are less than the amount
certified under subsection (1) of this section.
  (4) Moneys appropriated or allocated to an agency under
subsection (2) or (3) of this section may be used by the agency
for deferred maintenance or for enhancing professional
development, including employee training projects related to
productivity, technology enhancement and related expenditures
that have a long term benefit. A productivity improvement project
may be for research and development intended to lead to improved
productivity. + }
  SECTION 10. ORS 293.190 is amended to read:
  293.190. (1) On December 31 in each odd-numbered year, all
General Fund appropriation balances as recorded on the records of
the Oregon Department of Administrative Services for the prior
biennium shall revert to the General Fund except for capital
construction, continuing contracts, contested claims  { - , - }
 { +  or + } special appropriations designated by legislative
action   { - or savings continuously appropriated to agencies
under ORS 291.120 - } .
  (2) On December 31 in each odd-numbered year, all limitation
balances on any separate fund or cash account in the State
Treasury shall be canceled except for continuing contracts,
contested claims or special limitations designated by legislative
action.
  (3) Notwithstanding subsections (1) and (2) of this section,
under conditions which shall be described by the department by
rule, upon request, an extension may be granted to allow an
agency to make final analyses and corrections before an
appropriation or limitation is canceled. The procedures for
requesting an extension and the criteria for approving the
request shall be established by the department.
  SECTION 11. ORS 291.002 is amended to read:
  291.002. As used in ORS 291.001 to 291.034, 291.201 to 291.222,
291.232 to 291.260, 291.307 and 291.990 { +  and sections 4 to 9
of this 2003 Act + }, unless the context requires otherwise:
  (1) 'Department' means the Oregon Department of Administrative
Services.
  (2) 'Director' means the Director of the Oregon Department of
Administrative Services.
  (3) 'Dedicated fund' means a fund in the State Treasury, or a
separate account or fund in the General Fund in the State
Treasury, that by law is dedicated, appropriated or set aside for
a limited object or purpose; but 'dedicated fund' does not
include a revolving fund or a trust fund.
  (4) 'Revolving fund' means a fund in the State Treasury,
established by law, from which is paid the cost of goods or
services furnished to or by a state agency, and which is
replenished through charges made for such goods or services or
through transfers from other accounts or funds; and specifically
includes funds derived from receipts by the State Board of Higher
Education of tuition, fees, dormitory earnings, student activity
receipts and sales of products and services incident to education
functions.
  (5) 'Trust fund' means a fund in the State Treasury in which
designated persons or classes of persons have a vested beneficial
interest or equitable ownership, or which was created or
established by a gift, grant, contribution, devise or bequest
that limits the use of the fund to designated objects or
purposes.
  (6) 'Classification of expenditures' means the major groups or
categories of expenditures for the purpose of budget-making and
accounting that are established as provided in ORS 291.206.
  (7) 'State agency' or 'agency' means every state officer,
board, commission, department, institution, branch or agency of
the state government, whose costs are paid wholly or in part from
funds held in the State Treasury, except the Legislative
Assembly, the courts and their officers and committees, and
except the Secretary of State and the State Treasurer in the
performance of the duties of their constitutional offices.
  (8) 'State officer' means any elected or appointed state
officer, including members of boards and commissions, except the
members and officers of the Legislative Assembly, the courts and
the Secretary of State and the State Treasurer in the performance
of the duties of their constitutional offices.
  SECTION 12. ORS 171.559 is amended to read:
  171.559.  { + (1) + } The Joint Legislative Committee on Ways
and Means shall examine budgets based upon policy where budget
policies affect more than one agency pursuant to the policies
stated in ORS 171.557.
   { +  (2) As the committee considers the budget of a state
agency as defined in ORS 293.227, the committee shall:
  (a) Evaluate whether the Legislative Assembly should reduce,
reorganize or eliminate the agency;
  (b) Evaluate whether the Legislative Assembly should change the
activities that the agency performs; and
  (c) Examine whether a private entity as defined in ORS 383.003
could or should perform the agency's activities. + }
  SECTION 13.  { + ORS 291.120 is repealed. + }
                         ----------