Senate Bill No. 19

Introduced By gage

By Request of the Joint Interim Subcommittee on State Management Systems



A Bill for an Act entitled: "An Act generally revising state budgeting laws; requiring that the legislative finance committee prepare recommendations involving major budgetary matters for an ensuing legislative session; clarifying types of information contained in and the manner and times for preparing proposed budgets and reports; reducing the number of reports made to the budget director; redefining "base budget", "present law base", and "program" for the purposes of preparing the state budget; changing the manner of determining whether an agency is in substantial compliance with the budget; changing the approval and reporting procedures for program transfers; providing for budget amendments under the long-range building program; clarifying the provisions relating to authority to make expenditures in the second year of a biennium; amending sections 5-12-205, 5-12-303, 17-4-107, 17-4-108, 17-7-102, 17-7-111, 17-7-112, 17-7-121, 17-7-122, 17-7-123, 17-7-124, 17-7-132, 17-7-138, 17-7-139, 17-7-204, 17-7-211, 17-7-301, and 17-8-101, MCA; and repealing section 17-3-109, MCA; AND PROVIDING AN EFFECTIVE DATE."



Be it enacted by the Legislature of the State of Montana:



Section 1.  Section 5-12-205, MCA, is amended to read:

"5-12-205.   Powers and duties of committee. The committee may:

(1)  may organize, adopt rules to govern its proceedings, and meet as often as necessary, upon the call of the presiding officer, to advise and consult with the legislative fiscal analyst;

(2)  may employ and, in accordance with the rules for classification and pay adopted by the legislative council, set the salary of the legislative fiscal analyst. The legislative fiscal analyst shall serve at the pleasure of and be responsible for providing services to the committee.

(3)  may exercise the investigatory powers of a standing committee under chapter 5, part 1, of this title; and

(4) shall, before each regular and special legislative session involving budgetary matters, prepare recommendations to the house appropriations committee and the senate finance and claims committee on the application of certain budget issues. At a minimum, the recommendations must include procedures for the consistent application during each session of inflation factors, the allocation of fixed costs, and the personal services budget. The committee may also make recommendations on other issues of major concern in the budgeting process, such as estimating the cost of implementing particular programs based upon present law."



Section 2.  Section 5-12-303, MCA, is amended to read:

"5-12-303.   Fiscal analysis information from state agencies. (1) The legislative fiscal analyst may investigate and examine the costs and revenues revenue of state government activities and may examine and obtain copies of the records, books, and files of any state agency, including confidential records.

(2)  When confidential records and information are obtained from a state agency, the legislative fiscal analyst and staff must be subject to the same penalties for unauthorized disclosure of the confidential records and information provided for under the laws administered by the state agency. The legislative fiscal analyst shall develop policies to prevent the unauthorized disclosure of confidential records and information obtained from state agencies.

(3)  The legislative fiscal analyst may not obtain copies of individual income tax records protected under 15-30-303. The department of revenue shall make individual income tax data available by removing names, addresses, occupations, social security numbers, and taxpayer identification numbers. The department of revenue may not alter the data in any other way. The data is subject to the same restrictions on disclosure as are individual income tax returns.

(4)  The budget director shall furnish the legislative fiscal analyst with copies of all budget requests, in a format agreed upon by both the office of budget and program planning and the legislative fiscal analyst, at the time of submission to the budget director as provided by law and, if requested, all underlying and supporting documentation. In preparing the executive budget for the next biennium for submission to the legislature, the budget director shall use the base budget, the present law base, and new proposals as defined in 17-7-102.

(5)  In the year preceding each legislative session, the budget director shall furnish the legislative fiscal analyst, in a format agreed upon by both the office of budget and program planning and the legislative fiscal analyst:

(a)  by October 10, a preliminary budget reflecting the base budget and, by November 1, a present law base for each agency and a copy of the documents that reflect the anticipated receipts and other means of financing the base budget and present law base for each fiscal year of the ensuing biennium;

(b)  by November 15, a preliminary budget that must meet the statutory requirements for submission of the budget to the legislature and a summary of the preliminary budget designed for distribution to members and members-elect of the legislature;

(c)  by November 12, a paper copy and an electronic copy of the documents that reflect expenditures to the second level, as provided in 17-1-102(3), by funding source and detailed by accounting entity; and

(d)  by December 15, all amendments to the preliminary budget.

(6)(4)  Within 1 day after the legislative finance committee presents its budget analysis to the legislature, the budget director and the legislative fiscal analyst shall exchange expenditure and disbursement recommendations by second-level expenditure detail and by funding sources detailed by accounting entity. This information must be filed in the respective offices and be made available to the legislature and the public. In preparing the budget analysis for the next biennium for submission to the legislature, the legislative fiscal analyst shall use the base budget, the present law base, and new proposals as defined in 17-7-102.

(7)(5)  This section does not authorize publication or public disclosure of information if the law prohibits publication or disclosure."



Section 3.  Section 17-4-107, MCA, is amended to read:

"17-4-107.   Writeoff procedures. (1) The department may establish procedures for canceling and writing off accounts receivable carried on the books of the various state agencies that if the accounts have been transferred to the department pursuant to 17-4-104 and that are uncollectible or if the continued pursuance of the collection of the accounts would cost the state more than the amount collected. The procedures must be established in accordance with subsection (2).

(2)  The department may establish procedures for canceling and writing off accounts receivable carried on the books of various state agencies that are uncollectible or the continued pursuance of the collection would cost the state more than the amount collected. The procedures must include the reporting to the budget director of any canceling and writing off of accounts receivable."



Section 4.  Section 17-4-108, MCA, is amended to read:

"17-4-108.   Circumstances under which previously written-off debt may be collected. If a debt previously written off under 17-4-107(1) subsequently becomes collectible, the department shall proceed to collect the money due pursuant to 17-4-105(1) and 17-4-106."



Section 5.  Section 17-7-102, MCA, is amended to read:

"17-7-102.   Definitions. As used in this chapter, the following definitions apply:

(1)  "Additional services" means different services or more of the same services.

(2)  "Agency" means each state office, department, division, board, commission, council, committee, institution, university unit, or other entity or instrumentality of the executive branch, office of the judicial branch, or office of the legislative branch of state government, except for purposes of capital projects administered by the department of administration, for which institutions are treated as one department and university units as one system.

(3)  "Approved long-range building program budget amendment" means approval by the budget director of a request submitted through the architecture and engineering division of the department of administration to transfer excess funds appropriated to a capital project within an agency to increase the appropriation of another capital project within that agency or to obtain financing to expand a project with funds that were not available for consideration by the legislature. all offices, departments, boards, commissions, institutions, universities, colleges, and any other person or any other administrative unit of state government that spends or encumbers public money by virtue of an appropriation from the legislature under 17-8-101.

(4)(3)  "Approving authority" means:

(a)  the governor or the governor's designated representative for executive branch agencies;

(b)  the chief justice of the supreme court or the chief justice's designated representative for judicial branch agencies;

(c)  the speaker for the house of representatives;

(d)  the president for the senate;

(e)  appropriate legislative committees or a designated representative for legislative branch agencies; or

(f)  the board of regents of higher education or its designated representative for the university system.

(5)(4)  "Base budget" means that level of funding authorized by the previous legislature the resources for the operation of state government that are of an ongoing and nonextraordinary nature in the current biennium. THE BASE BUDGET MAY NOT EXCEED THAT LEVEL OF FUNDING AUTHORIZED BY THE PREVIOUS LEGISLATURE.

(6)(5)  "Budget amendment" means a legislative temporary appropriation to increase spending authority for the special revenue fund, proprietary funds, or unrestricted subfund, contingent on total compliance with all budget amendment procedures as provided in Title 17, chapter 7, part 4.

(7)  "Effectiveness measure" means a criterion for measuring the degree to which the objective sought is attained.

(8)(6)  "Emergency" means a catastrophe, disaster, calamity, or other serious unforeseen and unanticipated circumstance that has occurred subsequent to the time that an agency's appropriation was made, that was clearly not within the contemplation of the legislature and the governor, and that affects one or more functions of a state agency and the agency's expenditure requirements for the performance of the function or functions.

(7) "Funds subject to appropriation" means those funds required to be paid out of the treasury as set forth in 17-8-101.

(9)(8)  "Necessary" means essential to the public welfare and of a nature that cannot wait until the next legislative session for legislative consideration.

(10)(9) "New proposals" means requests to provide new nonmandated services, to change program services, to eliminate existing services, or to change sources of funding. For purposes of establishing the present law base, the distinction between new proposals and the adjustments to the base budget to develop the present law base is to be determined by the existence of constitutional or statutory requirements for the proposed expenditure. Any proposed increase or decrease that is not based on those requirements is considered a new proposal.

(11)(10) "Present law base" means that additional level of funding needed under present law to maintain operations and services at the level authorized by the previous legislature, including but not limited to:

(a)  changes resulting from legally mandated workload, caseload, or enrollment increases or decreases;

(b)  changes in funding requirements resulting from constitutional or statutory schedules or formulas;

(c)  inflationary or deflationary adjustments; and

(d)  elimination of nonrecurring appropriations.

(12) "Priority listing" means a ranking of proposed expenditures in order of importance.

(13)(11) "Program" means a combination of resources and activities designed to achieve an objective or objectives a principal organizational or budgetary unit within an agency.

(14) "Program size" means the magnitude of a program, such as the size of clientele served or the volume of service in relation to the population or area.

(15) "Program size indicator" means a measure to indicate the magnitude of a program.

(16)(12) "Requesting agency" means the agency of state government that has requested a specific budget amendment.

(17)(13) "University system unit" means the board of regents of higher education; office of the commissioner of higher education; university of Montana, with campuses at Missoula, Butte, Dillon, and Helena; Montana state university, with campuses at Bozeman, Billings, Havre, and Great Falls; the agricultural experiment station, with central offices at Bozeman; the forest and conservation experiment station, with central offices at Missoula; the cooperative extension service, with central offices at Bozeman; the bureau of mines and geology, with central offices at Butte; the fire services training school at Great Falls; and the community colleges at Miles City, Glendive, and Kalispell."



Section 6.  Section 17-7-111, MCA, is amended to read:

"17-7-111.   Agency Preparation of state budget -- agency program budgets -- form distribution and contents. (1) (a) To prepare a state budget, the executive branch, the legislature, and the citizens of the state need information that is consistent and accurate. Necessary information includes detailed disbursements by fund type for each agency and program for the appropriate time period, recommendations for creating a balanced budget, and recommended disbursements and estimated receipts by fund type and fund category.

(b) Subject to the requirements of this chapter, the budget director and the legislative fiscal analyst shall by agreement:

(i) establish necessary standards, formats, and other matters necessary to share information between the agencies and to ensure that information is consistent and accurate for the preparation of the state's budget; and

(ii) provide for the collection and provision of budgetary and financial information that is in addition to or different from the information otherwise required to be provided pursuant to this section.

(2) In the preparation of a state budget, the budget director shall, not later than July 1 in the year preceding the convening of the legislature the date specified in 17-7-112(1), distribute to all state offices and departments, including the judicial branch and the legislative branch, agencies the proper forms and instructions necessary for the preparation of budget estimates by the budget director. These forms must be prescribed by the budget director to procure the information required by subsection (2) (3). The forms must be submitted to the budget director by the date provided in 17-7-112(2) or the agency's budget is subject to preparation based upon estimates as provided in 17-7-112(5). The budget director may refuse to accept forms that do not comply with the provisions of this section or the instructions given for completing the forms.

(2)(3)  The agency budget requests, when completed by the budget office, request must set forth a balanced financial plan for the agency completing the forms for each fiscal year of the ensuing biennium. The plan must consist of:

(a)  a consolidated agency budget summary of funds subject to appropriation for the current base budget expenditures, including statutory appropriations, and for each modification present law adjustment and new proposal request setting forth the aggregate figures of the full-time equivalent personnel positions (FTE) and the budget, showing a balance between the total proposed disbursements and the total anticipated receipts, together with the other means of financing the budget for each fiscal year of the ensuing biennium, contrasted with the corresponding figures for the last completed fiscal year and the fiscal year in progress. The consolidated budget summary must be supported by schedules classifying receipts and disbursements contained in the summary by fund and, when applicable, organizational unit.;

(b)  a schedule of the actual and projected receipts, disbursements, and solvency of each accounting entity within each fund for the current biennium and estimated for the subsequent biennium;

(c)  a detailed schedule of receipts, by accounting entity within each fund, indicating classification and source of funds;

(d)  an agency schedule summarizing past and proposed spending plans and the means of financing the proposed plan. Information presented must include the following:

(i)(c)  a statement of the agency goals and objectives mission and a statement of goals and objectives for each program of the agency. The goals and objectives must include, in a concise form, sufficient specific information and quantifiable information to enable the legislature to formulate an appropriations policy regarding the agency and its programs and to allow a determination, at some future date, on whether the agency has succeeded in attaining its goals and objectives. The goals and objectives must contain a list of duties prioritized by the department director to reflect the director's opinion concerning the importance of the duties assigned to the agency by law.

(ii)(d) actual FTE and disbursements for the completed fiscal year of the current biennium, estimated FTE and disbursements for the current fiscal year, and the agency's request for the ensuing biennium, by program; and

(iii)(e) actual disbursements for the completed fiscal year of the current biennium, estimated disbursements for the current fiscal year, and the agency's recommendations for the ensuing biennium, by disbursement category.;

(e)(f)  a reference, for each program included in the agency budget request, identifying whether the program may be operated at the discretion of the agency or whether the agency is required by federal or state law to operate, administer, or manage the program.; and

(f)(g)  other information the budget director feels is necessary for the preparation of a budget.

(3)(4)  The budget director shall prepare and submit to the legislative fiscal analyst in accordance with 17-7-112:

(a)  detailed recommendations for the state long-range building program. Each recommendation must be presented by department, institution, agency, or branch, by funding source, with a description of each proposed project.

(b)  the proposed pay plan schedule for all executive branch employees at the program level by fund, with the specific cost and funding recommendations for each agency. Submission of a pay plan schedule under this subsection is not an unfair labor practice under 39-31-401.

(c) agency proposals for the use of cultural and aesthetic project grants under Title 22, chapter 2, part 3, the renewable resource grant and loan program under Title 85, chapter 1, part 6, the reclamation and development grants program under Title 90, chapter 2, part 11, and the treasure state endowment program under Title 90, chapter 6, part 7.

(4)(5)  The board of regents shall submit, with its budget request for each university unit in accordance with 17-7-112, a report on the university system bonded indebtedness and related finances as provided in this subsection (4) (5). The report must include the following information for each year of the biennium, contrasted with the same information for the last completed fiscal year and the fiscal year in progress:

(a)  a schedule of estimated total bonded indebtedness for each university unit by bond indenture;

(b)  a schedule of estimated revenue, expenditures, and fund balances by fiscal year for each outstanding bond indenture, clearly delineating the accounts relating to each indenture and the minimum legal funding requirements for each bond indenture; and

(c)  a schedule showing the total funds available from each bond indenture and its associated accounts, with a list of commitments and planned expenditures from such accounts, itemized by revenue source and project for each year of the current and ensuing bienniums.

(5)(6)  The budget director may not obtain copies of individual income tax records protected under 15-30-303. The department of revenue shall make individual income tax data available by removing names, addresses, occupations, social security numbers, and taxpayer identification numbers. The department of revenue may not alter the data in any other way. The data is subject to the same restrictions on disclosure as are individual income tax returns."



Section 7.  Section 17-7-112, MCA, is amended to read:

"17-7-112.   Submission deadline deadlines -- budgeting schedule. The following is the schedule for the preparation of a state budget for submission to the legislature convening in the following year:

(1) By August 1, forms necessary for preparation of budget estimates must be distributed pursuant to 17-7-111(2).

(1)(2) It is the duty of By September 1, each department, agency, and office, including the Montana university system, to shall submit the information required under 17-7-111 to the budget director on or before September 1 in the even year preceding the convening of the legislature. The department of justice shall submit information received from counties concerning the state's share of county attorney salaries.

(2)(3)  Between August 15 and By September 30 1, in the year preceding the convening of the legislature, the budget director must shall submit each state agency's budget request required under 17-7-111(2) 17-7-111(3) to the legislative fiscal analyst. The transfer of budget information must be done on a schedule mutually agreed to by the budget director and the legislative fiscal analyst in a manner that facilitates an even transfer of budget information during the month of September and that allows each office to maintain a reasonable staff workflow.

(4)  By October 10, the budget director shall furnish the legislative fiscal analyst with a preliminary budget reflecting the base budget in a format agreed upon by both the office of budget and program planning and the legislative fiscal analyst.

(3)(5)  If any department, institution, university unit, or agency fails to present the information within the time specified in this section, the budget director shall note that fact in the budget submitted to the governor and the budget director shall prepare and submit to the legislative fiscal analyst and the governor by By October 30, a budget request must be prepared by the budget director and submitted to the legislative fiscal analyst on behalf of the any department, institution, university unit, or agency, that did not present the information required by this section. The budget request must be based upon the budget director's studies of the operations, plans, and needs of the department, institution, university unit, or agency.

(6) By November 1, the budget director shall furnish the legislative fiscal analyst with a present law base for each agency and a copy of the documents that reflect the anticipated receipts and other means of financing the base budget and present law base for each fiscal year of the ensuing biennium. The material must be in a format agreed upon by both the office of budget and program planning and the legislative fiscal analyst.

(7)  By November 12, the budget director shall furnish the legislative fiscal analyst with the documents, in a format agreed upon by both the office of budget and program planning and the legislative fiscal analyst, that reflect expenditures to the second level, as provided in 17-1-102(3), by funding source and detailed by accounting entity.

(4)(8)  The By November 15, the proposed pay plan schedule required by 17-7-111(3)(4), a preliminary budget that meets the statutory requirements for submission of the budget to the legislature, and a summary of the preliminary budget designed for distribution to members and members-elect of the legislature must be submitted to the legislative fiscal analyst no later than November 15 in the year preceding the convening of the legislature.

(9) By December 15, the budget director shall submit a preliminary budget to the governor and to the governor-elect, if there is one, as provided in 17-7-121, and shall furnish the legislative fiscal analyst with all amendments to the preliminary budget.

(10) By January 7, recommended changes proposed by a governor-elect must be transmitted to the legislative fiscal analyst and the legislature as provided in 17-7-121."



Section 8.  Section 17-7-121, MCA, is amended to read:

"17-7-121.   Preliminary budget preparation and submission to governor and governor-elect. (1) Upon receipt of the completed forms and other available data and information, the budget director shall examine the same for the purpose of determining the necessity of the disbursements and funds requested and shall, on or before December 15 in the year preceding the convening of the legislature the date established in 17-7-112, submit in writing to the governor and to the governor-elect, if one there be is one, a preliminary budget for the ensuing biennium containing the detailed information hereinafter required to be set forth in the budget to be submitted by the governor to the legislature.

(2)  If so requested by the governor-elect, the governor shall incorporate in the budget, as a separate section, such the estimates, comments, and recommendations as that the governor-elect may wish to make, and by the date established in 17-7-112, this section of the budget shall must be transmitted to the legislature and the legislative fiscal analyst without change. It is the duty of the governor-elect in recommending changes to show a balance between proposed disbursements and anticipated receipts."



Section 9.  Section 17-7-122, MCA, is amended to read:

"17-7-122.   Preparation of budget. (1) The governor shall, following the receipt of the preliminary budget from the budget director, have prepared a budget for the ensuing biennium and shall submit the budget to the legislative fiscal analyst in accordance with 5-12-303 17-7-112 for inclusion in the combined governor's budget and budget analysis report.

(2)  Legislative branch budget proposals must be included in the budget submitted by the governor without changes.

(3)  Judicial branch budget proposals must be included in the budget submitted by the governor, but expenditures above the current base budget need not be part of the balanced financial plan pursuant to 17-7-123."



Section 10.  Section 17-7-123, MCA, is amended to read:

"17-7-123.   Form of executive budget. The budget submitted must set forth a balanced financial plan of funds subject to appropriation for each accounting entity and for the state government for each fiscal year of the ensuing biennium,. which The base level plan must consist of:

(1)  a consolidated budget summary setting forth the aggregate figures of the budget in a manner that shows a balance between the total proposed disbursements and the total anticipated receipts, together with the other means of financing the budget for each fiscal year of the ensuing biennium, contrasted with the corresponding figures for the last completed fiscal year and the fiscal year in progress. The consolidated budget summary must be supported by explanatory schedules or statements, classifying receipts and disbursements contained therein by fund and, when applicable, organizational unit;.

(2)  an analysis of the actual and projected receipts, disbursements, and solvency of each accounting entity within each fund for the current and subsequent biennium;

(3)  a detailed analysis of receipts by accounting entity within fund indicating classification and source of funds budget and full-time equivalent personnel position comparisons by agency, program, and appropriated funds for the current and subsequent biennium;

(4)(3)  a departmental analysis summarizing past and proposed spending plans by agency and the means of financing the proposed plan. Information presented must include the following:

(a)  a summary of the departmental goals and objectives mission and a statement of goals and objectives for each program of the department;

(b)(4)  actual base budget disbursements for the completed fiscal year of the current biennium, estimated comparable disbursements for the current fiscal year, and the current proposed present law base budget and the current base budget plus new proposals, if any, for each department and each program of the department;

(c)  a reference for each program as required under 17-7-111(2)(e); and

(d)(5)  a statement containing recommendations of the governor for the ensuing biennium by program and disbursement category, including:

(a) explanations of appropriation and revenue measures included in the budget that involve policy changes; and

(b) matters not included as a part of the budget bill but included as a part of the executive budget, such as the state employee pay plan, programs funded through separate appropriations measures, and other matters considered necessary for comprehensive public and legislative consideration of the state budget; and

(5)(6)  detailed recommendations for the state long-range building program. Each recommendation must be presented by department, institution, agency, or branch by funding source, with a description of each proposed project. An appropriation measure must be presented by project, source of funding, and department, agency, institution, or branch for which the project is primarily intended. a report on:

(a)  enterprise funds, including retained earnings and contributed capital, projected operations and charges, and projected fund balances; and

(b)  fees and charges in the internal service fund type, including changes in the level of fees and charges, projected use of the fees and charges, and projected fund balances. Fees and charges in the internal service fund type must be approved by the legislature in the general appropriations act. Fees and charges in a biennium may not exceed the level approved by the legislature in the general appropriations act effective for that biennium.

(7) any other financial or budgetary material agreed to by the budget director and the legislative fiscal analyst."



Section 11.  Section 17-7-124, MCA, is amended to read:

"17-7-124.   Additional budget data. In addition to the budget required in 17-7-123, the governor shall prepare and make available on request a detailed analysis of receipts by accounting entity within each fund type indicating classification and source of funds.:

(1)  a departmental analysis summarizing past and proposed spending plans by agency and the means of financing the proposed plan. Information available must include the following:

(a)  a statement of departmental goals and objectives and a statement of goals and objectives for each program of the department; and

(b)  schedules showing the number of employees who were given a pay grade change under the pay schedule implemented pursuant to 2-18-303 and the net cost to the agency for the grade changes for the biennium. The changes must be listed in tabular form by:

(i)  position description;

(ii) grade assigned prior to the completed fiscal year;

(iii) grade assigned during the completed fiscal year;

(iv) grade assigned during the current fiscal year;

(v)  recommended grade for the ensuing biennium;

(vi) dollar difference for the upgrade or downgrade for each position; and

(vii) net cost to the agency for grade changes.

(2)  appropriation measures detailed by program, fund, and accounting entity, authorizing disbursements and related restrictions by department, institution, or agency of the state; and

(3)  information submitted by agencies as required by 17-7-111."



Section 12.  Section 17-7-132, MCA, is amended to read:

"17-7-132.   Right of officers to appear on consideration of budget. The department of administration budget director and representatives of the executive officers, agencies, and institutions of the state and other state agencies expending or applying for state moneys money may and, when requested by either the house of representatives or the senate, shall appear and be heard with respect to any budget bill."



Section 13.  Section 17-7-138, MCA, is amended to read:

"17-7-138.   Operating budget. (1) (a) Expenditures by a state agency must be made in substantial compliance with an operating budget approved by an approving authority the budget approved by the legislature. Substantial compliance means that a first-level category in the operating budget may not be exceeded by more than 5%. SUBSTANTIAL COMPLIANCE MAY BE DETERMINED BY CONFORMITY TO LEGISLATIVE INTENT AS ESTABLISHED IN THE NARRATIVE ACCOMPANYING THE GENERAL APPROPRIATIONS ACT. An explanation of any significant change in agency or program scope, objectives, activities, or expenditures must be submitted to the legislative fiscal analyst for review and comment by the legislative finance committee prior to any implementation of the change. IF THE BUDGET DIRECTOR APPROVING AUTHORITY CERTIFIES THAT A CHANGE IS TIME-SENSITIVE, THE BUDGET DIRECTOR APPROVING AUTHORITY MAY APPROVE THE CHANGE PRIOR TO THE NEXT REGULARLY SCHEDULED MEETING OF THE LEGISLATIVE FINANCE COMMITTEE. THE BUDGET DIRECTOR APPROVING AUTHORITY SHALL SUBMIT ALL PROPOSED TIME-SENSITIVE CHANGES TO THE LEGISLATIVE FISCAL ANALYST PRIOR TO APPROVAL. IF THE LEGISLATIVE FISCAL ANALYST DETERMINES THAT NOTIFICATION OF THE LEGISLATIVE FINANCE COMMITTEE IS WARRANTED, THE LEGISLATIVE FISCAL ANALYST SHALL IMMEDIATELY NOTIFY AS MANY MEMBERS AS POSSIBLE OF THE PROPOSED CHANGE AND COMMUNICATE ANY CONCERNS EXPRESSED TO THE BUDGET DIRECTOR APPROVING AUTHORITY. THE BUDGET DIRECTOR APPROVING AUTHORITY SHALL PRESENT A REPORT FULLY EXPLAINING THE REASONS FOR THE ACTION TO THE NEXT MEETING OF THE LEGISLATIVE FINANCE COMMITTEE. Except as provided in subsection (2), the expenditure of money appropriated in the general appropriations act is contingent upon approval of an operating budget by August 1 of each fiscal year. An approved original operating budget must comply with state law and any statement of intent adopted as part of a bill.

(b) For the purposes of this subsection (1), an agency or program is considered to have a significant change in its scope, objectives, activities, or expenditures if:

(i) the expenditure change exceeds $1 million; or

(ii) the expenditure change exceeds 25% of a budget category and the change is greater than $25,000. If there have been other changes to the budget category in the current fiscal year, all the changes, including the change under consideration, must be used in determining the 25% and $25,000 threshold.

(2)  The expenditure of money appropriated in the general appropriations act to the university system units, as defined in 17-7-102, is contingent upon approval of an operating budget by October 1 of each fiscal year. All other requirements in this section apply to the university system.

(3)  The operating budget for money appropriated by the general appropriations act must be separate from the operating budget for money appropriated by another law except a law appropriating money for the state pay plan or any portion of the state pay plan. Each operating budget must include expenditures for each agency program, detailed at least by first-level categories as provided in 17-1-102(3). Each agency shall record its operating budget and any approved changes on the statewide budget and accounting system. Forms used for changing an operating budget must reference the current, complete, and approved operating budget, show the proposed changes to the operating budget, and reference any other pending documents to change the operating budget."



Section 14.  Section 17-7-139, MCA, is amended to read:

"17-7-139.   Program transfers. (1) Unless prohibited by law, the approving authority may approve agency requests to transfer appropriations between programs within each fund type within each fiscal year. The transfer may not exceed 5% of the total agency appropriation, excluding statutory appropriations, administrative authorizations, and budget amendments. An explanation of any transfer that involves a significant change in agency or program scope, objectives, activities, or expenditures must be submitted to the legislative fiscal analyst for review and comment by the legislative finance committee prior to any implementation of the change. IF THE BUDGET DIRECTOR APPROVING AUTHORITY CERTIFIES THAT A REQUEST FOR A TRANSFER REPRESENTING A SIGNIFICANT CHANGE IN AGENCY OR PROGRAM SCOPE, OBJECTIVES, ACTIVITIES, OR EXPENDITURES IS TIME-SENSITIVE, THE BUDGET DIRECTOR APPROVING AUTHORITY MAY APPROVE THE TRANSFER PRIOR TO THE NEXT REGULARLY SCHEDULED MEETING OF THE LEGISLATIVE FINANCE COMMITTEE. THE BUDGET DIRECTOR APPROVING AUTHORITY SHALL SUBMIT ALL PROPOSED TIME-SENSITIVE CHANGES TO THE LEGISLATIVE FISCAL ANALYST PRIOR TO APPROVAL. IF THE LEGISLATIVE FISCAL ANALYST DETERMINES THAT NOTIFICATION OF THE LEGISLATIVE FINANCE COMMITTEE IS WARRANTED, THE LEGISLATIVE FISCAL ANALYST SHALL IMMEDIATELY NOTIFY AS MANY MEMBERS AS POSSIBLE OF THE PROPOSED CHANGE AND COMMUNICATE ANY CONCERNS EXPRESSED TO THE BUDGET DIRECTOR APPROVING AUTHORITY. THE BUDGET DIRECTOR APPROVING AUTHORITY SHALL PRESENT A REPORT FULLY EXPLAINING THE REASONS FOR THE ACTION TO THE NEXT MEETING OF THE LEGISLATIVE FINANCE COMMITTEE. All program transfers must be completed within the same fund from which the transfer originated. A request for a transfer accompanied by a justification explaining the reason for the transfer must be submitted by the requesting agency to the approving authority and the office of budget and program planning. Upon approval of the transfer, the approving authority shall inform the legislative fiscal analyst of the approved transfer and the justification for the transfer.

(2) For the purposes of subsection (1), an agency or program is considered to have a significant change in its scope, objectives, activities, or expenditures if:

(a) the budget transfer exceeds $1 million; or

(b) the budget transfer exceeds 25% of a budget category PROGRAM'S TOTAL OPERATING PLAN and the transfer is greater than $25,000. If there have been other transfers to or from the first-level budget category PROGRAM in the current fiscal year, all the transfers, including the transfer under consideration, must be used in determining the 25% and $25,000 threshold."



Section 15.  Section 17-7-204, MCA, is amended to read:

"17-7-204.   Long-range building program. The executive budget for all state agencies shall must include detailed recommendations for the state long-range building program presented in a priority listing in order of importance by fund type. Each recommendation shall must be presented by department, institution, agency, or branch by funding source, with a description of each proposed project, an explanation of the problem to be addressed by the proposed project, alternative methods of addressing the problem, the rationale for the selection of a particular alternative, and a projection of increased operating costs incident to the project for the next three bienniums."



Section 16.  Section 17-7-211, MCA, is amended to read:

"17-7-211.   Expansion to be authorized -- budget amendment. (1) An existing capital project may not be expanded beyond the scope of the project approved by the legislature unless the expansion of the project is authorized by an approved a long-range building program budget amendment approved by the budget director.

(2) A proposed long-range building program budget amendment must be submitted to the budget director through the architecture and engineering division of the department of administration. The budget director, through a long-range building program budget amendment, may authorize:

(a) the transfer of excess funds appropriated to a capital project within an agency to increase the appropriation of another capital project within that agency; or

(b) financing to expand a project with funds that were not available for consideration by the legislature."



Section 17.  Section 17-7-301, MCA, is amended to read:

"17-7-301.   Authorization to expend during first year of biennium from appropriation for second year -- proposed supplemental appropriation defined -- limit on second-year expenditures. (1) A state department, institution, or An agency of the executive branch desiring authorization to may make expenditures during the first fiscal year of the biennium from appropriations for the second fiscal year of the biennium shall submit if authorized by the general appropriations act. An agency that is not authorized in the general appropriations act to make first-year expenditures may be granted spending authorization by the governor APPROVING AUTHORITY upon submission and approval of a proposed supplemental appropriation to the governor APPROVING AUTHORITY through the budget director. The proposal submitted to the governor APPROVING AUTHORITY must include a plan for reducing expenditures in the second year of the biennium that allows the agency to contain expenditures within appropriations. If the governor APPROVING AUTHORITY finds that, due to an unforeseen and unanticipated emergency, the amount actually appropriated for the first fiscal year of the biennium with all other income will be insufficient for the operation and maintenance of the department, institution, or agency during the year for which the appropriation was made, the governor APPROVING AUTHORITY shall, after careful study and examination of the request and upon review of the recommendation of FOR EXECUTIVE BRANCH PROPOSALS BY the budget director, submit the proposed supplemental appropriation to the legislative fiscal analyst.

(2)  The plan for reducing expenditures required by subsection (1) is not required if the proposed supplemental appropriation is:

(a)  due to an unforeseen and unanticipated emergency for fire suppression;

(b)  requested by the superintendent of public instruction, in accordance with the provisions of 20-9-351, and is to complete the state's funding of guaranteed tax base aid, transportation aid, or equalization aid to elementary and secondary schools for the current biennium; or

(c)  requested by the attorney general and:

(i)  is to pay the costs associated with litigation in which the department of justice must is required to provide representation to the state of Montana; or

(ii) in accordance with the provisions of 7-32-2242, is to pay costs for which the department of justice is responsible for confinement of an arrested person in a detention center.

(3)  Upon receipt of the recommendation of the legislative finance committee pursuant to 17-7-311, the governor APPROVING AUTHORITY may authorize an expenditure during the first fiscal year of the biennium to be made from the appropriation for the second fiscal year of the biennium. Except as provided in subsection (2), the governor APPROVING AUTHORITY shall require the agency to implement the plan for reducing expenditures in the second year of the biennium that contains agency expenditures within appropriations.

(4)  The department, institution, or agency may expend the amount authorized by the governor APPROVING AUTHORITY only for the purposes specified in the authorization.

(5)  The governor APPROVING AUTHORITY shall report to the next legislature in a special section of the budget the amounts expended as a result of all authorizations granted by the governor APPROVING AUTHORITY and shall request that any necessary supplemental appropriation bills be passed.

(6)  As used in this part, "proposed supplemental appropriation" means an application for authorization to make expenditures during the first fiscal year of the biennium from appropriations for the second fiscal year of the biennium.

(7)  (a) Except as provided in subsections (2) and (7)(b), an agency may not make expenditures in the second year of the biennium that, if carried on for the full year, will require a deficiency appropriation, commonly referred to as a "supplemental appropriation".

(b)  An agency shall prepare and, to the extent feasible, implement a plan for reducing expenditures in the second year of the biennium that contains agency expenditures within appropriations. The approving authority is responsible for ensuring the implementation of the plan. If, in the second year of a biennium, mandated expenditures that are required by state or federal law will cause an agency to exceed appropriations or available funds, the agency shall reduce all nonmandated expenditures pursuant to the plan in order to reduce to the greatest extent possible the expenditures in excess of appropriations or funding. An agency may not transfer funds between fund types in order to implement a plan."



Section 18.  Section 17-8-101, MCA, is amended to read:

"17-8-101.   Appropriation and disbursement of money from treasury. (1) Except as provided in subsection (5), money deposited in the general fund, the special revenue fund type (except money deposited in the treasury from nonstate and nonfederal sources restricted by law or by the terms of an agreement, such as a contract, trust agreement, or donation), and the capital projects fund type, with the exception of refunds authorized in subsection (3), must may be paid out of the treasury only on appropriation made by law.

(2)  Money deposited in the enterprise fund type, internal service fund type, debt service fund type, expendable trust fund type, nonexpendable trust fund type, pension trust fund type, state special revenue fund from nonstate and nonfederal sources restricted by law or by the terms of an agreement, such as a contract, trust agreement, or donation, and agency fund type may be paid out of the treasury under general laws, or contracts entered into in pursuance of law, permitting the disbursement.

(3)  Subject to the provisions of subsection (8) (7), money paid into the state treasury through error or under circumstances, such that the state is not legally entitled to retain it and a refund procedure is not otherwise provided by law, may be refunded upon the submission of a verified claim approved by the department of administration.

(4)  Authority to expend appropriated money may be transferred from one state agency to another, provided that the original purpose of the appropriation is maintained. The office of budget and program planning shall report semiannually to the legislative finance committee concerning all appropriations transferred under the provisions of this section.

(5)  Fees and charges for services deposited in the internal service fund type must be based upon commensurate costs. The legislative auditor, during regularly scheduled audits of state agencies, shall audit and report on the reasonableness of internal service fund type fees and charges and on the fund equity balances.

(6)  The office of budget and program planning shall include in the budget submitted to the legislature a report on:

(a)  enterprise funds, including retained earnings and contributed capital, projected operations and charges, and projected fund balances; and

(b)  internal service fund type fees and charges, including changes in the level of fees and charges, projected use of the fees and charges, and projected fund balances. Internal service fund type fees and charges must be approved by the legislature in the general appropriations act. Fees and charges in any biennium may not exceed the level approved by the legislature in the general appropriations act effective for that biennium.

(7)  Any accounts in the enterprise fund or the internal service fund created after July 1, 1995, must be approved by the department, using conformity with generally accepted accounting principles as the primary approval criteria. The department shall report annually to the office of budget and program planning and the legislative finance committee on the nature, status, and justification for all new accounts in the enterprise fund and the internal service fund.

(8)(7)  Enterprise and internal service funds must be appropriated if they are used as a part of a program that is not an enterprise or internal service function and otherwise requires an appropriation."



NEW SECTION. Section 19.  Repealer. Section 17-3-109, MCA, is repealed.



NEW SECTION. SECTION 20.  EFFECTIVE DATE. [THIS ACT] IS EFFECTIVE JULY 1, 1997.

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