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First Substitute H.B. 49

Representative Wayne A. Harper proposes the following substitute bill:


             1     
BUDGET RESERVE ACCOUNT AND DISASTER

             2     
RECOVERY ACCOUNT AMENDMENTS

             3     
2008 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Wayne A. Harper

             6     
Senate Sponsor: ____________

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill makes changes to the state's budget reserve and disaster recovery accounts.
             11      Highlighted Provisions:
             12          This bill:
             13          .    changes target amounts for year-end surplus transfers to the General Fund Budget
             14      Reserve Account, Education Fund Budget Reserve Account, and State Disaster
             15      Recovery Restricted Account;
             16          .    modifies requirements governing deposits into the accounts;
             17          .    changes the conditions under which monies may be appropriated from the budget
             18      reserve accounts;
             19          .    designates legislative appropriations to the budget reserve accounts as repayments
             20      when specified appropriations from the accounts have not been repaid;
             21          .    requires the Legislative Fiscal Analyst and the Governor's Office of Planning and
             22      Budget to report to the Executive Appropriations Committee and the Tax Review
             23      Commission on revenue volatility and its relation to the balances in the General
             24      Fund Budget Reserve Account and the Education Budget Reserve Account; and
             25          .    makes technical changes.


             26      Monies Appropriated in this Bill:
             27          None
             28      Other Special Clauses:
             29          None
             30      Utah Code Sections Affected:
             31      AMENDS:
             32          63-38-2.5, as last amended by Laws of Utah 2003, Chapters 88, and 319
             33          63-38-2.6, as last amended by Laws of Utah 2007, Chapter 122
             34          63-38-2.7, as enacted by Laws of Utah 2007, Chapter 328
             35      ENACTS:
             36          63-38-2.9, Utah Code Annotated 1953
             37     
             38      Be it enacted by the Legislature of the state of Utah:
             39          Section 1. Section 63-38-2.5 is amended to read:
             40           63-38-2.5. Establishing a General Fund Budget Reserve Account -- Providing for
             41      deposits and expenditures from the account.
             42          (1) As used in this section:
             43          (a) "Education Fund budget deficit" means a situation where appropriations made by
             44      the Legislature from the Education Fund for a fiscal year exceed the estimated revenues
             45      adopted by the Executive Appropriations Committee of the Legislature for the Education Fund
             46      in that fiscal year.
             47          (b) "General Fund appropriations" means the sum of the spending authority for a fiscal
             48      year that is:
             49          (i) granted by the Legislature in all appropriation acts and bills; and
             50          (ii) identified as coming from the General Fund.
             51          (c) "General Fund budget deficit" means a situation where General Fund appropriations
             52      made by the Legislature for a fiscal year exceed the estimated revenues adopted by the
             53      Executive Appropriations Committee of the Legislature for the General Fund in that fiscal year.
             54          (d) "General Fund revenue surplus" means a situation where actual General Fund
             55      revenues collected in a completed fiscal year exceed the estimated revenues for the General
             56      Fund for that fiscal year that were adopted by the Executive Appropriations Committee of the


             57      Legislature.
             58          (e) "Operating deficit" means that, at the end of the fiscal year, the unreserved and
             59      undesignated fund balance in the General Fund is less than zero.
             60          [(1)] (2) There is created within the General Fund a restricted account to be known as
             61      the General Fund Budget Reserve Account, which is designated to receive the legislative
             62      appropriations, investment earnings, and the surplus revenue required to be deposited into the
             63      account by this section.
             64          [(2)] (3) (a) (i) [At] Except as provided in Subsection (3)(a)(ii), at the end of any fiscal
             65      year in which the Division of Finance, in consultation with the Legislative Fiscal Analyst and
             66      in conjunction with the completion of the annual audit by the state auditor, determines that
             67      there is a General Fund revenue surplus, the Division of Finance shall transfer 25% of the
             68      General Fund revenue surplus [shall be transferred] to the General Fund Budget Reserve
             69      Account[, except that the amount in the combined totals of the].
             70          (ii) If the transfer of 25% of the General Fund revenue surplus to the General Fund
             71      Budget Reserve Account [and the Education Budget Reserve Account created in Section
             72      63-38-2.6 may not exceed 6%] would cause the balance in the account to exceed 6% of
             73      General Fund appropriations for the fiscal year in which the revenue surplus occurred, the
             74      Division of Finance shall transfer only those funds necessary to ensure that the balance in the
             75      account equals 6% of [the total of the] General Fund [appropriation amount and the Uniform
             76      School Fund appropriation amount] appropriations for the fiscal year in which the General
             77      Fund revenue surplus occurred.
             78          (iii) The Division of Finance shall calculate the amount to be transferred under this
             79      Subsection (3)(a):
             80          (A) before transferring from the General Fund revenue surplus any other year-end
             81      contingency appropriations, year-end set-asides, or other year-end transfers required by law;
             82      and
             83          (B) excluding the investment earnings for the fiscal year and excluding any direct
             84      legislative appropriation made to the General Fund Budget Reserve Account for the fiscal year.
             85          [(ii) In] (b) (i) Except as provided in Subsection (3)(b)(ii), in addition to Subsection
             86      [(2)] (3)(a)(i), if a General Fund revenue surplus exists and if, within the last ten years, the
             87      Legislature has appropriated any money from the General Fund Budget Reserve Account that


             88      has not been replaced by appropriation or as provided in this Subsection [(2)(a)(ii)] (3)(b), the
             89      Division of Finance shall[, before any contingent appropriations or other transfers required by
             90      law are made,] transfer up to 25% more of the General Fund revenue surplus to the General
             91      Fund Budget Reserve Account to replace the amounts appropriated, until direct legislative
             92      appropriations, if any, and transfers [of] from the General Fund revenue surplus under this
             93      Subsection [(2)(a)(ii)] (3)(b) have replaced the appropriations from the [fund] account.
             94          [(b) The amount to be transferred to the General Fund Budget Reserve Account shall
             95      be determined before any other contingency appropriation using surplus funds.]
             96          (ii) If the transfer under Subsection (3)(b)(i) would cause the balance in the account to
             97      exceed 6% of General Fund appropriations for the fiscal year in which the revenue surplus
             98      occurred, the Division of Finance shall transfer only those funds necessary to ensure that the
             99      balance in the account equals 6% of General Fund appropriations for the fiscal year in which
             100      the revenue surplus occurred.
             101          (iii) The Division of Finance shall calculate the amount to be transferred under this
             102      Subsection (3)(b):
             103          (A) before transferring from the General Fund revenue surplus any other year-end
             104      contingency appropriations, year-end set-asides, or other year-end transfers required by law;
             105      and
             106          (B) excluding the investment earnings for the fiscal year and excluding any direct
             107      legislative appropriation made to the General Fund Budget Reserve Account for the fiscal year.
             108          (c) For appropriations made by the Legislature to the General Fund Budget Reserve
             109      Account, the Division of Finance shall treat those appropriations, unless otherwise specified in
             110      the appropriation, as replacement funds for appropriations made from the account if funds were
             111      appropriated from the General Fund Budget Reserve Account within the past ten years and
             112      have not yet been replaced.
             113          [(3)] (4) (a) If, at the close of any fiscal year, there appear to be insufficient monies to
             114      pay additional debt service for any bonded debt authorized by the Legislature, the Division of
             115      Finance may hold back [monies] from any General Fund revenue surplus monies sufficient to
             116      pay the additional debt service requirements resulting from issuance of bonded debt that was
             117      authorized by the Legislature.
             118          (b) The Division of Finance may not spend the hold back amount for debt service


             119      under Subsection [(3)] (4)(a) unless and until it is appropriated by the Legislature.
             120          (c) If, after calculating the amount for transfers to the General Fund Budget Reserve
             121      Account, the remaining General Fund revenue surplus is insufficient to cover the hold back for
             122      debt service required by Subsection [(3)] (4)(a), the Division of Finance shall reduce the
             123      transfer to the General Fund Budget Reserve Account by the amount necessary to cover the
             124      debt service hold back.
             125          (d) Notwithstanding Subsection [(2)] (3), the Division of Finance shall hold back the
             126      General Fund balance for debt service authorized by this Subsection [(3)] (4) before making
             127      any transfers to the General Fund Budget Reserve Account or any other designation or
             128      allocation of General Fund revenue surplus.
             129          [(4) (a) Any appropriation made by the]
             130          (5) Notwithstanding Subsection (3), if, at the end of a fiscal year, the Division of
             131      Finance determines that an operating deficit exists and that holding back the transfers to the
             132      State Disaster Recovery Restricted Account under Section 63-38-2.7 does not eliminate the
             133      operating deficit, the Division of Finance may reduce the transfer to the General Fund Budget
             134      Reserve Account by the amount necessary to eliminate the operating deficit.
             135          (6) The Legislature may appropriate monies from the General Fund Budget Reserve
             136      Account [may] only [be used] to [cover operating deficits,]:
             137          (a) resolve a General Fund budget deficit, for the fiscal year in which the General Fund
             138      budget deficit occurs;
             139          (b) pay some or all of state settlement agreements approved under Title 63, Chapter
             140      38b, State Settlement Agreements[, or];
             141          (c) pay retroactive tax refunds[.]; or
             142          (d) resolve an Education Fund budget deficit.
             143          [(b) The General Fund Budget Reserve Account is available for appropriation to fund
             144      operating deficits in public education appropriations.]
             145          [(5) All interest] (7) Interest generated from investments of money in the General
             146      Fund Budget Reserve Account shall be deposited into the account.
             147          Section 2. Section 63-38-2.6 is amended to read:
             148           63-38-2.6. Establishing an Education Budget Fund Reserve Account -- Providing
             149      for deposits and expenditures from the account.


             150          (1) As used in this section:
             151          (a) "Education Fund appropriations" means the sum of the spending authority for a
             152      fiscal year that is:
             153          (i) granted by the Legislature in all appropriation acts and bills; and
             154          (ii) identified as coming from the Education Fund.
             155          (b) "Education Fund budget deficit" means a situation where appropriations made by
             156      the Legislature from the Education Fund for a fiscal year exceed the estimated revenues
             157      adopted by the Executive Appropriations Committee of the Legislature for the Education Fund
             158      in that fiscal year.
             159          (c) "Education Fund revenue surplus" means a situation where actual Education Fund
             160      revenues collected in a completed fiscal year exceed the estimated revenues for the Education
             161      Fund in that fiscal year that were adopted by the Executive Appropriations Committee of the
             162      Legislature.
             163          (d) "Operating deficit" means that, at the end of the fiscal year, the unreserved and
             164      undesignated fund balance in the Education Fund is less than zero.
             165          [(1)] (2) There is created within the Education Fund a restricted account to be known
             166      as the Education Fund Budget Reserve Account, which is designated to receive the legislative
             167      appropriations, investment earnings, and the surplus revenue required to be deposited into the
             168      account by this section.
             169          [(2)] (3) (a) (i) [At] Except as provided in Subsection (3)(a)(ii), at the end of any fiscal
             170      year in which the Division of Finance, in consultation with the Legislative Fiscal Analyst and
             171      in conjunction with the completion of the annual audit by the state auditor, determines that
             172      there is [a] an Education Fund revenue surplus [in the Education Fund, the Uniform School
             173      Fund or both], the Division of Finance shall transfer 25% of the [cumulative] Education Fund
             174      revenue surplus [shall be transferred] to the Education Fund Budget Reserve Account[, except
             175      that the amount in the combined totals of].
             176          (ii) If the transfer of 25% of the Education Fund revenue surplus to the Education Fund
             177      Budget Reserve Account [and the General Fund Budget Reserve Account created in Section
             178      63-38-2.5 may not exceed 6%] under Subsection (3)(a)(i) would cause the balance in the
             179      account to exceed 7% of Education Fund appropriations for the fiscal year in which the
             180      Education Fund revenue surplus occurred, the Division of Finance shall transfer only those


             181      funds necessary to ensure that the balance in the account equals 7% of the [total combined
             182      appropriations from the] Education Fund appropriations [and the General Fund] for the fiscal
             183      year in which the Education Fund revenue surplus occurred.
             184          (iii) The Division of Finance shall calculate the amount to be transferred under this
             185      Subsection (3)(a):
             186          (A) before transferring from the Education Fund revenue surplus any other year-end
             187      contingency appropriations, year-end set-asides, or other year-end transfers required by law;
             188      and
             189          (B) excluding the investment earnings for the fiscal year and excluding any direct
             190      legislative appropriation made to the Education Fund Budget Reserve Account for the fiscal
             191      year.
             192          [(ii) In] (b) (i) Except as provided in Subsection (3)(b)(ii), in addition to Subsection
             193      [(2)] (3)(a)(i), if [a] an Education Fund revenue surplus exists and if, within the last ten years,
             194      the Legislature has appropriated any money from the Education Fund Budget Reserve Account
             195      that has not been replaced by appropriation or as provided in this Subsection [(2)(a)(ii)] (3)(b),
             196      the Division of Finance shall[, before any contingent appropriations or other transfers required
             197      by law are made,] transfer up to 25% more of the Education Fund revenue surplus to the
             198      Education Fund Budget Reserve Account to replace the amounts appropriated, until direct
             199      legislative appropriations, if any, and transfers [of] from the Education Fund revenue surplus
             200      under this Subsection [(2)(a)(ii)] (3)(b) have replaced the appropriations from the [fund]
             201      account.
             202          [(b) The amount to be transferred to the Education Budget Reserve Account shall be
             203      determined before any other contingency appropriation using surplus funds.]
             204          (ii) If the transfer under Subsection (3)(b)(i) would cause the balance in the account to
             205      exceed 7% of Education Fund appropriations for the fiscal year in which the Education Fund
             206      revenue surplus occurred, the Division of Finance shall transfer only those funds necessary to
             207      ensure that the balance in the account equals 7% of Education Fund appropriations for the
             208      fiscal year in which the revenue surplus occurred.
             209          (iii) The Division of Finance shall calculate the amount to be transferred under this
             210      Subsection (3)(b):
             211          (A) before transferring from the Education Fund revenue surplus any other year-end


             212      contingency appropriations, year-end set-asides, or other year-end transfers required by law;
             213      and
             214          (B) excluding the investment earnings for the fiscal year and excluding any direct
             215      legislative appropriation made to the Education Fund Budget Reserve Account for the fiscal
             216      year.
             217          (c) For appropriations made by the Legislature to the Education Fund Budget Reserve
             218      Account, the Division of Finance shall treat those appropriations, unless specified otherwise in
             219      the appropriation, as replacement funds for appropriations made from the account if funds were
             220      appropriated from the account within the past ten years and have not yet been replaced.
             221          (4) Notwithstanding Subsection (3), if, at the end of a fiscal year, the Division of
             222      Finance determines that an operating deficit exists, the Division of Finance may reduce the
             223      transfer to the Education Fund Budget Reserve Account by the amount necessary to eliminate
             224      the operating deficit.
             225          [(3)] (5) [Any appropriation made by the] The Legislature may appropriate monies
             226      from the Education Fund Budget Reserve Account [may only be used to cover operating
             227      deficits in the state's public and higher education system] only to resolve an Education Fund
             228      budget deficit.
             229          [(4) All interest] (6) Interest generated from investments of money in the Education
             230      Fund Budget Reserve Account shall be deposited into the account.
             231          Section 3. Section 63-38-2.7 is amended to read:
             232           63-38-2.7. Deposits related to the Disaster Recovery Funding Act.
             233          (1) As used in this section, "operating deficit" means that, at the end of the fiscal year,
             234      the unreserved and undesignated fund balance in the General Fund is less than zero.
             235          (2) Beginning with the fiscal year ending June 30, 2007, at the end of each fiscal year
             236      and after the transfer of surplus General Fund revenues has been made to the General Fund
             237      Budget Reserve Account as provided in Section 63-38-2.5 , the Division of Finance shall
             238      deposit an amount into the State Disaster Recovery Restricted Account, created in Section
             239      53-2-403 , calculated by:
             240          [(1)] (a) determining the amount of surplus General Fund revenues after the transfer to
             241      the General Fund Budget Reserve Account under Section 63-38-2.5 that is unrestricted and
             242      undesignated;


             243          [(2)] (b) calculating an amount equal to the lesser of:
             244          [(a)] (i) 25% of the amount determined under Subsection [(1)] (2)(a); or
             245          [(b)] (ii) 6% of the total of the General Fund appropriation amount [and the Uniform
             246      School Fund appropriation amount] for the fiscal year in which the surplus occurs; and
             247          [(3)] (c) adding to the amount calculated under Subsection [(2)] (2)(b) an amount equal
             248      to the lesser of:
             249          [(a)] (i) 25% more of the amount described in Subsection [(1)] (2)(a); or
             250          [(b)] (ii) the amount necessary to replace, in accordance with this Subsection [(3)]
             251      (2)(c), any amount appropriated from the State Disaster Recovery Restricted Account within
             252      ten fiscal years before the fiscal year in which the surplus occurs if:
             253          [(i)] (A) a surplus exists; and
             254          [(ii)] (B) the Legislature appropriates money from the State Disaster Recovery
             255      Restricted Account that is not replaced by appropriation or as provided in this Subsection [(3)]
             256      (2)(c).
             257          (3) Notwithstanding Subsection (2), if, at the end of a fiscal year, the Division of
             258      Finance determines that an operating deficit exists, the Division of Finance shall reduce the
             259      transfer to the State Disaster Recovery Restricted Account by the amount necessary to
             260      eliminate the operating deficit.
             261          Section 4. Section 63-38-2.9 is enacted to read:
             262          63-38-2.9. Revenue volatility report.
             263          (1) Beginning in 2011 and continuing every three years after 2011, the Legislative
             264      Fiscal Analyst and the Governor's Office of Planning and Budget shall, by December 20,
             265      submit a joint revenue volatility report to the Executive Appropriations Committee and Tax
             266      Review Commission.
             267          (2) The Legislative Fiscal Analyst and the Governor's Office of Planning and Budget
             268      shall ensure that the report:
             269          (a) discusses the tax base and the tax revenue volatility of the revenue streams that
             270      provide the source of funding for the state budget;
             271          (b) identifies the balances in the General Fund Budget Reserve Account and the
             272      Education Fund Budget Reserve Account; and
             273          (c) analyzes the adequacy of the balances in the General Fund Budget Reserve Account


             274      and the Education Fund Budget Reserve Account in relation to the volatility of the revenue
             275      streams.


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