BUDGET
BILL PREPARATION GUIDELINES
I. INTRODUCTION
The California Constitution requires that
within the first 10 days of each calendar year, the Governor submit a proposed
Budget to the Legislature and that the Budget be accompanied by a Budget Bill.
The Department of Finance (Finance)
prepares the Budget Bill utilizing the previous Budget Act as a base. The
Office of State Publishing (OSP) provides the initial galley which is commonly
referred to as "language sheets". Language sheets for every item and
section in the previous Budget Act are distributed to various budget units in
early December of each year for updating. Several updates are made in late
December and early January, culminating in Senate and Assembly versions of the
Budget Bill for introduction in the two houses by the chair of each
house’s budget committee.
For a major portion of the items and
sections, the updating is merely a changing of dollars and fiscal year
references. However, there may be major changes which need to be made such as
the restructuring of programs, adjustments for organizational changes,
additions of new appropriations and provisional language. Finance staff often
need to work with departmental staff and the Legislative Counsel’s Office
in developing language. The Legislative Counsel’s Office designates staff
to work on budget language for both the budget development and enactment
stages. In some situations, Finance staff may work with staffs of the
Legislative Analyst’s Office and the legislative fiscal committees in preparing
language sheets.
Annually, Finance issues a Finance Memo
to provide any special instructions, issue a calendar for the update and
finalization of the Budget Bill, and inform staff of the designated contact
people in the Legislative Counsel’s Office.
The following are standard guidelines
applicable from year to year. Finance staff and departmental staff who assist
in the preparation of the Budget Bill must be familiar with these guidelines.
II. GUIDELINES
A. Updating Language Sheets for
Existing Items and Control Sections
1.
Ensure language
sheets are accurate, complete, coordinated with other units, etc.
2.
Make all changes
on language sheets using standard editing marks and insertion techniques. For
new staff, copies of standard editing marks are available from the budget
editor. If it is necessary to retype a language sheet or if departments produce
language sheets through an automated process, attach the old version(s) to the
newly created page(s); do not
destroy the old version(s) because the OSP needs to refer
to the existing item(s) contained in its computer file.
3.
Mark the
language sheet "canceled," if an item or section is no longer
required.
Do Not Destroy Canceled Language
Sheets. Turn them in!
4.
Update the
following information:
a. Dates contained in control language,
b. Code section references,
c. Cross-references to other items, and
d. Language to be sure it is current and still
applicable.
e. Change references to bill numbers (e.g, AB 511) to
Chapters or codified sections as appropriate, usually after a year or so.
5.
Clear
substantive changes with the Legislative Counsel’s Office, unless
otherwise instructed by your Program Budget Manager.
B. Control Sections
Control Sections should be limited to general
statewide provisions. Therefore, if a proposed new or existing section contains
language pertaining to one or only a few items/departments, it should be
included as control language within the appropriate item(s). As a general rule,
appropriation items should be used instead of control sections for
authorizing expenditures or transfers. (This provides for more consistency with
other appropriation/transfer items. Also, additional expenditure/transfer
records do not have to be created in the computer files to reflect the effect
of such control sections.) If a new section is required, coordinate the
assignment of a section number with the Financial Operations (FO) section.
All control section language sheets need
to be submitted to FO with budgets at the paging point (if final decisions can
be incorporated) or within 2-3 days of final decision.
C. Appropriations for Proposition 98
Proposition 98 funding must be
appropriated in a separate item. Under no circumstances may an appropriation
include expenditures for both Prop. 98 and non-Prop. 98 purposes. The following
format should be used for Prop. 98 items.
6110-101-0001—For local
assistance, Department of
Education (Proposition 98), for transfer to Section A of the
State School Fund ............................................................250,000,000
Section 12.32 of the Budget Act
requires language stating appropriations subject to Article XVI of the
California Constitution be designated with the wording
"Proposition 98." This ensures that appropriations can be
properly identified and charged against the minimum school funding guarantee.
It helps avoid the General Fund Reserve being charged twice for Proposition 98
expenditures.
D. Appropriations for State-Mandated Local Programs
Funding for State-Mandated Local Programs
must be appropriated in separate items within the budgets directly involved
with the programs. A Finance Memo may be issued providing detailed instructions
and sample items with control language.
E. Reappropriation and Reversion Language
Sample for Standard Reappropriation:
4300-491—Reappropriation,
Department of Developmental Services. The balance of the appropriation provided
in the following citation is reappropriated for the purposes provided for in
that appropriation and shall be available for encumbrance or expenditure until
June 30, 2005:
0001—General Fund
1) Item 4300-001-0001, Budget Act of 2003 (Ch. 157, Stats. 2003)
Other circumstances may require the use of
wording other than this standard language.
Sample
for Reappropriation for change of purpose:
2660-490—Reappropriation,
Department of Transportation. $4,750,000
of the appropriation provided in Item 2660-101-0001, Budget Act of 2003 (Ch
157, Stats. 2003) is reappropriated for acquiring ferry boats until December
31, 2003. At such time, any unencumbered
balances remaining from the $4,750,000 reappropriated by this item may be
transferred to and in augmentation of Item 2660-301-0001, Budget Act of 2004
with the approval of the Department of Finance.
Sample for Reappropriation with dollars:
3340-491—Reappropriation,
(1) $590,000 in Item
3340-101-0005, Budget Act of 2004 (Ch. 208, Stats. 2004), for local assistance
to local conservation corps. Of that amount, $106,000 shall be for Long
Beach local corps for resource conservation projects, and $484,000 shall be for
Fresno local corps for the construction of a recreation building where a
neighborhood youth center.
Sample
for Reappropriation for extension of liquidation period:
2660-491—Reappropriation, Department of Transportation. Notwithstanding any other provision of law, the period to liquidate encumbrances of the following citations are extended to June 30, 2005.
0001-General Fund
(1) Item 2660-101-0001, Budget Act of 2002 (Ch 379, Stats. 2002)
Sample for Standard Reversion with no amounts
specified:
4260-495—Reversion,
Department of Health Services. As of June 30, 2004, the unencumbered
balance of the appropriation provided in the following citation shall revert to
the fund balance of the fund from which the appropriation was made.
0001—General Fund
(1) Chapter 973 of the Statutes of 2002.
Other circumstances may require the
use of wording other than this standard language.
Sample
for Reversion with dollar amount specified:
2660-495—Reversion, Department of Transportation. As of June 30, 2004, the balances specified below, of the appropriations provided in the following citations shall revert to the balance in the fund from which the appropriations were made.
0046—Public Transportation Account
(1) Item 2660-001-0046, Budget Act of 2002 (
F. Transfer Items
Most transfer items state “for
transfer by the Controller”. This
language requires the Controller (SCO)
to transfer the amount specified shortly after the Budget Act is enacted. However, if there is not enough cash in the
fund available for transfer at that time, the SCO must contact the agency to
determine how much and when to transfer.
Many times, when partial transfers are made, the remaining amount to be
transferred is overlooked. To alleviate
this problem, transfer items should include the language “upon order of
the Department of Finance”. This
provides written documentation in the form of an Executive Order to the SCO to
make the transfer.
Sample
for Transfer Items
2240-115-3006—For transfer by the Controller,
upon order of the Director of Finance, from the Jobs-Housing Balance
Improvement Account to the General Fund
…………………(40,000,000)
Other
circumstances may require the use of wording other than this standard language.
G. Appropriation Authority for Expending Revenues from
Fines and Penalties, Chapter 654/95
Section 13332.18 of the Government Code states that revenues (including interest accrued) derived from the assessment of fines and penalties by any State department shall not be expended unless the Legislature specifically provides authority for the expenditure of these funds in the annual Budget Act. A fine or penalty is defined as a charge imposed for wrong-doing and in excess of the cost of investigating, processing, or prosecuting the conduct for which the charge is assessed, or the cost of collecting it. A charge reasonably related to a service provided by a department is not a fine or penalty for purposes of this law.
The intent is that these
requirements/provisions are limited to governmental cost funds. Thus, nongovernmental
cost funds, bond funds and federal funds are exempted.
Departments should be periodically reviewing
their governmental cost fund revenues derived from the assessment of fines and
penalties and the charges which are imposed for the costs of investigating,
processing, prosecuting, and collecting. If there is an excessive charge above
a reasonable assessment, the following standard language provision needs to be
included as language in Budget Bill appropriations.
"The amount appropriated in this item includes revenues derived from the assessment of fines and penalties imposed as specified in Section 13332.18 of the Government Code."
Finance budget analyst need to ensure that
departments are aware of these requirements and that the Budget Bill language
is included when appropriate.
There are a number of specific exemptions1/
from the provisions of this legislation. Following is a list of these
exemptions:
a.
The Fish and
Game Preservation Fund.
b.
The Restitution
Fund.
c.
The Peace
Officers' Training Fund.
d.
The Driver
Training Penalty Assessment Fund.
e.
The Corrections
Training Fund.
f.
The Local Public
Prosecutors and Public Defenders Training Fund.
g.
The
Victim-Witness Injury Fund.
h.
The Traumatic
Brain Injury Fund.
i.
The Industrial
Relations Construction Industry Enforcement Fund.
j.
The Workplace
Health and Safety Revolving Fund.
k.
The Oil Spill
Response Trust Fund.
l.
The Oil Spill
Prevention and Administration Fund.
m.
The
Environmental Enhancement Fund.
n.
The Recovery
Account of the Real Estate Fund.
o.
The Motor Vehicle
Account in the State Transportation Fund.
p.
The
q.
The Motor
Vehicle License Fee Account in the Transportation Tax Fund.
r.
Funds for
programs established pursuant to the Food and Agricultural Code that can be
terminated through an industry referendum vote.
1/ Exemption (1) contained in the
legislation is omitted as it related to a prior version of the bill and has no
application to the chaptered version per the author’s office.
(April 2006) (FO/PPBA)