Provides that upon failure by the legislature to act upon a budget within seventy-two hours from the beginning of the state fiscal year a default budget shall take effect

1 Co-sponsor

• Michael H. Ranzenhofer

Title of bill

CONCURRENT RESOLUTION OF THE SENATE AND ASSEMBLY proposing an amendment to section 4 of article 7 of the constitution, in relation to reforming the state budget process

Purpose

To implement a fail safe mechanism through a Constitutional amendment mandating the use of the prior fiscal year State budget if no budget is agreed to within 72 hours after the April 1st commencement of the fiscal year.

Summary of provisions

Section 1 of the resolution amends Section 4 of Article VII of the State Constitution to stipulate that if both houses of the Legislature fail to finally act on all appropriation bills submitted by the Governor within 72 hours after the start of the new fiscal year, a "default budget" will be imposed that fiscal year. Essentially, the prior fiscal year's budget will be comprised of all appropriation bills for the immediately preceding fiscal year and all laws governing apportionment and allocation of those appropriations. Within 15 days after the date on which the default budget becomes law, the Governor may make a determination that moneys and receipts available for the fiscal year are less than the immediately preceding year. In that event, the Governor shall have the following powers: transfer any appropriation for any object or purpose to another project or purpose only to meet contractual requirements; reduce by a uniform percentage ail appropriations from the General Fund, or portions thereof, not necessary to meet contractual requirements or other requirements established by State or Federal law; and modify the operation of any law governing the apportionment and the allocation of appropriations. If the Governor does make s uch a determination that moneys and receipts available for the fiscal year are less than for the immediately preceding fiscal year, the Governor must notify both houses of his determination and all modifications that will be made to appropriations or to the operation of laws for the fiscal year.

Justification

Until 2005, it had been 20 years since the State budget had been adopted before the start of the new fiscal year (April 1st). By failing to adopt an "on-time" budget, the State places schools, municipalities, and not-for-profit organizations at risk of not knowing when and how much State aid will be available to them. It may also delay the commencement (or continuation) of capital projects and other programs which are important to the residents of the State. By having such a "default" mechanism in place, ALL parties will have a greater incentive to negotiate in good faith and to make compromise necessary to achieve a fair and balanced budget. In the event that they are unable to reach a consensus, the State and its residents will be able to move forward and to have certainty as to what allocations and spending will occur during the fiscal year.

Legislative history

New in Senate. A.92 of 2007-2008 Opinion referred to Judiciary A.9610 of 2006, Opinion referred to Judiciary. A.744 of 2005, Opinion referred to Judiciary. A.1279 of 2004, held for consideration in Ways and Means. A.1279 of 2003, Opinion referred to Judiciary. A.7714 of 2002, Opinion referred to Judiciary

Fiscal implications

None.

Effective date

The first of January next after passage by two separately elected sessions of the legislature and approval by the voters.