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SF 2250

1st Engrossment - 88th Legislature (2013 - 2014) Posted on 03/18/2014 08:30am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to state government; establishing a policy for the general fund budget
reserve level; increasing the budget reserve; authorizing a transfer of funds;
amending Minnesota Statutes 2012, section 16A.152, subdivisions 1b, 2, 8.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2012, section 16A.152, subdivision 1b, is amended to
read:


Subd. 1b.

Budget reserve deleted text begin increasedeleted text end new text begin levelnew text end .

deleted text begin On July 1, 2003,deleted text end new text begin (a)new text end The commissioner
of management and budget shall deleted text begin transfer $300,000,000 to the budget reserve account in
the general fund. On July 1, 2004, the commissioner of management and budget shall
transfer $296,000,000 to the budget reserve account in the general fund. The amounts
necessary for this purpose are appropriated from the general fund
deleted text end new text begin calculate the budget
reserve level by multiplying the current biennium's general fund nondedicated revenues
and the most recent budget reserve percentage under subdivision 8
new text end .

new text begin (b) If, on the basis of a forecast of general fund revenues and expenditures, the
commissioner of management and budget determines that there will be a positive
unrestricted general fund balance at the close of the biennium and that the provisions of
subdivision 2, clauses (1), (2), (3), and (4), are satisfied, the commissioner shall transfer
to the budget reserve account in the general fund the amount necessary to increase the
budget reserve to the budget reserve level determined under paragraph (a). The amount
of the transfer authorized in this paragraph shall not exceed 33 percent of the positive
unrestricted general fund balance determined in the forecast.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for forecasts issued following final
enactment.
new text end

Sec. 2.

Minnesota Statutes 2012, section 16A.152, subdivision 2, is amended to read:


Subd. 2.

Additional revenues; priority.

(a) If on the basis of a forecast of general
fund revenues and expenditures, the commissioner of management and budget determines
that there will be a positive unrestricted budgetary general fund balance at the close of
the biennium, the commissioner of management and budget must allocate money to the
following accounts and purposes in priority order:

(1) the cash flow account established in subdivision 1 until that account reaches
$350,000,000;

(2) the budget reserve account established in subdivision 1a until that account
reaches deleted text begin $653,000,000deleted text end new text begin $810,992,000new text end ;

(3) the amount necessary to increase the aid payment schedule for school district
aids and credits payments in section 127A.45 to not more than 90 percent rounded to the
nearest tenth of a percent without exceeding the amount available and with any remaining
funds deposited in the budget reserve;new text begin and
new text end

(4) the amount necessary to restore all or a portion of the net aid reductions under
section 127A.441 and to reduce the property tax revenue recognition shift under section
123B.75, subdivision 5, by the same amountdeleted text begin ; anddeleted text end new text begin .
new text end

deleted text begin (5) to the state airports fund, the amount necessary to restore the amount transferred
from the state airports fund under Laws 2008, chapter 363, article 11, section 3,
subdivision 5.
deleted text end

(b) The amounts necessary to meet the requirements of this section are appropriated
from the general fund within two weeks after the forecast is released or, in the case of
transfers under paragraph (a), clauses (3) and (4), as necessary to meet the appropriations
schedules otherwise established in statute.

(c) The commissioner of management and budget shall certify the total dollar
amount of the reductions under paragraph (a), clauses (3) and (4), to the commissioner of
education. The commissioner of education shall increase the aid payment percentage and
reduce the property tax shift percentage by these amounts and apply those reductions to
the current fiscal year and thereafter.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for forecasts issued following final
enactment.
new text end

Sec. 3.

Minnesota Statutes 2012, section 16A.152, subdivision 8, is amended to read:


Subd. 8.

Report on budget reserve percentage.

(a) deleted text begin The commissioner of
management and budget must periodically review the formula developed as part of the
Budget Trends Study Commission authorized by Laws 2007, chapter 148, article 2, section
81, to estimate the percentage of the preceding biennium's general fund expenditures
and transfers recommended as a budget reserve
deleted text end new text begin The commissioner of management and
budget shall develop and annually review a methodology for evaluating the adequacy of
the budget reserve based on the volatility of Minnesota's general fund tax structure. The
review must take into consideration relevant statistical and economic literature. After
completing the review, the commissioner may revise the methodology if necessary. The
commissioner must use the methodology to annually estimate the percentage of the current
biennium's general fund nondedicated revenues recommended as a budget reserve
new text end .

(b) deleted text begin The commissioner must annually review the variables and coefficients in the
formula used to model the base of the general fund taxes and the mix of taxes that provide
revenues to the general fund. If the commissioner determines that the variables and
coefficients have changed enough to result in a change in the percentage of the preceding
biennium's general fund expenditures and transfers recommended as a budget reserve,
the commissioner must update the variables and coefficients in the formula to reflect the
current base and mix of general fund taxes
deleted text end new text begin By January 15 of each year, the commissioner
shall report the percentage of the current biennium's general fund nondedicated revenue
that is recommended as a budget reserve to the chairs and ranking minority members of
the legislative committees with jurisdiction over the Department of Management and
Budget. The report must also specify:
new text end

new text begin (1) whether the commissioner revised the recommendation as a result of significant
changes in the mix of general fund taxes or the base of one or more general fund taxes;
new text end

new text begin (2) whether the commissioner revised the recommendation as a result of a revision
to the methodology; and
new text end

new text begin (3) any additional appropriate informationnew text end .

deleted text begin (c) Every ten years, the commissioner must review the methodology underlying the
formula, taking into consideration relevant economic literature from the past ten years,
and determine if the formula remains adequate as a tool for estimating the percentage of
the preceding biennium's general fund expenditures and transfers recommended as a
budget reserve. If the commissioner determines that the methodology underlying the
formula is outdated, the commissioner must revise the formula.
deleted text end

deleted text begin (d) By January 15 of each year, the commissioner must report to the chairs and
ranking minority members of the house of representatives Committee on Ways and Means
and the senate Committee on Finance, in compliance with sections 3.195 and 3.197,
on the percentage of the preceding biennium's general fund expenditures and transfers
recommended as a budget reserve. The report must specify:
deleted text end

deleted text begin (1) if the commissioner updated the variables and coefficients in the formula to
reflect significant changes to either the base of one or more general fund taxes or to the
mix of taxes that provide revenues to the general fund as provided in paragraph (b);
deleted text end

deleted text begin (2) if the commissioner revised the formula after determining the methodology was
outdated as provided in paragraph (c); and
deleted text end

deleted text begin (3) if the percentage of the preceding biennium's general fund expenditures and
transfers recommended as a budget reserve has changed as a result of an update of or a
revision to the formula.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4. new text begin BUDGET RESERVE INCREASE.
new text end

new text begin On July 1, 2014, the commissioner of management and budget shall transfer
$150,000,000 to the budget reserve in the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2014.
new text end