1.1                          A bill for an act
  1.2             relating to state government; creating a state council 
  1.3             on budget and oversight; specifying the duties of the 
  1.4             council and its relationship to other agencies; 
  1.5             amending Minnesota Statutes 1994, sections 15.91, 
  1.6             subdivision 2; 16A.04, subdivision 1; 16A.102, 
  1.7             subdivisions 1 and 2; 16A.103, subdivisions 2 and 3; 
  1.8             and 16A.152, subdivisions 2, 4 and 6; proposing coding 
  1.9             for new law as Minnesota Statutes, chapter 15B; 
  1.10            repealing Minnesota Statutes 1994, section 16A.103, 
  1.11            subdivision 1. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13                             ARTICLE 1
  1.14                        CREATION OF COUNCIL
  1.15     Section 1.  [15B.01] [STATE COUNCIL ON BUDGET AND 
  1.16  OVERSIGHT.] 
  1.17     Subdivision 1.  [CREATION.] The state council on budget and 
  1.18  oversight is created as an independent office of state 
  1.19  government.  The council consists of: 
  1.20     (1) two members appointed by and serving at the pleasure of 
  1.21  the governor; 
  1.22     (2) one member of the house of representatives appointed by 
  1.23  and serving at the pleasure of the speaker of the house, and one 
  1.24  senator appointed by and serving at the pleasure of the senate 
  1.25  committee on rules and administration; and 
  1.26     (3) the legislative auditor. 
  1.27     The minority leader of the house of representatives and the 
  1.28  minority leader of the senate are ex-officio nonvoting members 
  2.1   of the council.  A minority leader may designate a member of the 
  2.2   leader's caucus to serve in the leader's place. 
  2.3      Subd. 2.  [APPLICATION OF OTHER LAWS.] The council is not 
  2.4   subject to laws governing other state agencies.  However, the 
  2.5   council is subject to the Minnesota government data practices 
  2.6   act in chapter 13, and council meetings are subject to the open 
  2.7   meeting law, section 471.705.  Employees of the council shall 
  2.8   participate in state employee insurance and retirement programs. 
  2.9      Subd. 3.  [STAFF; ADMINISTRATIVE SUPPORT.] The council may 
  2.10  hire or contract for the services of a director who shall serve 
  2.11  at the pleasure of the council or it may employ the state 
  2.12  economist as a director.  The director shall hire or contract 
  2.13  for any other necessary staff.  Council employees other than the 
  2.14  director are in the classified service.  The commissioner of 
  2.15  administration shall provide administrative support and office 
  2.16  space for the council and its employees.  The director may enter 
  2.17  into contracts necessary for performance of duties of the office.
  2.18     Subd. 4.  [FORECASTS.] (a) The council shall provide 
  2.19  guidelines to the state economist for preparation of state 
  2.20  revenue and expenditure forecasts.  The forecasts shall be 
  2.21  prepared by the state economist or at the direction of the 
  2.22  economist, and are not subject to approval or disapproval by the 
  2.23  council. 
  2.24     (b) In February and October of each year, the state 
  2.25  economist shall prepare and deliver to the council a forecast of 
  2.26  state revenue and expenditures.  The forecast must assume the 
  2.27  continuation of current laws and reasonable estimates of 
  2.28  projected growth in the national and state economies and 
  2.29  affected populations.  Expenditures must be estimated for all 
  2.30  obligations imposed by law and those projected to occur as a 
  2.31  result of inflation and variables outside the control of the 
  2.32  legislature.  In addition, the state economist shall forecast 
  2.33  Minnesota personal income for each of the years covered by the 
  2.34  forecast and include these estimates in the forecast documents.  
  2.35  A forecast prepared during the first fiscal year of a biennium 
  2.36  must cover that biennium and the next biennium.  A forecast 
  3.1   prepared during the second fiscal year of a biennium must cover 
  3.2   that biennium and the next two bienniums. 
  3.3      Subd. 5.  [PERFORMANCE REPORTING.] The council shall 
  3.4   oversee the preparation of performance reports under sections 
  3.5   15.90 and 15.91.  The council shall develop guidelines for 
  3.6   oversight of these reports.  The director is responsible for 
  3.7   carrying out duties assigned to the council under section 15.91. 
  3.8      Subd. 6.  [COOPERATION OF OTHER AGENCIES.] Upon request of 
  3.9   the council, a state agency or unit of local government shall 
  3.10  submit to the council information that the council needs to 
  3.11  carry out its duties under subdivisions 4 and 5.  The 
  3.12  information must be submitted in the time and manner requested 
  3.13  by the director.  Specifically, all state agencies shall provide 
  3.14  the director immediate access to all information relating to 
  3.15  revenue and expenditure forecasts.  This subdivision does not 
  3.16  require a state agency or unit of local government to submit 
  3.17  information that is not public data under chapter 13. 
  3.18                             ARTICLE 2
  3.19                       CONFORMING AMENDMENTS
  3.20     Section 1.  Minnesota Statutes 1994, section 15.91, 
  3.21  subdivision 2, is amended to read: 
  3.22     Subd. 2.  [PERFORMANCE REPORTS.] (a) Each agency shall 
  3.23  develop a performance report for the major programs that it 
  3.24  provides or administers.  The report shall include each of the 
  3.25  following items or an explanation of why an item does not apply 
  3.26  to the agency or its individual programs: 
  3.27     (1) a statement of the mission, goals, and objectives of 
  3.28  the agency including those set forth in statute; 
  3.29     (2) measures of the output and outcome of the program; 
  3.30     (3) identification of priority and other populations served 
  3.31  by the programs under current law and how those populations are 
  3.32  expected to change within the period of the report; 
  3.33     (4) plans for how outcome information can be used as an 
  3.34  incentive for improving state programs and program outcomes; 
  3.35     (5) requests for statutory flexibility needed to reach 
  3.36  outcome goals; 
  4.1      (6) proposals and cost estimates for collecting new outcome 
  4.2   information; and 
  4.3      (7) other information that may be required to explain the 
  4.4   past and projected performance of state programs. 
  4.5      The objectives required under clause (1):  (i) must be 
  4.6   simple declarative statements of intent; (ii) should carry 
  4.7   benchmarks for accomplishment; and (iii) should be specific 
  4.8   enough so citizens can measure progress year to year. 
  4.9      (b) Each agency shall issue ~~a first annual report by~~ 
  4.10  ~~September 1, 1994, and~~ annual ~~updated~~ reports no later than 
  4.11  September 1 of each year beginning in 1995.  A report must cover 
  4.12  a period of four years previous and two years in the future from 
  4.13  the date that it is required to be issued, including previous 
  4.14  forecasts versus actual measures. 
  4.15     (c) Each agency shall send a copy of each report issued to 
  4.16  the governor, the speaker of the house of representatives, the 
  4.17  president of the senate, the state council on budget and 
  4.18  oversight, the legislative commission on planning and fiscal 
  4.19  policy, the legislative auditor, the commissioner of finance, 
  4.20  and two copies to the legislative reference library. 
  4.21     (d) The ~~legislative auditor shall review the drafts and~~ 
  4.22  ~~give comments to agencies and the legislature before September~~ 
  4.23  ~~1, 1994, and~~ legislative auditor shall review and give comments 
  4.24  on annual reports on a rotating biennial schedule.  The comments 
  4.25  shall be sent to each agency, the legislative reference library, 
  4.26  and the state council on budget and oversight. 
  4.27     (e) State agency reports shall be compiled as required in 
  4.28  this paragraph.  The ~~commissioner of finance~~ state council on 
  4.29  budget and oversight, in consultation with the commissioner of 
  4.30  administration, the legislative commission on planning and 
  4.31  fiscal policy, and the finance committees and divisions of the 
  4.32  house of representatives and senate, shall: 
  4.33     (1) develop forms and instructions and coordinate training 
  4.34  for the use of the agencies in the preparation of their reports; 
  4.35     (2) work with individual agencies to determine acceptable 
  4.36  measures of staff workload, unit costs, output, and outcome for 
  5.1   use in reports; and 
  5.2      (3) request any needed additional information concerning 
  5.3   any agency report submitted. 
  5.4      Each agency shall include citizens, agency clients, 
  5.5   consumer and advocacy groups, worker participation committees, 
  5.6   managers, elected officials, and contractors in its planning. 
  5.7      Sec. 2.  Minnesota Statutes 1994, section 16A.04, 
  5.8   subdivision 1, is amended to read: 
  5.9      Subdivision 1.  [TO PREPARE, CONSULT, SUPERVISE.] The 
  5.10  commissioner shall prepare the biennial budget with projections 
  5.11  of revenues and expenditures for both the biennial budget period 
  5.12  and the biennium following the biennial budget period.  In 
  5.13  making these budget projections, the commissioner shall consider 
  5.14  forecasts prepared under section 15B.01.  The governor shall 
  5.15  supervise the preparation unless there is a governor-elect, who 
  5.16  then shall provide the supervision. 
  5.17     Sec. 3.  Minnesota Statutes 1994, section 16A.102, 
  5.18  subdivision 1, is amended to read: 
  5.19     Subdivision 1.  [GOVERNOR'S RECOMMENDATION.] By the fourth 
  5.20  Monday in January of each odd-numbered year, the governor shall 
  5.21  submit to the legislature a recommended revenue target for the 
  5.22  next two bienniums.  The recommended revenue target must specify:
  5.23     (1) the maximum share of Minnesota personal income to be 
  5.24  collected in taxes and other revenues to pay for state and local 
  5.25  government services; 
  5.26     (2) the division of the share between state and local 
  5.27  government revenues; and 
  5.28     (3) the appropriate mix and rates of income, sales, and 
  5.29  other state and local taxes and other revenues, other than 
  5.30  property taxes, and the amount of property taxes and the effect 
  5.31  of the recommendations on the incidence of the tax burden by 
  5.32  income class. 
  5.33  The recommendations must be based on the November forecast 
  5.34  prepared under section ~~16A.103~~ 15B.01. 
  5.35     Sec. 4.  Minnesota Statutes 1994, section 16A.102, 
  5.36  subdivision 2, is amended to read: 
  6.1      Subd. 2.  [LEGISLATIVE BUDGET RESOLUTION.] By March 15 of 
  6.2   each odd-numbered year, the legislature shall by concurrent 
  6.3   resolution adopt revenue targets for the next two bienniums.  
  6.4   The resolution must specify: 
  6.5      (1) the maximum share of Minnesota personal income to be 
  6.6   collected in taxes and other revenues to pay for state and local 
  6.7   government services; 
  6.8      (2) the division of the share between state and local 
  6.9   government services; and 
  6.10     (3) the appropriate mix and rates of income, sales, and 
  6.11  other state and local taxes and other revenues, other than 
  6.12  property taxes, and the amount of property taxes and the effect 
  6.13  of the resolution on the incidence of the tax burden by income 
  6.14  class. 
  6.15  The resolution must be based on the February forecast prepared 
  6.16  under section ~~16A.103~~ 15B.01 and take into consideration the 
  6.17  revenue targets recommended by the governor under subdivision 1. 
  6.18     Sec. 5.  Minnesota Statutes 1994, section 16A.103, 
  6.19  subdivision 2, is amended to read: 
  6.20     Subd. 2.  [LOCAL REVENUE.] In February and November of each 
  6.21  year, the commissioner of revenue shall prepare and deliver to 
  6.22  the governor, state council on budget and oversight, and the 
  6.23  legislature forecasts of revenue to be received by school 
  6.24  districts as a group, counties as a group, and the group of 
  6.25  cities and towns that have a population of more than 2,500.  The 
  6.26  forecasts must assume the continuation of current laws, 
  6.27  projections of valuation changes in real property, and 
  6.28  reasonable estimates of projected growth in the national and 
  6.29  state economies and affected populations.  Revenue must be 
  6.30  estimated for property taxes, state and federal aids, local 
  6.31  sales taxes, if any, and a single projection for all other 
  6.32  revenue for each group of affected local governmental units.  As 
  6.33  part of the February forecast, the commissioner of revenue shall 
  6.34  report to the governor, the state council on budget and 
  6.35  oversight, and legislature on which groups of local government 
  6.36  units exceeded the revenue targets of the governor and 
  7.1   legislature in the most recent biennium. 
  7.2      Sec. 6.  Minnesota Statutes 1994, section 16A.103, 
  7.3   subdivision 3, is amended to read: 
  7.4      Subd. 3.  [SEPARATE ESTIMATES OF FEE REVENUES.] ~~In~~ 
  7.5   ~~preparing the November estimates under subdivision 1, the~~ 
  7.6   ~~commissioner shall separately report the amount of departmental~~ 
  7.7   ~~earnings as defined in section 16A.1285.~~  In preparing the 
  7.8   estimates under subdivision 2, the commissioner of revenue shall 
  7.9   separately estimate local government revenues similar to 
  7.10  departmental earnings as defined in section 16A.1285. 
  7.11     Sec. 7.  Minnesota Statutes 1994, section 16A.152, 
  7.12  subdivision 2, is amended to read: 
  7.13     Subd. 2.  [ADDITIONAL REVENUES; PRIORITY.] If ~~on the basis~~ 
  7.14  ~~of~~ after reviewing a forecast of general fund revenues and 
  7.15  expenditures prepared by the state economist under section 
  7.16  15B.01 the commissioner of finance determines that there will be 
  7.17  a positive unrestricted budgetary general fund balance at the 
  7.18  close of the biennium, the commissioner of finance must allocate 
  7.19  money to the budget reserve and cash flow account until the 
  7.20  total amount in the account equals five percent of total general 
  7.21  fund appropriations for the current biennium as established by 
  7.22  the most recent legislative session.  Beginning July 1, 1993, 
  7.23  forecast unrestricted budgetary general fund balances are first 
  7.24  appropriated to restore the budget reserve and cash flow account 
  7.25  to $500,000,000.  Additional biennial unrestricted budgetary 
  7.26  general fund balances available after November 1 of every 
  7.27  odd-numbered calendar year are appropriated in January of the 
  7.28  following year to reduce the property tax levy recognition 
  7.29  percent under section 121.904, subdivision 4a, to zero before 
  7.30  additional money beyond $500,000,000 is allocated to the budget 
  7.31  reserve and cash flow account.  $180,000,000 of the budget 
  7.32  reserve and cash flow account shall be dedicated to elementary 
  7.33  and secondary education.  
  7.34     The amounts necessary to meet the requirements of this 
  7.35  section are appropriated from the general fund. 
  7.36     Sec. 8.  Minnesota Statutes 1994, section 16A.152, 
  8.1   subdivision 4, is amended to read: 
  8.2      Subd. 4.  [REDUCTION.] (a) If, after reviewing a forecast 
  8.3   prepared by the state economist under section 15B.01, the 
  8.4   commissioner determines that probable receipts for the general 
  8.5   fund will be less than anticipated, and that the amount 
  8.6   available for the remainder of the biennium will be less than 
  8.7   needed, the commissioner shall, with the approval of the 
  8.8   governor, and after consulting the legislative advisory 
  8.9   commission, reduce the amount in the budget reserve and cash 
  8.10  flow account as needed to balance expenditures with revenue. 
  8.11     (b) An additional deficit shall, with the approval of the 
  8.12  governor, and after consulting the legislative advisory 
  8.13  commission, be made up by reducing unexpended allotments of any 
  8.14  prior appropriation or transfer.  Notwithstanding any other law 
  8.15  to the contrary, the commissioner is empowered to defer or 
  8.16  suspend prior statutorily created obligations which would 
  8.17  prevent effecting such reductions.  
  8.18     (c) If the commissioner determines that probable receipts 
  8.19  for any other fund, appropriation, or item will be less than 
  8.20  anticipated, and that the amount available for the remainder of 
  8.21  the term of the appropriation or for any allotment period will 
  8.22  be less than needed, the commissioner shall notify the agency 
  8.23  concerned and then reduce the amount allotted or to be allotted 
  8.24  so as to prevent a deficit. 
  8.25     (d) In reducing allotments, the commissioner may consider 
  8.26  other sources of revenue available to recipients of state 
  8.27  appropriations and may apply allotment reductions based on all 
  8.28  sources of revenue available.  
  8.29     (e) In like manner, the commissioner shall reduce 
  8.30  allotments to an agency by the amount of any saving that can be 
  8.31  made over previous spending plans through a reduction in prices 
  8.32  or other cause. 
  8.33     Sec. 9.  Minnesota Statutes 1994, section 16A.152, 
  8.34  subdivision 6, is amended to read: 
  8.35     Subd. 6.  [NOTICE TO COMMITTEES.] The commissioner shall 
  8.36  notify the committees on finance and taxes and tax laws of the 
  9.1   senate and the committees on ways and means and taxes of the 
  9.2   house of representatives of a reduction in an allotment under 
  9.3   this section.  The notice must be in writing and delivered 
  9.4   within 15 days of the commissioner's act.  The notice must 
  9.5   specify:  
  9.6      (1) the amount of the reduction in the allotment, and the 
  9.7   basis for the commissioner's determination that anticipated 
  9.8   revenues will be less than anticipated expenses; 
  9.9      (2) the agency and programs affected; 
  9.10     (3) the amount of any payment withheld; and 
  9.11     (4) any additional information the commissioner determines 
  9.12  is appropriate.  
  9.13     Sec. 10.  [REPEALER.] 
  9.14     Minnesota Statutes 1994, section 16A.103, subdivision 1, is 
  9.15  repealed. 
  9.16     Sec. 11.  [TRANSFER.] 
  9.17     The duties of the commissioner of finance involving 
  9.18  forecasting and oversight of performance reporting are 
  9.19  transferred to the state council on budget and oversight under 
  9.20  Minnesota Statutes, section 15.039. 
  9.21                             ARTICLE 3
  9.22     Section 1.  [EFFECTIVE DATE.] 
  9.23     Articles 1 and 2 are effective July 1, 1995.