R.I. Government Agencies | Privacy Policy |
The purpose of this primer is to clarify the annual budget process and appropriations process.
According to Article IX Section 16 of the Rhode Island Constitution, and the Rhode Island General Laws Section 35-3-7, the Governor must present spending recommendations to the Legislature. The Budget reflects expenditures for both the current and upcoming fiscal year and identifies the sources of financing for those expenditures.
On or before the third Thursday in January, unless delayed by act of the Legislature, the Governor must submit to the General Assembly a budget containing a complete plan of estimated revenues and proposed expenditures, with a personnel supplement detailing number and titles of positions of each agency, and estimates of personnel costs for the next fiscal year.
The budget is proposed by the Governor and considered by the General Assembly, which may increase, decrease, alter, or strike out any item in the budget, provided that the action would not cause an excess of appropriations over anticipated revenue receipts. No appropriation in excess of budget recommendations may be made by the General Assembly unless it provides the necessary additional revenue to cover such appropriation. The Governor may veto legislative appropriations. The Legislature may override any veto by a two-thirds majority vote. Supplemental appropriations measures must be submitted by the Governor to the General Assembly on or before the second Tuesday in January. Supplemental appropriations by the General Assembly must also be supported by additional revenues.
The general laws of the state provide that if the General Assembly fails to pass the annual appropriation bill, amounts equal to those appropriated in the prior fiscal year shall be automatically available for expenditure, subject to monthly or quarterly allotments as determined by the Budget Officer. Expenditures for general obligation bond indebtedness of the state shall be made as required regardless of the passage of the annual budget or the amount provided for in the prior fiscal year.
It is important when reading the budget to consider which fiscal year is being discussed. The state fiscal year runs from July 1 to the following June 30 and is numbered for the calendar year in which it ends. The current fiscal year is the one which ends the coming June. The actual fiscal years are the years which concluded June of the two previous years. The budget year refers to the next fiscal year, which begins the July following the Legislature's adjournment. Finally, out-year refers to the years beyond the budget year.
By law, The Budget must reflect two actual years of spending, the Governor's revised spending recommendations for the current fiscal year, and the Governor's full recommendations for the budget year.
Receipt estimates for the current year and budget year are those adopted by the State Revenue Estimating Conference, as adjusted by any changes recommended by the Governor.
The State Revenue Estimating Conference was created by the 1990 General Assembly to provide the Governor and the Assembly with estimates of general revenues. It is composed of the State Budget Officer, the House Fiscal Advisor, and the Senate Fiscal Advisor, with the chair rotating between the three. It must meet no less than two times per year, in November and May, can be convened at any other time by call of any member, and must reach consensus on revenues. The 1991 Assembly created a Medical Assistance and Public Assistance Caseload Estimating Conference similar to the Revenue Estimating Conference to adopt cash assistance entitlement caseload estimates. The 1998 Assembly amended the Medical Assistance and Public Assistance Caseload Estimating Conference to estimate medical assistance expenditures, upon which the Governor’s expenditures budget shall be based, and the appropriations by the assembly shall be made.
The consensus revenue estimate is the official revenue projection for general revenue. Estimates of revenues for federal funds, restricted receipts, and other funds are prepared by individual state agencies, reviewed by the Budget Office, and included in The Budget.
The State of Rhode Island classifies state spending by function of government and by category of expenditure.
Function of government classifies expenditures by grouping agencies which make expenditures for similar programs and purposes. There are six functions of government defined in The Budget: General Government, Human Services, Education, Public Safety, Natural Resources, and Transportation.
The following explains the six functions of government included in The Budget.
General Government includes the administrative and regulatory functions of state government. Certain elected officials (Governor, Lieutenant Governor, General Treasurer, Secretary of State), the Legislature, and the Department of Administration are agencies that perform an administrative function. The Department of Business Regulation, the Department of Labor and Training, and the Public Utilities Commission are examples of agencies that perform a regulatory function.
Human Services is the function that provides services to individuals. Services provided include: the care of the disabled by the Department of Mental Health, Retardation and Hospitals; child protective and social services provided by the Department of Children, Youth and Families; health programs at the Department of Health and the Department of Human Services; financial assistance and social services provided by the Department of Human Services; and, pharmaceutical assistance and home health care at the Department of Elderly Affairs.
The Education function provides education services to Rhode Islanders. The State Board of Regents for Elementary and Secondary Education and the Board of Governors for Higher Education provide direct education services, while services provided by the Rhode Island Telecommunications Authority are indirect in nature.
Public Safety is the function that provides safety and security services to Rhode Island citizens. Agencies in this function include the Department of Corrections, the Judiciary, the Attorney General and various law enforcement agencies, including the State Police.
The Natural Resources function protects the natural and physical resources of the state and regulates the use of those resources. Agencies included in this function are the Department of Environmental Management, the Coastal Resources Management Council, and the Water Resources Board.
Transportation includes the Department of Transportation, which is the only agency in this function. It is responsible for maintaining and constructing highways in Rhode Island, and for planning and financing all surface transportation modes.
Categories of expenditures classify expenditures by budgeting and accounting objects of expenditure: state operations; aid to local units of government; assistance, grants, and benefits; and capital. Objects of expenditures define how funds are encumbered and expended.
State Operations include expenses incurred while conducting the day-to-day business of state government. This category includes "personnel" and "operating." Personnel includes expenditures for salaries and wages, fringe benefits, consultant services, and workers' compensation costs. Operating expenses comprise non-personnel expenditures for operations of state government, including maintenance and non-fixed equipment (capital outlay).
Aid to Local Units of Government consists of payments made to governmental units which provide services at the local level, and in most cases have taxing authority. Education Aid to local school districts is an example.
Other Assistance, Grants and Benefits constitutes payments to individuals and agencies which are not governmental units. Drugs, medicine and nursing facilities for the medicaid programs, the pharmaceutical assistance program for the elderly, and cash assistance payments for Family Independence Program entitlements are a few examples.
Capital includes capital debt service and capital improvements. While the debt service component of capital improvements is reflected in the operating budget, the majority of capital improvements are found in the Capital Budget. Debt service includes payments on short term tax anticipation notes, long term general obligation bonds, Rhode Island Public Building Authority lease payments, certificates of participation payments for the Intake Service Center, Attorney General's administrative office, and Shepard’s building and lease payments to the Convention Center Authority.
A major part of the state operations category of expenditures is salary and wage payments to employees. Public service in state government is divided into the classified service, unclassified service and non-classified service. The classified service comprises all positions in state service, now existing or to be created, except as specifically provided under R.I.G.L. 36-4-2 for unclassified employees and R.I.G.L. 16-59-7 for Higher Education non-classified employees. The classified service is divided into a competitive branch and a non-competitive branch.
Employees hired to fill positions in the classified service must be hired on the basis of merit and fitness and usually upon the basis of competitive examinations. The non-competitive branch includes positions that require the performance of routine tasks, or those that require licenses, certificates, or registrations. These employees are also promoted and discharged on the basis of rules and regulations established and administered by the Rhode Island merit system.
Certain positions are specifically designated for inclusion in the unclassified service. These positions are defined to include those in specific agencies, or types of agencies for specific purposes. Examples are employees of the Legislature, elected officials, and employees of the courts. Compensation for unclassified positions is governed by the Unclassified Pay Board and other matters are governed by rules and regulations of the unclassified system.
State service also includes special types of positions. In addition to regular full time positions, there are seasonal positions in the classified service. Such positions require the employee to work an irregular schedule such that the employee is on call when needed, or for only a portion of the year, and only for a maximum of 925 hours in a 12-month period. Employees of the Department of Environment Management who staff the state’s parks, beaches, and wildlands in the summer are an example of seasonal employees.
Frequent reference is made in The Budget to "general revenue" expenditures and expenditures from "all funds". Expenditures from all funds include both general revenue expenditures and expenditures from federal funds, restricted receipts, and other or special revenue funds.
General revenue receives the most attention in the budget because it is the largest of the "uncommitted" revenue sources available to the state. It is also the fund to which most general tax receipts are credited. The Legislature may spend general revenue dollars for any purpose.
Federal funds, restricted receipts, and other funds, by contrast, are dedicated to a specific purpose. Other funds include the University and College Funds, the Transportation Fund, the Unemployment Insurance Fund and the Temporary Disability Insurance Fund. For example, the Legislature may not spend monies from the Unemployment Insurance Fund to build new prisons.
Within the budget documents, schedules contain expenditure data for two actual fiscal years, the current fiscal year and the budget year. The schedules display agency data by fund source for All Funds, General Revenue, Federal Funds, Restricted Receipts, and Other funds.
The 1990 Assembly instituted a limit on state expenditures commencing in fiscal year 1992 such that appropriations do not result in general fund expenditures exceeding 99.5 percent of general fund revenues in FY 1993, 98.5 percent in FY 1994 and 98.0 percent thereafter. The remaining balance is to be deposited into a budget reserve account, capped at 3.0 percent of general revenues. Once the cap is reached, the excess is deposited in a Capital Account, entitled the Rhode Island Capital Plan Fund, to be used for capital projects, debt reduction, and/or debt service. The 1992 General Assembly approved placement of the spending limits on the ballot as a constitutional requirement, and the voters approved the item on November 3, 1992.
For FY 2002 the Governor's budget recommends the use of the Rhode Island Capital Plan Fund solely for pay-as-you-go capital improvement projects.
The Budget is prepared on the same basis that the state's year end financial statements, which is a modified accrual basis. Briefly, this means that obligations of the state are budgeted as expenditures if the goods or services are expected to be received during the fiscal year, regardless of whether a cash payment is expected to be made by the state by June 30th of that year. Revenues are estimated on the basis of when they are "earned" by the state. For example, the estimate of gas tax revenues reflects twelve months of revenues. However, due to a one month difference in the time the liability is incurred and the actual cash payment is made by the taxpayer, the revenue estimate reflects cash received from August through July.
The Comprehensive Annual Financial Report (CAFR) shows the status of the state's finances on the basis of "generally accepted accounting principles" (GAAP). Every attempt is made in preparing the budget to ensure that it is consistent with the auditing standards upon which the state's financial position will be determined.
The administration continues in its effort, initiated in FY 1998, to develop and track measures of the performance of state agencies and departments. The performance measures included in the FY 2002 budget are derived from the on-going process to identify and refine measures for state decision makers to evaluate on an annual basis. With few exceptions, all executive branch agencies, and most other government offices, have completed their initial set of program performance measures. These measures are included on the agency and program financing pages in The Budget and are described further in the Technical Appendix. In some cases where no measures are identified, the process of developing measures continues. These cases are identified as NS (not supplied) or NC (not complete). In other areas, as explained in the Forward, for general officers and agency central management units, NA (not applicable) is indicated.