- A draft branch biennial budget bill and budget reference
documents are submitted to members of the General Assembly by
the branch heads.
- A Budget Address, highlighting major fiscal policies and
program proposals of an Administration, is presented by the
Governor at the time the Executive Budget is introduced.
- The budget documents provide the detail to support the
biennial budget bill and contain data required by statutes.
- It has been customary for the Governor's budget to include
the following documents:
Revenue Estimates: information regarding the
General Fund and Road Fund (historical receipts and forecasts).
Budget-in-Brief: summary data about the
Operating and Capital Budgets.
Executive Budget: budget detail by state
agency, major program or organization unit and budget function
or cabinet, depicting the budget plan for the current fiscal
year, including any special appropriations, and recommendations
for each of the next two years.
Historical Information: summary of actual
agency revenue and expenditure data for the past two fiscal
Capital Financing Analysis: information about
new capital investment projects and debt statistics.
Highlights and Priorities: the Governor's major
policy and budget agenda.
Kentucky uses omnibus branch-wide budget bills (general appropriation bills) in its legislative process.
- Operating and capital appropriations for all agencies within a branch of government and appropriations for all current activities and programs, as well as related fiscal impacts of proposed bills - - creating new programs or operations -- are contained in one branch budget bill.
Statewide and specific agency fiscal policies, procedures and directives are included in the branch budget bills.
Budget bills have several major parts:
Part I contains Operating Budget appropriations for budget units;
Part II contains Capital Budget itemized appropriations. As a matter of fiscal policy, any previously authorized capital projects which have not reached construction phase or received permanent financing during the current biennium must be reauthorized in the budget bill in order to continue.
Part III, General Provisions, contains statewide fiscal policies and provisions in such areas as budget administration, interim budget revision authority and procedures, resolving statutory conflicts, ratification of budget reduction orders, budget reserve trust funding, and similar fiscal matters germane to state government finance.
Part IV deals with state salary, compensation and employment policies applicable during the fiscal biennium.
Part V enumerates transfers of restricted and special funds to augment the General Fund, when such resources are included in the budget plan.
Other major parts contain the General Fund and Road Fund Budget Reduction and Surplus Expenditures Plans, which are authorized in KRS Chapter 48, and specific provisions related to tobacco settlement funds and bond pools.
Part IX, Special Provisions, the most recent addition to the budget bills, details legislative directions and fiscal policies which affect spending by an individual department or budget unit.
Upon introduction of the biennial budget bills, which are typically sponsored by leadership and chairs of the appropriations committees, budget review activities of the House and Senate Appropriations and Revenue (A & R) Committees formally commence.
Budget bills are introduced simultaneously and hearings are conducted concurrently over a six-week period.
Branch officers, cabinet heads and agency heads testify and supply additional information about agency budget requests, branch budget recommendations and other fiscal matters, in response to members' interests.
Public testimony is considered at the discretion of the Chairs.
The LRC Budget Review Office produces legislative information documents for each agency budget hearing which compare Branch Recommendations for a budget unit with the Agency Request for the Operating Budget.
This material summarizes budget data by fund source, principal categories of expenditure and budget analysis levels -- Current Services in summary and Additional Funding in detail.
A brief narrative section identifies key fiscal policies and highlights budget recommendations.
A separate Capital Budget comparison record is also provided.
House Rules provide six standing budget review subcommittees, which are assigned functional jurisdiction to conduct budget deliberations, to consider pending legislation with budgetary impacts, and to develop any alternative budget proposals for consideration and action by the House A & R.
Members of House standing committees are welcome to participate in budget hearings.
The Senate A & R Committee conducts its budget review as a full panel and members of standing committees may participate in Senate budget hearings.
Traditionally, initial action on the budget bills, in the form of committee substitutes, is undertaken by the House.
The Senate ordinarily determines its budget plan action as substitutes or amendments to the House-passed bills.
Since 1980, the Executive Branch budget bill has always been resolved in free conference committee.
Rule 42 - Liaison Subcommittees
Establishes six standing budget review subcommittees, each
composed of seven members, under the Appropriations and Revenue
- Economic Development, Natural Resources and Tourism;
- General Government, Finance and Public Protection;
- Human Resources;
- Justice, Corrections and Judiciary; and
On four subcommittees designated by the Committee on Committees, four A & R members are designated by the House A & R Chair and three members are appointed by the Committee on Committees from other standing committees.
On two subcommittees, three or four members are appointed by the Committee on Committees from other standing committees, and the remaining A & R members are designated by the A & R Chair.
Standing Committees' members are usually referred to as liaison members.
All members have full voting authority in all matters before a budget review subcommittee.
The Committee on Committees may assign a chairman of a standing committee as an ex-officio non-voting member of a subcommittee.
Rule 42A - Budget Review
Budget Review Subcommittees provide notice of meetings at which members of standing committees may participate as non-voting members;
Upon conclusion of hearings, subcommittee recommendations are communicated to standing committees, which may respond in writing;
When the Appropriations and Revenue Committee reports budget bills, standing committees are notified of the content of the budget relating to their jurisdiction;
When A & R reports budget bills, a report must be prepared, explaining, in detail, modifications to the original budget (the budget memorandum);
The Rules Committee shall not post any budget bill for passage less than five days after reported by A & R.
Rule 44 - Committee on Conference
A committee on free conference shall propose no new appropriation or any appropriation above the level originally designed by either Chamber.
A report of a Conference Committee is not in order on the same legislative day as distribution of copies of the report and accompanying staff analysis.
Rule 49 - Procedure in Committee
A prefiled bill receiving a favorable expression from an interim joint committee is not exempt from posting and consideration requirements if it has a fiscal impact of more than $20,000.
Rule 52 - Fiscal Statement
A sponsor, committee or its chair, or a chamber may request a fiscal analysis on a proposed measure.
A fiscal statement is prepared and attached to the measure before final action.
State fiscal analysis, referred to as a State Fiscal Note, examines any provision with fiscal effects and estimates the potential impacts of passage of the measure on state government revenues and expenditures.
Fiscal analysis of a proposed amendment to a bill may also be requested.
A fiscal statement is a public document.
Rule 61 - Amendments to Bills
"...No amendment shall be in order... unless it complies with Rule 52 relative to fiscal analysis..."
Rule 42 - Standing Subcommittees
Establishes six standing subcommittees (identical to House jurisdictions), of three members each, under the A & R Committee.
On each subcommittee, one member is designated by the Senate A & R Chair from the A & R Committee and two liaison members are appointed by the Committee on Committees from members of other standing committees.
Liaison members have full voting authority in all matters under consideration.
Rule 52 - Fiscal Statement
Similar to House Rule 52, explained above.
The requirement for a fiscal statement may be waived by a vote of a majority of the members elected to the Senate.
Statute and House Rules require the preparation of budget reports on actions by the appropriations committees of the General Assembly.
The LRC Budget Review Office compiles and publishes a legislative budget memorandum comparing original branch budget recommendations with budget decisions by the appropriations committees and the General Assembly.
Versions of the budget memorandum are prepared and distributed at each stage of the budget-enacting process.
Liaison members have full voting authority in all matters under consideration.
The document contains legislative changes in budget allocations and states legislative intent and directions.
By practice, the budget memorandum incorporates the biennial highway construction program adopted by the General Assembly
The Budget Memorandum is adopted by Joint Resolution as a companion measure to a branch budget bill and is printed in the Acts of the General Assembly.
As directed by the Joint Resolution, a Final Budget Memorandum is produced by the Legislative Research Commission after the Regular Session, and incorporates final actions on the budget, including gubernatorial vetoes and reconsideration, and complies with the statutory comparison of budget changes between Branch Recommendations and enactments.
Administration of the budget must be in accordance with the budget bills and memorandum.
A Fiscal Statement on pending legislation may be prepared under certain circumstances. (See House Rule 52 or Senate Rule 52).
A State Fiscal Analysis Note to address the potential impact of a measure on state government revenue or expenditures is prepared upon request.
State Fiscal Notes do not deal with the fiscal impact or economic effects on local jurisdictions.
If a bill draft is introduced, the fiscal statement becomes a public record and is attached to the measure.
Fiscal notes estimates may identify a specific impact figure, a range of figures, or may be indeterminable, due to the lack of reliable or relevant data.
Statements are based upon the expressed language in the measure and stated assumptions.
A revised State Fiscal Note is prepared on committee substitutes and, when warranted, on measures to which a fiscal note has already been attached that pass a chamber with floor amendments.
A revised State Fiscal Note on the Committee Substitute (CS) or General Assembly (GA) version of a measure is intended to inform members of potential fiscal impacts of substantive changes adopted to the original bill..
Fiscal analysis and reporting on state expenditures is performed by Budget Review staff members.
A & R tax staff prepare state fiscal information on revenue and tax legislation.
Other LRC staff with expertise in a subject area assist in the state fiscal note process.
It has become common practice in the House to request that state fiscal notes on posted bills in committee be prepared prior to final consideration and reporting.
If a pending bill has a potential fiscal impact, a problem may be created in implementing the act if a budget bill or legislative budget plan does not include funding support.
Sometimes, proposed enabling legislation may contain a separate funding mechanism or an appropriation or revenue provision. This type of measure may be deemed an appropriation bill, which requires a majority vote of elected members for passage.
It has been the general practice to incorporate such funding in a branch budget bill and the General Assembly's adopted budget plan.
The Budget Review Office monitors bills with appropriations or revenue provisions, in order to gauge potential effect of any legislation on balancing the state's budget.
The legislative budget process does not conclude until final action on the branch budget bills.
The Governor has constitutional authority to disapprove (veto) any distinct parts or items in a branch budget bill or the whole act.
When items are vetoed in the branch budget bills, the General Assembly may reconsider each veto item and vote to override or sustain the Executive's veto actions.
The majority vote of elected members in the House and Senate is required to override a veto.