AB 127

The bill provides that the Department of Administration (DOA), beginning

with the 2011-13 fiscal biennium, must require 20 percent of executive branch

agencies to submit their biennial budget requests prepared using the principles of

zero-based budgeting for each of their activities, units, and programs. In each fiscal

biennium thereafter, DOA must require a different 20 percent of executive branch

agencies to submit their biennial budget requests prepared using the principles of

zero-based budgeting, except that DOA must require each state agency to do this at

least once during any five consecutive fiscal biennia. Under the bill, "zero-based

budgeting" is defined as the compilation of a budget in which each component is

justified on the basis of cost, need, and relation to the statutory responsibilities of the

state agency for which the budget is made.

In addition, under current law, DOA is required to submit, as part of the

biennial budget report, a comparison of the state's budgetary surplus or deficit

according to generally accepted accounting principles (GAAP), as reported in any

audited financial report prepared by DOA for the most recent fiscal year, and the

estimated change in the surplus or deficit based on recommendations in the biennial

budget bill or bills. GAAP are those principles for state and local governments

adopted by the Governmental Accounting Standards Board (GASB). Organized in

1984, GASB is an independent organization founded to establish standards of

financial accounting and reporting for state and local governmental entities. Its

standards generally guide the preparation of external financial reports of those

entities.

This bill provides that the legislature may not pass any biennial budget bill or

bills for the 2015-17 and succeeding fiscal biennia that would produce a state budget

deficit according to GAAP. The bill further requires that, beginning on January 1,

2011, the executive budget bill or bills must be prepared according to GAAP and that

the bill or bills may not contain recommendations for the succeeding biennium that

create a state budget deficit, according to GAAP.

Finally, the bill provides that neither house of the legislature may pass the

executive budget bill for the 2009-11 fiscal biennium, if that bill appropriates federal

economic stimulus funds, unless the governor submits a plan to the legislature to

eliminate the state's structural deficit by the end of the 2015-16 fiscal year. Under

the bill, "federal economic stimulus funds" is defined to mean federal moneys

received by the state, pursuant to federal legislation enacted during the 111th

Congress for the purpose of reviving the economy of the United States.