Budget Reserve Account Act

Budget Reserve Account Act

Summary

To help protect a state from sudden, unanticipated revenue shortfalls, budget reserve accounts should be implemented. These special funds provide a cushion for states in the event of economic hard times. Instead of immediately raising taxes, borrowing money, or slashing budgets, the budget reserve account can be tapped.

This Act calls for a constitutional provision to establish a budget reserve account where, within forty-five days after the end of any fiscal year, excess funds from the year are to be deposited. It limits the deposit to no more than 5 percent of estimated general fund revenues and calls for any excess over 5 percent to be returned to the taxpayer. It also provides for emergency appropriations from the budget reserve account only with two-thirds vote of the members in each House.

Model Legislation

Section 1. This Act may be cited as the Budget Reserve Account Act.

Section 2. {Enacting clause, etc}

Section 3. To amend the Constitution of the state by inserting new Subsections to read as follows:

(A) There is hereby established a Budget Reserve Account with the General Fund. Within forty-five (45) days after the end of any fiscal year, the excess of any unencumbered funds remaining from the said fiscal year shall be paid into the Budget Reserve Account, provided, however, that no such payment will be made that would increase the total of the Budget Reserve Account to more than five percent of the estimated State General Fund Revenues. The excess of any unencumbered funds shall be determined by subtracting from the actual unencumbered funds at the end of any fiscal year an amount with together with the latest estimated revenues is necessary to fund the ensuing fiscal year’s General Fund Budget, including the required estimated General Fund supplemental and automatic appropriations for said ensuing fiscal year less estimated reversions. Any remaining unencumbered funds that exceed the five percent limit of the Budget Reserve Account will be returned to the taxpayer in the form of tax returns, calculated by the appropriate state fiscal agency.

(B) The legislature, by a two-thirds vote of the members elected to each House, may appropriate from the Budget Reserve Account such additional sums as may be necessary to fund any anticipated or unanticipated deficit in any given fiscal year or to provide funds required as a result of any revenue reduction enacted by the legislature or to cover any other fiscal emergency.

Section 4. {Severability clause.}

Section 5. {Repealer clause.}

 

Reapproved by the ALEC Board of Directors on January 29, 2013

Keyword Tags: Budget

Task Forces