It’s Dictionary Day…Time to explain some fiscal policy jargon

Who knew that there was a national dictionary day? Well, we think it’s a great excuse to geek out over nerdy vocabulary!

At MBPC, we know how hard it can be to navigate the world of wonky words and jumbled jargon. When it comes to important issues, the state budget, and the Montana tax code, there is a lot of alphabet soup to figure out. Lucky for you, the MBPC staff really love wading through jargon and developing resources that help Montanans interpret what is actually going on during critical policy debates in our state.

We have written quite a few “Wonky Word” blogs in the past, such as Medicare vs. Medicaid (there are important differences!), OTO (which is short for One Time Only funding in the state budget) and Sine Die (nearly everyone’s favorite legislative word).

In the spirit of Dictionary Day, which is a funny little holiday to be celebrated today October 16th, we’d like to define a few more pieces of jargon that you’ll likely read and hear in the world of fiscal policy as MBPC gears up for another legislative session.

HB 2

The state budget bill, the General Appropriations Act, is an important one to keep track of to understand how the state legislature appropriates money for programs and services.

Of the total general fund expenditures, historically about 90% are appropriated in temporary appropriation bills. Of those total temporary appropriations, most is made from appropriations in this one bill: House Bill 2.

General Fund

General Fund can be broadly defined as revenues from general sources that can be used for any lawful purpose. Therefore, the amount of general fund available is very important in determining the overall level of funding available for a wide range of government services and, consequently, the size and scope of state government.

General fund is generally made up of a few tax revenue sources – income, property, and corporation taxes. General fund is the focus of virtually all of the attention before, during, and after the legislative session. This focus is due to the general fund’s source, use, and size. Many of the largest programs and services are funded by the general fund, such as in the Department of Health and Human Services. Since it can be used for any lawful purpose, general fund is also used to manage the state’s financial stability through the ending fund balance.

There are three tiers of budget development:

1) base budget

2) present law adjustments

3) new proposals

For the base budget, historically the legislature generally used adjusted expenditures made during the last fully completed year (the base year) as a starting point for the next biennium’s budget. Beginning with the 2017 biennium budget building process, the legislature used the second year of the biennium’s adjusted appropriations as a starting point. The base budget includes only ongoing appropriations for consideration. Hence, the budget base differs from total expenditures in a base year. Among the items removed from the base are one-time-only (read our OTO Wonky Word) appropriations.

Present law is defined in statute as that level of funding needed to maintain operations and services at the level authorized by the previous legislature, including but not limited to:

  • Changes resulting from legally mandated workload, caseload, or enrollment increases or decreases;
  • Changes in funding requirements resulting from constitutional or statutory schedules or formulas or inflationary or deflationary adjustments; and
  • The elimination of nonrecurring appropriations.

These changes or adjustments are called present law adjustments.

New proposals are defined in statute as “requests to provide new non-mandated services, to change program services, to eliminate existing services, or to change sources of funding.” Any proposal that is not based upon the existence of constitutional or statutory requirements is a new proposal.

In most agencies, major changes are included in new proposals. However, in other agencies present law adjustments are often the biggest changes in agency budgets, such as corrections, transportation, and public health and human services. New proposals are presented as decision packages.

Cheers to geeking out on wonky words today and every day at MBPC!

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