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Tom Bottern
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S.F. No. 2250 - General Fund Budget Reserve Level - The First Engrossment
Author: Senator Rod Skoe
Prepared By: Thomas S. Bottern, Senate Counsel (651/296-3810)
Date: March 14, 2014


This bill revises the process for allocating future forecast surplus amounts to the budget reserve.  The bill directs the Commissioner of Minnesota Management and Budget to recommend the appropriate budget reserve level expressed as a percentage of general fund nondedicated revenues, and then specifies that 33 percent of any additional forecast surplus amounts remaining after satisfying other obligations must be transferred to the reserve up to the amount necessary to fund the recommended level.  This bill also directly appropriates $150,000,000 to the budget reserve.

Section 1 [Budget Reserve Level] strikes references to previous transfers to the budget reserve and creates a new requirement for the Commissioner of Management and Budget to calculate a budget reserve level, to be determined by multiplying the current biennium’s general fund nondedicated revenues by the amount of the most recent budget reserve percentage determined under the new procedure provided in section 3 of this bill.

Paragraph (b) specifies that after a positive unrestricted general fund balance (a forecast surplus) has been allocated to the statutory priorities already expressed in law (found in section 2 of this bill), 33 percent of any additional amount shall be transferred to the budget reserve account in the general fund to the extent necessary to increase the to the budget reserve level calculated under the new procedure established in this section.

Section 2 [Additional Revenues; Priority] amends existing law to increase the use of a forecast budget surplus (without additional legislative action) to increase the budget reserve from the limit on the use of the surplus of $653,000,000 currently in law up to $810,922,000.  Also strikes an obsolete requirement to restore previous transfers from the state airports fund.

Section 3 [Report on Budget Reserve Percentage] changes the method used to calculate the adequacy of the budget reserve.  Directs the Commissioner of Management and Budget to annually prepare a methodology to evaluate the adequacy of the reserve based on Minnesota’s general fund tax structure.  Existing law requires the commissioner to determine the percentage of general fund expenditures and transfers that is recommended as a budget reserve; the changes in this section will require the commissioner to apply the methodology to the current biennium’s general fund nondedicated revenues to determine the recommended budget reserve.  This section also requires the Commissioner of Management and Budget to provide a report to legislative chairs regarding the recommended budget reserve, including a description of factors underlying the recommendation. 

Section 4 [Budget Reserve Increase] requires a onetime transfer of $150,000,000 to the budget reserve in the general fund on July 1, 2014.





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