Print Friendly HOUSE BILL NO. 280 – Tax/expenditure limitation
HOUSE BILL NO. 280
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H0280..................................................by REVENUE AND TAXATION
TAX/EXPENDITURES - LIMITATIONS - Amends, adds to and repeals existing law to
adopt taxation and expenditure limitations; to create an Emergency Reserve
Fund and govern appropriation from the fund; to prohibit mandated and shifted
costs; to adopt a local tax limitation provision; and to govern moneys to be
transferred to the Budget Stabilization Fund and appropriations from the fund.
02/19 House intro - 1st rdg - to printing
02/20 Rpt prt - to Rev/Tax
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 280
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO IMPOSITION OF A TAXATION AND EXPENDITURE LIMITATION; AMENDING
3 TITLE 67, IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 88, TITLE 67, IDAHO
4 CODE, TO IMPOSE A LIMITATION UPON ANNUAL STATE EXPENDITURES, TO DEFINE
5 TERMS, TO PROVIDE CREATION OF AN EMERGENCY RESERVE FUND AND GOVERN APPRO-
6 PRIATION FROM THE FUND, TO GOVERN DISPOSITION OF EXCESS REVENUES, TO PRO-
7 VIDE FOR AN EMERGENCY DECLARATION, TO PROHIBIT MANDATED AND SHIFTED COSTS,
8 TO PROVIDE EXCLUSION OF CERTAIN EXPENDITURES AND TO ADOPT A LOCAL TAX LIM-
9 ITATION PROVISION; AMENDING SECTION 57-814, IDAHO CODE, TO GOVERN MONEYS
10 TO BE TRANSFERRED TO THE BUDGET STABILIZATION FUND AND APPROPRIATIONS FROM
11 THE FUND; AND REPEALING SECTIONS 57-814A AND 67-6803, IDAHO CODE.
12 Be It Enacted by the Legislature of the State of Idaho:
13 SECTION 1. That Title 67, Idaho Code, be, and the same is hereby amended
14 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
15 ter 88, Title 67, Idaho Code, and to read as follows:
16 CHAPTER 88
17 TAX AND EXPENDITURE LIMITATION
18 67-8801. EXPENDITURE LIMITATION. A limit on the total amount of expendi-
19 tures by Idaho in each fiscal year is established. The annual state expendi-
20 tures shall not exceed the total expenditures for the prior fiscal year,
21 except for annual percentage changes in the cost of living and the population.
22 In no case shall such percentage change in expenditures exceed the average
23 percentage change in the state's per capita personal income over the prior
24 three (3) fiscal years.
25 67-8802. DEFINITIONS. As used in this chapter the following words shall
26 have the following meanings:
27 (1) "Cost of living" means the consumer price index (all items) for the
28 United States of America, or any comparable index, as computed by the bureau
29 of labor statistics or the department of commerce of the United States for a
30 twelve (12) month period of time.
31 (2) "Emergency" means an extraordinary event or occurrence that could not
32 have been reasonably foreseen or prevented and that requires immediate expen-
33 diture to preserve the health, safety and general welfare of the people.
34 (3) "Expenditures" means the total amount of moneys appropriated by the
35 state except:
36 (a) Appropriation funded moneys received from the federal government;
37 (b) Principal and interest on bonded indebtedness;
38 (c) Appropriations funded by unemployment and disability insurance funds;
39 (d) Appropriations funded by discretionary user charges to the extent
40 that such charges do not exceed the cost of the goods or services and pur-
41 chase by the user is discretionary;
1 (e) Appropriations funded from permanent endowment, trust funds or pen-
2 sion funds;
3 (f) Proceeds of gifts or bequests made for purposes specified by the
4 donor; or
5 (g) Moneys appropriated for tax relief.
6 (4) "Fiscal year" means any accounting period consisting of twelve (12)
7 consecutive months.
8 (5) "Per capita expenditures" means the quotient derived from dividing
9 expenditures of the state for a fiscal year by its population on the first day
10 of that fiscal year.
11 (6) "Personal income" means the total income received by residents of the
12 state from all sources, including transfer payments as defined and officially
13 reported by the United States department of commerce for a twelve (12) month
14 period of time.
15 (7) "Population" means the number of people residing in the state,
16 excluding armed forces stationed overseas, as determined by the United States
17 bureau of census.
18 67-8803. EMERGENCY RESERVE FUND. Any excess of state revenues over expen-
19 ditures at the end of a fiscal year shall first be transferred to an emergency
20 reserve fund. The emergency reserve fund shall not exceed one percent (1%) of
21 the total expenditures of the current fiscal year.
22 Appropriation of money from the emergency reserve fund may be made in the
23 event of state emergencies such as natural disasters. Appropriations from the
24 emergency reserve fund would require declaration of an emergency by the gover-
25 nor and upon concurrence of a majority vote of all members present in each of
26 the two (2) houses of the legislature. Emergencies would exclude revenue
27 decreases or revenue shortfalls due to economic conditions.
28 67-8804. EXCESS REVENUES. For any fiscal year, the excess of revenues
29 over expenditures, except as provided in section 67-8803 and section 57-814,
30 Idaho Code, shall be refunded. The legislature may use any reasonable method
31 for refunds, including temporary tax credits or rate reductions. Refunds need
32 not be proportional when prior payments are impractical to identify or return.
33 67-8805. EMERGENCY DECLARATION. The limitation imposed by section
34 67-8801, Idaho Code, may be exceeded upon the exhaustion of the funds estab-
35 lished in accordance with section 67-8803 and section 57-814, Idaho Code, and
36 upon the declaration of an emergency by the governor and upon a concurrence of
37 a two-thirds (2/3) majority of the membership of each house of the legisla-
38 ture. The legislature shall set forth the amount of the cost of the emergency
39 situation and the method by which it shall be defrayed. The limitation may be
40 exceeded only for the year(s) in which the emergency situation is declared. In
41 no event shall such emergency appropriation, as defined in section 67-8802,
42 Idaho Code, be included in the computation of the limitation imposed by sec-
43 tion 67-8801, Idaho Code, for any subsequent year.
44 67-8806. MANDATED AND SHIFTED COSTS. The state shall not impose upon any
45 local unit of government any part of the total costs of new programs or ser-
46 vices, or increases in existing programs or services, unless a specific appro-
47 priation is made sufficient to pay the local unit of government for that pur-
48 pose. The proportion of state revenue paid to all local units of government,
49 taken as a group, shall not be reduced below that proportion in effect at the
50 adoption of this chapter. Where costs are transferred from one unit of gov-
51 ernment to another unit of government, either by law or court order, the lim-
1 itation imposed in section 67-8801, Idaho Code, shall be adjusted and trans-
2 ferred accordingly so that total costs are not increased as a result of such
4 67-8807. EXCLUDED EXPENDITURES. If any expenditure category, or revenue
5 source, shall, by a court of competent jurisdiction in a final order, be
6 adjudged excluded from this chapter, the process of computing the expenditure
7 limitation shall be adjusted accordingly and remaining provisions shall be in
8 full force and effect.
9 67-8808. LOCAL TAX LIMITATION. Every political subdivision of this state
10 is hereby prohibited from levying any tax not in existence when this chapter
11 was adopted, and from increasing the rates of existing taxes after the effec-
12 tive date of this chapter, without the approval of a majority of the voters of
13 that local unit of government. This section shall not apply to taxes imposed
14 for the repayment of principal and interest or other indebtedness or for the
15 payment of assessments or contract obligations in anticipation of which bonds
16 are issued.
17 SECTION 2. That Section 57-814, Idaho Code, be, and the same is hereby
18 amended to read as follows:
19 57-814. BUDGET STABILIZATION FUND. (1) There is hereby created in the
20 state treasury the budget stabilization fund for the purpose of meeting gen-
21 eral fund revenue shortfalls. and to meet expenses incurred as the result of a
22 major disaster declared by the governor. All moneys in the budget reserve
23 account at the date of approval of this act shall be transferred to the budget
24 stabilization fund. Interest earnings from the investment of moneys in this
25 fund by the state treasurer shall be credited to the permanent building
26 account subject to the provisions of section 67-1210, Idaho Code.
27 (2) Subject to the requirements of section 63-3203, Idaho Code, the state
28 controller shall annually transfer moneys from the general fund to the budget
29 stabilization fund subject to the following criteria:
30 (a) If the state controller certifies that the receipts to the general
31 fund total state revenues for the fiscal year just ending have exceeded
32 the receipts expenditures of the previous current fiscal year, by more
33 than four percent (4%) and the requirements of section 67-8803, Idaho
34 Code, have been met, then the state controller shall transfer all general
35 fund collections in excess of said four percent (4%) increase revenue to
36 the budget stabilization fund , up to a maximum of one percent (1%) of the
37 actual general fund collections of the fiscal year just ending. The state
38 controller shall make the transfers in four (4) equal amounts during Sep-
39 tember, December, March and June of the next fiscal year.
40 (b) The amount of moneys in the budget stabilization fund shall not
41 exceed five percent (5%) of the total general fund receipts expenditures
42 for the fiscal year just ending.
43 (c) The state controller shall transfer moneys in the budget stabiliza-
44 tion fund in excess of the limit imposed in subsection (2)(b) of this sec-
45 tion to the general fund.
46 (3) If a majority of the membership of each house of the legislature
47 adopt a concurrent resolution requesting the amount of the transfer specified
48 in subsection (2) of this section be reduced, the state controller shall
49 reduce the amount of the transfer.
50 (4) Appropriations of moneys from the budget stabilization fund in any
51 year shall be limited to fifty percent (50%) after the fund balance has
1 reached five percent (5%) may be made in the event of state emergencies such
2 as revenue decreases or revenue shortfalls due to economic conditions. The
3 maximum amount that can be transferred from the fund is the amount required to
4 maintain expenditures as provided in section 67-8801, Idaho Code; any addi-
5 tional funds remain in the budget stabilization fund. Appropriations from the
6 budget stabilization fund can only occur upon concurrence of a majority vote
7 of all members present in each of the two (2) houses of the legislature.
8 SECTION 3. That Sections 57-814A and 67-6803, Idaho Code, be, and the
9 same are hereby repealed.
STATEMENT OF PURPOSE
A Tax and Expenditure Limit is an effective method to control the
growth of state government and promote fiscal responsibility.
Tax and Expenditure Limits restrain government and are a constant
reminder to lawmakers of the costs of extravagant fiscal
This Act calls for statutory provisions to constrain increases in
the maximum rate of annual state spending to yearly percentage
changes in the cost-of-living, population growth, and the average
percentage change in per capita personal income over the state's
prior three fiscal years. It creates an "Emergency Reserve Fund"
and governs appropriations from the fund. It amends the existing
"Budget Stabilization Fund." This regenerative fiscal limit will
create stability for bond ratings for the state. The Act calls
for taxpayer refunds of excess revenue, provides for emergency
exemptions, prevents cost shifting to local governments, and
limits taxes and expenditures at the local level.
The state budgeting process will shift from revenue forecasting
to expenditure limits based on yearly percentage changes of
actual numbers. It is estimated there would be a savings to the
general fund of $100,000 per year due to the elimination of one
Economist position in the Division of Financial Management, plus
Name: Rep. McGeachin
STATEMENT OF PURPOSE/FISCAL NOTE H 280