It’s complicated. And always controversial. The state operating budget is the annual spending plan for state government. It allocates limited resources among a bevy of public services and obligations. Each spring the governor and the Legislature work on a budget for the fiscal year that begins on July 1. By law, the state’s annual spending is not supposed to exceed the state’s annual revenue, although creative methods sometimes warp these limitations.
Forty-five days before the regular spring legislative session, the governor’s office, working with the commissioner of administration and the executive agencies, presents a budget plan for the upcoming fiscal year. This plan reflects the policies and priorities of the governor, who attempts to bend the will and resolve of the Legislature to agree. The House Appropriations Committee holds hearing and eventually crafts its own version of the state budget, the main portion of which is contained in legislation called House Bill 1. The budget then moves onto the House floor and eventually to the Senate Finance Committee and the full Senate. Both chambers must agree on a budget plan for it to pass, and the governor has line-item veto powers.
There are many types of financial figures in the mosaic of state budgeting. Two are of central importance. The most obvious is the budget based on total state funding, which is supported by state taxes and fees, federal dollars, college tuition and other resources. Each year’s budget contains a spending amount from the state general fund, which depends on state taxes. Both figures are useful measures. The general fund is basically the state’s revenue minus dedicated spending, such as fuel taxes for the transportation trust fund and other special fees and college tuition. The state’s general fund provides the critical dollars for K-12 education, direct support to colleges and matches for federal health care money. Many of the core operations of the state – such as elections, social services, prisons, general government, the courts and the Legislature – depend on the state general fund.