2003 - 2004 LEGISLATURE
March 11, 2003 - Introduced by Joint Legislative Council. Referred to Joint
Committee on Finance.
1An Act to renumber
16.002 (1); to amend
13.093 (2) (a), 16.40 (3) (title), 16.50 2
(7) (b), 16.518 (title), 20.875 (1) (a) and 25.60; to repeal and recreate
16.46 (9); 3
and to create
13.95 (1m) (c), 16.002 (1), 16.40 (3m), 16.50 (8), 16.518 (4) and (5), 4
20.877, 25.17 (1) (fr) and 25.64 of the statutes; relating to: the budget
5stabilization fund, the generally accepted accounting principles deficit
6reduction fund, the general fund deficit based on generally accepted accounting
7principles, and making appropriations.
Analysis by the Legislative Reference Bureau
This bill is explained in the Notes provided by the Joint Legislative Council in
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
Joint Legislative Council prefatory note: This bill was introduced at the
recommendation of the Joint Legislative Council's Special Committee on Improving
Wisconsin's Fiscal Management.
The provisions in the bill relate to the state's budget stabilization fund and the
state's general fund deficit based on generally accepted accounting principles (the GAAP
Budget Stabilization Fund
Under current law, the budget stabilization fund is funded by a transfer each fiscal
year from the general fund of an amount equal to 50 percent of the difference between
the amount of tax revenues projected to be deposited in the general fund during the fiscal
year and the amount of these revenues actually deposited in the general fund during the
fiscal year. This transfer is not made when the balance in the budget stabilization fund
budget on June 30 of the fiscal year is at least equal to 5 percent of the estimated general
fund expenditures during the fiscal year. In addition, the amount of the transfer is
reduced by an amount necessary to ensure that the general fund balance after the
transfer is equal to the statutory reserve required for that fiscal year.
Currently, moneys in the budget stabilization fund may be used for any purpose
specified by the legislature. The governor may also request that moneys in the fund be
used to correct an imbalance between projected general fund revenues and authorized
expenditures when the Department of Administration (DOA) secretary determines that
previously authorized expenditures will exceed revenues in the current or forthcoming
fiscal year by more than 0.5 percent of the estimated general fund appropriations for that
The bill does the following to the budget stabilization fund:
• Transfers from the general fund to the budget stabilization fund each fiscal year
an amount equal to the statutory reserve for the fiscal year until the budget stabilization
fund reaches a balance of 5 percent of the estimated expenditures from the general fund
during the fiscal year.
• Specifies that moneys in the budget stabilization fund are reserved for a transfer
from the fund to the general fund to provide state revenue stability during periods of
below-normal economic activity when actual general fund revenues are 98 percent or less
of the estimated general fund revenues published in the biennial budget act.
Currently, DOA prepares a state financial statement based on GAAP under its
general authority. The bill explicitly directs DOA to prepare this statement and identifies
it as the comprehensive annual financial report (CAFR).
The bill creates a GAAP deficit reduction fund. The bill:
• Transfers to the fund from the general fund each fiscal year that a transfer is not
made to the budget stabilization fund an amount equal to the statutory reserve for the
fiscal year, until the unreserved balance of the general fund in the CAFR for the previous
year is no longer a negative amount.
• Specifies that moneys in this fund may only be used to increase any unreserved
balance of the general fund reported as a negative amount in the most recent CAFR.
The bill also creates a mechanism to address the worsening of the state's GAAP
deficit. In particular, the bill directs the governor, when the unreserved general fund
balance in the most recent CAFR is a larger negative amount than the unreserved
general fund balance reported in the CAFR for the previous year, to recommend
legislation to eliminate this increase.
Currently, the biennial state budget report prepared by the secretary of DOA under
the direction of the governor must contain a number of specified types of information,
including the effect of the recommendations in the biennial budget bill or bills on the
GAAP deficit. The bill clarifies this requirement by removing ambiguous text and
simplifying this requirement.
The bill creates 2 other provisions to provide the legislature additional information
on the effects of legislation on the state's general fund balance based on GAAP. These
• Direct the Legislative Fiscal Bureau (LFB) to identify, where feasible,
recommendations in specified versions of a biennial budget bill that may have a
significant impact on the GAAP general fund balance.
• Expand the fiscal estimate process to include an estimate of the effects of a bill,
other than an executive budget bill, on the GAAP general fund balance.
In general, the bill takes effect on the day after publication. The expansion of the
fiscal estimate process in the bill takes effect 9 months after publication. The transfer
by the bill of moneys in the general fund to the budget stabilization fund and the GAAP
deficit reduction fund and the duty of the governor to recommend legislation to address
any worsening of the GAAP deficit take effect on July 1, 2005.
SB65, s. 1
13.093 (2) (a) of the statutes is amended to read:
(a) Any bill making an appropriation and any bill increasing or 3
decreasing existing appropriations or state or general local government fiscal 4
liability or revenues shall, before any vote is taken thereon by either house of the 5
legislature if the bill is not referred to a standing committee, or before any public 6
hearing is held before any standing committee or, if no public hearing is held, before 7
any vote is taken by the committee, incorporate a reliable estimate of the anticipated 8
change in appropriation authority or state or general local government fiscal liability 9
or revenues under the bill, including to the extent possible the impact of such changes
10on the general fund balance in the most recently published comprehensive annual
11financial report, as defined in s. 16.002 (1), and
a projection of such changes in future 12
biennia. For purposes of this paragraph, a bill increasing or decreasing the liability 13
or revenues of the unemployment reserve fund is considered to increase or decrease 14
state fiscal liability or revenues. Except as otherwise provided by joint rules of the 15
legislature, such estimates shall be made by the department or agency 16
administering the appropriation or fund or collecting the revenue. The joint survey 17
committee on retirement systems shall prepare the fiscal estimate with respect to 18
the provisions of any bill referred to it which create or modify any system for, or make 19
any provision for, the retirement of or payment of pensions to public officers or
employees. When a fiscal estimate is prepared after the bill has been introduced, it 2
shall be printed and distributed as are amendments.
SB65, s. 2
13.95 (1m) (c) of the statutes is created to read:
(c) The legislative fiscal bureau shall prepare a report identifying, 5
where feasible, recommendations in each version of the biennial budget bill or bills 6
that may have a significant impact on the general fund balance in the most recently 7
published comprehensive annual financial report, as defined in s. 16.002 (1).
SB65, s. 3
16.002 (1) of the statutes is renumbered 16.002 (1m).
SB65, s. 4
16.002 (1) of the statutes is created to read:
"Comprehensive annual financial report" means a financial 11
statement prepared under s. 16.40 (3m).
SB65, s. 5
16.40 (3) (title) of the statutes is amended to read:
(title) Prepare budgetary basis annual financial statement.
SB65, s. 6
16.40 (3m) of the statutes is created to read:
16.40 (3m) Prepare annual financial statement based on generally accepted
Prepare at the end of each fiscal year not later than 17
December 31, a financial statement for the state in accordance with generally 18
accepted accounting principles as promulgated by the governmental accounting 19
SB65, s. 7
16.46 (9) of the statutes is repealed and recreated to read:
The estimated impact of the recommendations in the biennial budget 22
bill or bills on the general fund balance in the most recently published comprehensive 23
annual financial report.
SB65, s. 8
16.50 (7) (b) of the statutes is amended to read:
(b) Following such notification, the governor shall submit a bill 2
containing his or her recommendations for correcting the imbalance between 3
projected revenues and authorized expenditures, including, if the imbalance is
4caused by actual general fund revenues being 98% or less of estimated general fund
5revenues under s. 20.005 (1) as published in the biennial budget act or acts,
recommendation as to whether moneys should be transferred from the budget 7
stabilization fund to the general fund. If the legislature is not in a floorperiod at the 8
time of the secretary's notification, the governor shall call a special session of the 9
legislature to take up the matter of the projected revenue shortfall and the governor 10
shall submit his or her bill for consideration at that session.
SB65, s. 9
16.50 (8) of the statutes is created to read:
16.50 (8) Deficit increase
. (a) If following the publishing of any 13
comprehensive annual financial report the secretary determines that the 14
unreserved balance of the general fund in that report is a larger negative amount 15
than the unreserved balance of the general fund in the comprehensive annual 16
financial report for the previous fiscal year, the secretary shall immediately notify 17
the governor, the presiding officers of each house of the legislature, and the joint 18
committee on finance of the difference.
(b) Following such notification, the governor shall submit a bill containing his 20
or her recommendations for eliminating the difference, so that the unreserved 21
balance in the most recently published comprehensive annual financial report, as 22
adjusted by the governor's recommendations, is no less than the unreserved balance 23
in the comprehensive annual financial report for the previous fiscal year. If the 24
comprehensive annual financial report that contains the larger negative unreserved
balance was published in an even-numbered year, the governor may include his or 2
her recommendations in an executive budget bill introduced under s. 16.47 (1m).
SB65, s. 10
16.518 (title) of the statutes is amended to read:
(title) Transfers to the budget stabilization fund and the cash
5building projects generally accepted accounting principles deficit