HB990.DOC

SECTION 1. The legislature finds that predicting the future of the State's economic and financial growth is often an uncertain science. The legislature further finds that council of revenues general fund projections, used for both the development of the biennium budget and the six-year state program and financial plan, averaged an error of 5.54 percentage points from 2001-2013. Given the inexact nature of these projections, especially with the inherent difficulty with financial projections for dates farther out into the future, new approaches to this process should be explored to ensure that realistic and practical financial goals for the State are planned and implemented.

The six-year state program and financial plan, which is prepared by the office of the governor pursuant to section 37-69, Hawaii Revised Statutes, and continually updated and maintained using recent economic data for the State and counties, is often relied upon as a financial road map for the State. This program and financial plan, along with the biennium budget, represent two of the most used government indicators of state fiscal policy, planning, and economic health. Accordingly, the legislature finds that it would be in the best interest of state financial administration and the public if improvements were made to improve the accuracy and reliability of these indicators.

The legislature also finds that pursuant to Attorney General Opinion No. 97-1, there exists a statutorily implied, but otherwise unwritten, requirement for the proposed biennium budget to be a "balanced budget". The legislature finds that codifying this implied requirement may help to increase the transparency of state financial administration procedures and serve as a more visible indicator of the importance of ongoing responsible state financial policy.

The purpose of this Act is to:

(1) Address the difficulty in making accurate projections under the current six-year state program and financial plan by reducing the length of the program and financial plan to a shorter and more manageable projection period of four years; and

(2) Codifying the statutorily implied mandate that the proposed executive budget prepared by the governor is balanced.

SECTION 2. Section 10-14.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The budget, [~~six-year~~] four-year program and financial plan, and the variance report of the office of Hawaiian affairs shall be submitted by the board to the legislature and to each member thereof in accordance with the budget submission schedule specified for the governor in chapter 37 and shall contain the program information specified in that chapter that is applicable to the office of Hawaiian affairs. Not less than twenty days prior to the convening of each regular session of the legislature, the office of Hawaiian affairs shall submit to the legislature an accounting of the expenditures made in the prior fiscal year, by account code and budget program. By November 1 of each year preceding a legislative session in which a budget is to be submitted, the board shall provide written notification to the governor of the proposed total expenditures, by cost categories and sources of funding, and estimated revenues of the office of Hawaiian affairs for each fiscal year of the next fiscal biennium."

SECTION 3. Section 37-62, Hawaii Revised Statutes, is amended by amending the definition of "programming" to read as follows:

""Programming" means that process by which government's long-range program and financial plans are scheduled for implementation over a [~~six-year~~] four-year period and which specifies what programs are to be implemented, how they are to be implemented, when they are to be implemented, and what the costs of such implementation are."

SECTION 4. Section 37-65, Hawaii Revised Statutes, is amended to read as follows:

"[[]§37-65[]] Responsibilities of the governor. The governor shall direct the preparation and administration of state programs, program and financial plans, and budget. The governor shall evaluate the long-range program plans, requested budgets and alternatives to state objectives and programs; and formulate and recommend for consideration by the legislature the State's long-range plans, a proposed [~~six-year~~] four-year state program and financial plan and a proposed state budget."

SECTION 5. Section 37-66, Hawaii Revised Statutes, is amended to read as follows:

"[[]§37-66[]] Responsibilities of the legislature. The legislature shall:

(1) Consider the long-range plans, including the proposed objectives and policies, the [~~six-year~~] four-year state program and financial plan, and the budget and revenue proposals recommended by the governor and any alternatives thereto.

(2) Adopt programs and the state budget, and appropriate moneys to implement the programs it deems appropriate.

(3) Adopt such other legislation as necessary to implement state programs.

(4) Review the implementation of the state budget and program accomplishments and execution of legislative policy direction. Implementation of the state budget and program management, execution, and performance shall be subject to post-audits by the auditor who shall report the auditor's findings and recommendations to the legislature as provided in chapter 23."

SECTION 6. Section 37-67, Hawaii Revised Statutes, is amended to read as follows:

"[[]§37-67[]] Responsibilities of the department of budget and finance. The director of finance shall assist the governor in the preparation, explanation and administration of the state long-range plans, the proposed [~~six-year~~] four-year program and financial plan and the state budget. To this end, subject to this part, the director shall:

(1) With the approval of the governor, develop procedures and prescribe rules and regulations to guide such state agencies as may be assigned by the director the task of formulating and preparing the initial proposals with respect to long-range plans, program and financial plans, program budget requests and program performance reports and to assure the availability of information needed for effective policy decision-making.

(2) Assist such state agencies in the formulation of program objectives, preparation of program plans and program budget requests, and reporting of program performance.

(3) Coordinate, analyze and revise as necessary the program objectives, long-range plans, program and financial plans, program budget requests and program performance reports initially proposed or prepared by such state agencies and develop the state comprehensive program and financial plan, budget and program performance report.

(4) Administer its responsibilities under the program execution provisions of this part so that the policy decisions and budget determinations of the governor and the legislature are implemented to the fullest extent possible within the concepts of proper management.

(5) Investigate continuously the administration of the various agencies for the purpose of advising the governor and recommending to the governor, the legislature and the committees of the legislature concerning the duties of the various positions in these agencies, the methods of the agency, the standards of efficiency therein, and changes which in the director's judgment will produce greater effectiveness of programs and economy in the conduct of government programs and assist in the preparation of program and financial plans, budget requests and program performance reports.

(6) Provide the legislature and any member or committee of either house of the legislature with such documents and information as may be requested concerning the programs, budget, and fiscal and management operations of the State."

SECTION 7. Section 37-69, Hawaii Revised Statutes, is amended to read as follows:

"§37-69 The [~~six-year~~] four-year program and financial plan. (a) The governor shall prepare a state [~~six-year~~] four-year program and financial plan encompassing all state programs. Not fewer than thirty days before the legislature convenes in every odd-numbered year, the governor shall submit to the legislature and to each member thereof the [~~six-year~~] four-year program and financial plan. The program and financial plan shall be annually and continually updated and maintained. The program and financial plan, in general, shall contain:

(1) The state program structure;

(2) Statements of statewide objectives and program objectives;

(3) Program plans that describe the programs recommended to implement the statewide and program objectives and the manner in which the recommended programs are proposed to be implemented over the next [~~six~~] four fiscal years; and

(4) A financial plan that shows the fiscal implications of the recommended programs for the next [~~six~~] four fiscal years.

(b) The information contained in the program and financial plan shall be presented generally in the following manner:

(1) Information shall be displayed by programs, or groups of programs.

(2) Programs shall be appropriately crosswalked to expending agencies.

(3) Data shall be appropriately summarized at each level of the program structure.

(4) Program costs shall include all costs, including research and development, operating and capital, regardless of the means of financing except that the means of financing shall be expressly identified; all costs shall be displayed in the year of their anticipated expenditure, regardless of whether such costs have been authorized to be expended by prior appropriations acts or are authorized to be expended by existing law, or require new appropriations or authorizations.

(5) Cost data shall be presented in units of thousands of dollars or less.

(6) Comparative data for the last completed fiscal year and the fiscal year in progress shall be shown.

(1) Economic data for the State and the counties of the following kinds:

(A) Population: Including historical, current, and projected population count; population distribution by age and sex; estimated increases and decreases, including increases and decreases by immigration;

(B) Employment: Including magnitude of labor force by age and sex; labor force participation rates; employment by age and sex; industry and occupational surpluses and shortages; effects of government programs on employment rate;

(D) Wages and prices: Including wages by industry and occupational groups; prices for government procurement items; construction costs; cost of living index; price indices for components of personal consumption;

(E) Industry and business trends; and

(F) Effects of national economic and financial policies and conditions;

(2) Brief statements disclosing the basis upon which the revenue estimates in the plan were made, including for each specific tax and nontax revenue source:

(A) The previous projections for the last completed fiscal year and the fiscal year in progress;

(B) The variance between the projections and the actual or revised estimate, and the reasons for the variances;

(D) Yield projections of existing revenue sources and existing taxes at authorized rates;

(E) Assumptions made and methodology used in projections;

(F) Changes recommended; and

(G) Projected yields if changes are adopted; etc.;

(3) At the lowest level on the state program structure, for each program:

(A) The total actual program cost for the last completed fiscal year, the estimated cost for the fiscal year in progress, and the estimated cost for each of the next [~~six~~] four fiscal years; research and development, operating, and capital costs shall be included and the means of financing shall be identified. The number of personnel positions and all lease payments shall be shown for the program, identified by their means of financing;

(B) The program size indicators; the actual size attained in the last completed fiscal year, the estimated size for the fiscal year in progress, and the estimated size for each of the next [~~six~~] four fiscal years; and

(C) The effectiveness measures; the actual level of effectiveness attained in the last completed fiscal year, the estimated level of effectiveness for the fiscal year in progress, and the estimated level for each of the next [~~six~~] four fiscal years;

(4) Appropriate displays of paragraph (3)(A) and (C), at every level of the state program structure above the lowest level, by the major groupings of programs encompassed within the level. The displays of [[]paragraph[]] (3)(A) shall appropriately identify the means of financing and the number of positions included in the level;

(5) Financial summaries displaying the State's financial condition, actual for the last completed fiscal year, and estimated for the fiscal year in progress and each of the next [~~six~~] four fiscal years, including:

(A) A display of the programmed, total state expenditures, by cost categories, the total state resources anticipated from existing tax and nontax sources at existing rates, by resource categories, including the fund balance or deficit at the beginning of the fiscal year and bond receipts, and the resulting fund balance or deficit at the close of each fiscal year. Lease payments in each cost category shall be stated separately; and

(B) The changes proposed to the existing tax and nontax rates, sources or structure, and the estimated increases or reductions in revenues, the estimated cumulative increases or reductions, and the estimated fund balance or deficit in each of the next [~~six~~] four fiscal years as a result of such proposed changes. Proposals for changes in the existing tax and nontax rates, sources or structure shall be made in every case where the proposed, total state expenditures exceed the total resources anticipated from existing tax and nontax sources at existing rates.

Such financial summaries shall be prepared for the total state expenditures and resources and for the general fund and special fund portions thereof;

(6) A summary of the balance of each special fund, actual for the last completed fiscal year and estimated for the fiscal year in progress and estimated for each of the next [~~six~~] four fiscal years;

(7) A summary of the State's total bond fund required to carry out the recommended programs and the kinds of bonds and amounts thereof through which the requirements were met in the last completed fiscal year, are to be met in the fiscal year in progress, and are proposed to be met in each of the next [~~six~~] four fiscal years. The summary shall detail, for each fiscal year:

(A) Of the total bond fund requirements, the amount, by cost categories, requiring new bond issuance authorization and the kinds and amounts of bonds planned for issuance under such new authorizations;

(B) By bond categories, the total, cumulative balance of bonds authorized in prior years but unissued and the amount thereof proposed to be issued; and

(C) A recapitulation of the total bonds to be issued, including both new authorizations and prior authorizations, by bond categories;

(8) Separately for general fund tax revenues, special fund tax revenues, general fund nontax revenues, and special fund nontax revenues:

(A) By kinds of taxes or sources, the amount of revenue from existing, authorized taxes or sources at existing rates received in the last completed fiscal year and estimated to be received in the fiscal year in progress and in each of the next [~~six~~] four fiscal years;

(B) A summary of the proposed changes in the existing taxes or sources or rates, and the estimated increases or reductions in revenues in each of the next [~~six~~] four fiscal years resulting from such changes; and

(C) The total estimated revenues with and without the proposed changes in each of the next [~~six~~] four fiscal years; and

(9) A summary of the State's total payments due under financing agreements required to carry out the recommended programs and the kinds of financing agreements and amounts thereof through which the requirements were met in the last completed fiscal year, are to be met in the fiscal year in progress, and are proposed to be met in each of the next [~~six~~] four fiscal years. The summary shall detail, for each fiscal year:

(A) Of the total financing agreement requirements, the amount, by cost categories, requiring new financing agreement authorizations and the kinds and amounts of financing agreements planned for execution and delivery under such new authorizations;

(B) By cost category, the cumulative balance of financing agreements authorized in prior years but not executed and delivered and the amount proposed to be executed and delivered; and

(C) A recapitulation of the total financing agreements to be executed and delivered, including both new authorizations and prior authorizations, by cost categories.

(d) The program plans for the ensuing [~~six~~] four fiscal years shall more specifically include:

(1) At the lowest level on the state program structure, for each program:

(A) A statement of its objectives;

(B) Measures by which the effectiveness in attaining the objectives is to be assessed;

(D) A brief description of the activities encompassed;

(E) The program size indicators;

(F) The program size planned for each of the next [~~six~~] four fiscal years;

(G) A narrative explanation of the plans for the program. It shall contain, and in general be limited to, the following:

(i) A description of the kinds of activities carried out or unusual technologies employed;

(ii) A statement of key policies pursued;

(iii) Identification of important program or organizational relationships involved;

(iv) A description of major external trends affecting the program;

(v) A discussion of significant discrepancies between previously planned cost, effectiveness, and program size levels and those actually achieved;

(vi) Comments on, and an interpretation of, cost, effectiveness, and program size data over the upcoming budget period, with special attention devoted to changes from the current budget period;

(vii) Comments on, and an interpretation of, cost, effectiveness, and program size data over the four years of the planning period and how they relate to the corresponding data for the budget period; and

(viii) A summary of the special analytic study, program evaluation, or other analytic report supporting a substantial change in the program where such a major program change recommendation has been made;

(H) The full cost implications of the recommended programs, by cost categories and cost elements, actually experienced in the last completed fiscal year, estimated for the fiscal year in progress, and estimated for each of the next [~~six~~] four fiscal years. The means of financing shall be identified for each cost category. The personal services cost element and the lease payments cost element shall be shown separately; the cost elements of other current expenses, equipment, and motor vehicles may be combined. The number of positions included in the program shall be appropriately identified by means of financing;

(I) A recapitulation of subparagraph (H) for the last completed fiscal year, the fiscal year in progress and each of the next [~~six~~] four fiscal years, by means of financing grouped under each cost category. The number of positions included in any program shall be appropriately identified;

(J) An identification of the revenues generated in the last completed fiscal year and estimated to be generated in the fiscal year in progress and in each of the next [~~six~~] four fiscal years, and the fund into which such revenues are deposited;

(K) Details of implementation of each capital improvement project included in the total program cost, including:

(i) A description of the project, location, and scope;

(ii) The initially estimated, currently estimated, and final cost of the project, by investment cost elements and by means of financing;

(iii) The amounts previously appropriated by the legislature for the project, by cost elements and by means of financing specified in the acts appropriating the sums, and an identification of the acts so appropriating;

(iv) The costs incurred in the last completed fiscal year and the estimated costs to be incurred in the fiscal year in progress and in each of the next [~~six~~] four fiscal years, by cost elements and by means of financing; and

(v) A commencement and completion schedule, by month and year, of the various phases of the capital improvement project (i.e., land acquisition, design, construction, and occupancy) as originally intended, as currently estimated, and as actually experienced; and

(L) A crosswalk of the program expenditures, by cost categories and cost elements between the program and expending agencies for the next two fiscal years. The means of financing and the number of positions included in the program costs to be expended by each agency shall be specified; and

(2) Appropriate displays at every level of the state program structure above the lowest level. The displays shall include:

(A) A listing of all major groupings of programs included within the level, together with the objectives, measures of effectiveness, and planned levels of effectiveness for each of the ensuing [~~six~~] four fiscal years for each such major groupings of programs; and

(B) A summary of the total cost of each cost category by the major groupings of programs encompassed within the level, actual for the last completed fiscal year and estimated for the fiscal year in progress and for each of the next [~~six~~] four fiscal years."

SECTION 8. Section 37-70, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) If it is deemed more desirable, the program memoranda and the [~~six-year~~] four-year program and financial plan may be combined into a single document containing all the information required for each separate document."

SECTION 9. Section 37-71, Hawaii Revised Statutes, is amended to read as follows:

"§37-71 The budget. (a) Not fewer than thirty days before the legislature convenes in every odd-numbered year, the governor shall submit to the legislature and to each member thereof a budget that shall contain the program and budget recommendations of the governor for the succeeding two fiscal years. The budget, in general, shall contain:

(1) The state program structure;

(2) Statements of statewide objectives;

(3) The financial requirements for the next two fiscal years to carry out the recommended programs; and

(4) A summary of state receipts and revenues in the last completed fiscal year, a revised estimate for the fiscal year in progress, and an estimate for the succeeding biennium.

(b) The information contained in the budget shall be presented generally in the following manner:

(1) Information shall be displayed by programs or groups of programs.

(2) Program financial requirements shall be appropriately crosswalked between the programs and expending agencies.

(3) Data shall be appropriately summarized at each level of the program structure.

(4) Program costs shall include all costs, including research and development, operating and capital, regardless of the means of financing, except that the means of financing shall be expressly identified, and regardless of whether the expenditure of any sum was authorized by prior appropriations acts, is authorized by existing law, or requires new authorization, except that the amounts requiring new authorization shall be appropriately identified.

(5) Financial requirements shall be presented to the nearest dollar, omitting cents; and the summary of state receipts and revenues shall be presented to the nearest thousand dollars.

(6) The budget shall reflect the ensuing first two fiscal year program costs contained in the [~~six-year~~] four-year program and financial plan.

(1) At the lowest level on the state program structure, for each program:

(A) The total recommended expenditures, including research and development, capital and operating costs, by cost categories and cost elements for the ensuing biennium; the planned allocation of the total biennial request, by cost categories, and cost elements, between the two fiscal years of the biennium. The means of financing and the number of positions included in any cost category amount shall be appropriately identified;

(B) A summary showing means of financing the total recommended expenditures, those amounts requiring and those amounts not requiring legislative appropriation or authorization for spending in each fiscal year of the biennium;

(C) A crosswalk of the total proposed biennial expenditures between the program and expending agencies. The means of financing the number of positions and the lease payments included in any cost amount, and the net amount requiring appropriation or authorization shall be appropriately identified for each expending agency; and

(D) The proposed changes in the levels of expenditures, by cost categories, between the biennium in progress and the ensuing biennium, together with a brief explanation of the major reasons for each change. The reasons shall include, as appropriate, the following:

(i) Salary adjustments to existing positions of personnel;

(ii) The addition or deletion of positions;

(iii) Changes in the number of persons being served or to be served by the program;

(iv) Changes in the program implementation schedule;

(v) Changes in the actual or planned level of program effectiveness;

(vi) Increases due to the establishment of a program not previously included in the State's program structure;

(vii) Decreases due to the phasing out of a program previously included in the State's program structure; and

(viii) Changes in the purchase price of goods or services;

As appropriate, references to the program and financial plan shall be noted for an explanation of the changes. Notwithstanding the provisions of subsection (b)(5), the proposed changes in the levels of expenditures may be shown to the nearest thousand dollars;

(2) Appropriate summaries of paragraph (1)(A) and (C) immediately above at every level of the state program structure above the lowest level. Such summaries shall be by the major groupings of programs encompassed within the level. The summaries of paragraph (1)(A) shall identify the means of financing and the number of positions and the lease payments included in any cost category amount; and

(3) A summary listing of all capital improvement projects included in the proposed capital investment costs for the ensuing biennium. The listing shall be by programs at the lowest level of the state program structure and shall show for each project, by investment cost elements:

(A) The cost of the project;

(B) The amount of funds previously appropriated and authorized by the legislature; and

(C) The amount of new appropriations and authorizations proposed in each of the two fiscal years of the ensuing biennium and in each of the succeeding four years. The amount of the new appropriations and authorizations proposed shall constitute the proposed new requests for the project in each of the fiscal bienniums.

In every instance, the means of financing shall be noted.

(d) The summaries of the state receipts and revenues shall more specifically include:

(1) Financial summaries displaying the State's financial condition, to-wit:

(A) A display of the proposed, total state expenditures, by cost categories, the total state resources anticipated from existing taxes and nontax sources at existing rates, by resource categories (including the available fund balances or deficits and anticipated bond receipts), and the fund balance or deficit resulting therefrom for the biennium in progress, for the ensuing biennium, and for each of the two fiscal years of the ensuing biennium; and

(B) The changes proposed to the existing tax and nontax rates, sources, or structure, and the estimated cumulative increases or reductions, and the estimated fund balance or deficit in the ensuing biennium and in each of the two fiscal years of the biennium as a result of such proposed changes. Proposals for changes in the existing tax and nontax rates, sources, or structure shall be made in every case where the proposed, total state expenditures exceed the total state resources anticipated from existing tax and nontax sources at existing rates.

Such financial summaries shall be prepared for the total state expenditures and resources and for the general fund and special fund portions thereof;

(2) A summary of the balances of each special fund, actual for the last completed fiscal year and estimated for the fiscal year in progress and for each of the two fiscal years in the ensuing biennium;

(3) A summary of the State's total bond fund required to carry out the recommended programs and the kinds of bonds and amounts thereof through which such requirements are to be met in the biennium in progress and in each of the two fiscal years in the ensuing biennium. The summary shall detail for the biennium in progress and for each of the two years of the ensuing biennium:

(A) Of the total requirements, the amount, by cost categories, requiring new bond issuance authorization and the kinds and amounts of bonds planned for issuance under such new authorization;

(B) By bond categories, the total, cumulative balance of bonds authorized in prior years but unissued and the amount thereof planned to be issued; and

(C) A recapitulation of the total bonds, both new authorizations and prior authorizations, by bond categories, proposed to be issued;

(4) A tentative schedule by quarter and fiscal year of the amount of general obligation bonds and the amount of revenue bonds proposed to be issued in the ensuing fiscal biennium;

(5) A schedule of projected debt service charges for general obligation bonds outstanding at the time of the submission of the budget and to be issued by the close of the budget biennium in progress and the close of the ensuing budget biennium. The projection shall be separately stated for:

(A) Bonds currently outstanding;

(B) Bonds to be issued during the remainder of the fiscal biennium in progress and during the ensuing fiscal biennium; and

In each case, the projection shall be categorized into debt service to be paid directly from the general fund, debt service to be paid through reimbursements, and total debt service. The projection shall extend at least five years beyond the close of the ensuing fiscal biennium. An explanation shall be appended to the schedule, which shall include among other things, the amount of bonds to be issued during the fiscal year in progress and in each of the two fiscal years of the ensuing biennium, the maturities of the bonds to be issued, the method of retirement, and the interest rate assumed in the projection;

(6) A schedule of the current state funded debt, legal debt limit, and the legal debt margin, including the details thereof. In any budget which proposes appropriations for which the source of funding is general obligation bonds, the schedule shall include a declaration by the director of finance and computations showing that the total amount of principal and interest, estimated for such proposed appropriations and for all bonds authorized and unissued and calculated for all bonds issued and outstanding, will not cause the debt limit to be exceeded at the time of issuance;

(7) Separately for general fund tax revenues, special fund tax revenues, general fund nontax revenues, and special fund nontax revenues:

(B) A summary of the proposed changes in the existing taxes or sources or rates, and the estimated increases or reductions in revenues in each of the two years in the ensuing fiscal biennium resulting from such changes; and

(8) A summary of the State's total payments due under financing agreements required to carry out the recommended programs and the kinds of financing agreements and amounts thereof through which such requirements are to be met in the biennium in progress and in each of the two fiscal years in the ensuing biennium. The summary shall detail for the biennium in progress and for each of the two years of the ensuing biennium:

(B) By cost category, the cumulative balance of financing agreements authorized in prior years but not executed and delivered and the amount thereof proposed to be executed and delivered; and

(C) A recapitulation of the total financing agreements to be executed and delivered, including both new authorizations and prior authorizations, by cost categories.

(e) The proposed budget shall include:

(1) A statement of the percentage differences between the current biennium recommendations and the previous biennium appropriations for education programs. The information shall be displayed by programs or groups of programs, with corresponding amounts and percentage differences. If any component of an education program is added or removed, the governor shall provide an estimate of how the addition or removal affects the current biennium recommendations;

(2) A statement of the difference between the total amount proposed for the current biennium and the total amount expended in the previous biennium for education programs per pupil; and

(3) Other financial statements, information, and data that in the opinion of the governor are necessary or desirable in order to make known in all practical detail the programs, program plans, and financial conditions of the State.

As used in this subsection, "education programs" include instructional, personnel, transportation, facilities, facilities repair and maintenance, and other programs deemed appropriate by the department of education.

(f) The proposed budget shall contain an item to be known as the "contingent fund", which sum, upon approval by the legislature, shall be available for allocation by the governor during the ensuing fiscal biennium to meet contingencies as they arise.

(g) If it is deemed more practical, the [~~six-year~~] four-year program and financial plan and the budget may be combined into a single document containing all the information required for each separate document.

(h) The proposed budget shall not provide for projected expenditures in excess of projected revenues."

SECTION 10. Section 37-75, Hawaii Revised Statutes, is amended to read as follows:

"§37-75 Variance report. Not fewer than thirty days prior to the convening of each regular session of the legislature, the governor shall submit to the legislature and to each member thereof a report on program performance for the last completed fiscal year and the fiscal year in progress. In format, the report generally shall follow the fiscal requirements portion of the executive budget or budgets. The report shall include:

(1) At the lowest level of the program structure, for each program contained in the budget finally approved by the legislature for the last completed fiscal year and the fiscal year in progress:

(A) A comparison, by the operating and research and development cost categories, of the budgeted expenditures and the actual expenditures for the last completed fiscal year and the budgeted expenditures and the estimated expenditures for the fiscal year in progress;

(B) A comparison, for the operating and research and development cost categories, of the budgeted expenditures and positions authorized and the actual expenditures and positions filled in the last completed fiscal year and a comparison of the budgeted expenditures and the number of positions authorized for the fiscal year in progress and the actual expenditures and number of positions filled in the first three months of the fiscal year in progress and the estimated expenditures and number of positions expected to be filled in the remaining months of the fiscal year in progress;

(C) The program size indicators and a comparison of the program size anticipated and the size actually realized in the last completed fiscal year and the program size anticipated and the size estimated for the fiscal year in progress;

(D) The effectiveness measures and a comparison of the level of effectiveness anticipated and the level actually attained in the last completed fiscal year and the level of effectiveness anticipated and the level estimated for the fiscal year in progress; and

(E) A narrative explanation of the significant differences for the last completed fiscal year in each of the comparisons made in subparagraphs (A), (B), (C), and (D), including an explanation of the basis upon which the original estimates were made and the reasons why the estimates proved accurate or inaccurate, and a statement of what the actual experience portends for the future of the program in terms of costs, size, and effectiveness;

provided that expenditure amounts in the comparisons shall be shown to the nearest thousand dollars;

(2) Appropriate summaries at each level of the state program structure for each major grouping of programs encompassed therein, showing:

(A) A comparison of the total budgeted expenditure and the total actual expenditure for the last completed fiscal year and the total budgeted expenditure and the total estimated expenditure for the fiscal year in progress; provided that the expenditure amounts shall be shown to the nearest thousand dollars;

(B) The effectiveness measures and a comparison of the level of effectiveness anticipated and the level actually attained in the last completed fiscal year and the level of effectiveness anticipated and the level estimated for the fiscal year in progress; and

(C) A narrative explanation summarizing the major reasons for the differences in the comparisons made for the last completed fiscal year in subparagraphs (A) and (B); and

(3) A narrative explanation of the significant variations in capital improvement costs; provided that capital improvement project variances shall be referenced to the [~~six-year~~] four-year program and financial plan, which shall contain the information specified in section 37-69(d)(1)(K)."

SECTION 11. Section 37-76, Hawaii Revised Statutes, is amended to read as follows:

"§37-76 Publication. The state [~~six-year~~] four-year program and financial plan, the budget and the variance report shall be printed with a reasonable number of copies for public distribution."

SECTION 12. Section 37-78, Hawaii Revised Statutes, is amended to read as follows:

"§37-78 Schedule of implementation. The governor shall submit to the legislature:

(1) At the regular session of 1975, and every odd-numbered year's session thereafter, the program memoranda described in section 37-70[.];

(2) At the regular session of 1975, and every odd-numbered year's session [~~thereafter,~~] preceding the regular session of 2017, the governor's proposed state budget and six-year program and financial plan[.]; and

(3) At the regular session of 2017, and every odd-numbered year's session thereafter, the governor's proposed state budget and four-year program and financial plan."

SECTION 13. Section 37-111, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There shall be a council on revenues which shall prepare revenue estimates of the state government for the fiscal year in progress and for each of the ensuing fiscal years of the [~~six-year~~] four-year state program and financial plan. The council shall report the estimates and revisions thereto to the governor and the legislature each June 1, September 10, January 10, and March 15. The council shall revise and update such estimates if it determines that such revisions are necessary or upon request of the governor or the legislature."

SECTION 14. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 15. This Act shall take effect on January 1, 2017.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	990
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII