Legislature(1999 - 2000)
02/08/1999 09:00 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
GENERAL SUBJECT(S): Overview: Office of Management and Budget
Fiscal Year 1999 Cash Flow
The following overview was taken in log note format. Tapes and
handouts will be on file with the Senate Finance Committee through the
21st Legislative Session, contact 465-2618. After the 21st
Legislative session they will be available through the Legislative
Library at 465-3808.
Time Meeting Convened: 9:00 A.M.
Tape(s): SFC-99 #23, Side A (000 - 537)
PRESENT:
X
Senator Parnell
X
Senator Adams
X
Senator Torgerson
X
Senator P. Kelly
X
Senator Donley
X
Senator Green
X
Senator Leman
Senator Phillips
Senator Wilken
ALSO PRESENT:
ANNALEE MCCONNELL, Director, Office of Management and Budget; JACK
KREINHEDER, Senior Policy Analyst, Office of Management and Budget;
ROSS KINNEY, Deputy Commissioner, Department of Revenue; BOB POE,
Commissioner, Department of Administration; SENATOR TIM KELLY;
SENATOR DRUE PEARCE; DAVID TEAL, Director, Division of Legislative
Finance; aides to committee members and other legislative members.
LOG
SPEAKER
DISCUSSION
O00
CO-CHAIR PARNELL
Convened Senate Finance Committee meeting.
He noted members present and that Annalee
McConnell would be giving an overview this
morning.
047
ANNALEE MCCONNELL
Director, Office of Management and Budget
was invited to join the committee. She
introduced Ross Kinney and said he would be
explaining the handout provided members.
069
ROSS KINNEY
Deputy Commissioner, Department of Revenue
was invited to join the committee. He
explained the handout provided by Office of
Management and Budget.
Re: Cash receipts/Disbursement, Executive
Up-date: 1 February 1999.
Required disbursements because of the
budget.
Difference between revenue and receipt; not
a budgetary situation.
Flow of revenue into the State and
disbursements out. Dealing with two
issues: page 2, summary of cash flow,
actual and projected.
Spreadsheet divided into two sections:
general funds and constitutional budget
reserve fund.
154
BOB POE
Commissioner, Department of Administration
was invited to join the committee. He
explained the general fund section and
noted the available cash balance at the
end of each month. Borrowed only when
needed to keep around $150 million cash
balance. In February borrowed last $50
million, which brought us now to cap.
194
Explained school debt, occurred February
through June.
201
Other fund transfers that also occur
February through June.
201
Payroll
214
Borrowing needed above $700 million cap as
noted right hand corner of handout.
221
Cash outflows that will help to alleviate
some of the pain.
239
Additional borrowings above $700 million
cap.
SENATOR TORGERSON
Asked if any money was brought forward from
prior years?
MR. KINNEY
Referred to incoming revenue. Explained
how this is listed under general funds,
July and August (spreadsheet) in response
to Senator P. Kelly. Does not actually
disburse all money during the year as it is
appropriated. They move expenditures
forward as they need cash to deal with.
Liabilities that they incur each year in
July were explained. Realized as
expenditures and revenue the prior year.
279
MR. KINNEY
How they deal with cash flow.
284
MR. KINNEY
Additional borrowings. Difference between
expenditures. Recorded expenditures beyond
revenues. $700 million from the CBR fund.
307
MR. KINNEY
Difference between revenues and
expenditures. Will not know until about
November or December.
317
SENATOR TORGERSON
Asked if they were spending the
appropriations on something else?
MR. KINNEY
No.
SENATOR TORGERSON
Does the spreadsheet show this money?
MS. MCCONNELL
Explained how this process worked. Does
not actually take cash and put it in
different place. It was just a phasing of
the cash flow situation reflected in their
budgetary authority. Explained the flow of
monies in and out. Will not overspend the
monies appropriated in the budget.
SENATOR TORGERSON
Not convinced money for capital projects
not taken and spent on other projects.
MR. KINNEY
Reasserted the money was not taken for
other projects. Explained investment
returns. Wanted to keep monies in CBR fund
as long as possible in order to realize
maximum returns. Have authorization to
spend money but do not move it until they
realize the project.
He explained the utilization of cash to
meet obligations.
380
CO-CHAIR PARNELL
Asked Mr. Kinney to clarify dates. He
wanted to know cash available dates and
wanted to have this specific.
386
MR. KINNEY
Referred to bar graph on page one of the
OMB handout. This should explain it
sufficiently. Sometime in April it comes
up to limits. Cash flow basis is critical
about March 1. Referred to an historical
view of cash flow (he held the only chart
up for the committee members to see).
Somewhere around first part of April is
critical for general funds.
CO-CHAIR PARNELL
Asked further clarification.
MR. KINNEY
Explained the rule has been used for years
and years.
CO-CHAIR PARNELL
Perhaps the rule should be reexamined.
MR. KINNEY
Must insure they have good handle on
information flow and expectation on what is
coming in and what is going out. There is
a volatility in revenue as a result of oil
prices. An adequate cushion is needed for
expenditures. Their crystal ball is not
accurate.
MS. MCCONNELL
No reason to change from the $150 million
balance. Have tried to reevaluate the
rule.
CO-CHAIR PARNELL
Memorandum of understanding with Office of
Management and Budget. Is this contingency
still in place and adopted by the Governor?
MS. MCCONNELL
Have not changed this memorandum. Other
steps can be taken to transfer funds to the
general fund. Refers to the "sweep
provision".
Revenue anticipation; can borrow against
this. Previously had been no limit on the
CBR and could always borrow against it.
Had been no specific limit and had never
been in issue.
Now have different operating environment.
(refers to spread sheet, page 2) In past
years have had more chance of paying back
CBR.
SENATOR ADAMS
Asked if this included supplemental
requests or unforeseen expenditures?
MR. KINNEY
Responded to Senator Adams. (pause)$1.8
million for expenditures.
SENATOR ADAMS
Past legislation had a benchmark of $700
million?
Should that particular language be deleted
or another amount be put in?
CO-CHAIR PARNELL
Should pose this question to the
Administration as to what they are going to
do.
MS. MCCONNELL
Explained they could just remove the $700
million and put in language as used in
prior years. Would be preferable not to
have specified amount. Would not want to
get into situation after session if there
was a problem with lower oil prices.
$ll.58 was the expected oil price.
She further explained the limit on the CBR
draw. They will live within the caps as
established by the Legislature.
CO-CHAIR PARNELL
Last year gave a good indication as to how
this matter was going to be treated.
Republicans put upper limit; with price of
oil today now faced again with same
situation. Would rather put specific limit
rather than giving Administration a blank
check.
MS. MCCONNELL
Perception of the public may be a blank
check. Hoped press will report that there
is not a blank check as the Administration
cannot spend more than is appropriated by
the Legislature.
SENATOR LEMAN
Would the Governor really have come to the
table to discuss reductions if there was
not the cash flow problem? He felt this
was a good thing to happen.
MS. MCCONNELL
There was not a limit to the CBR in 1998.
Limit was not the driving force into the
Governor coming to the table.
531
CO-CHAIR PARNELL
Concluded comments. There was a short
recess for a change of co-chair to begin
the bill hearing.
SENATE FINANCE COMMITTEE
LOG NOTES
02/08/99
SFC-99 -5- 2/8/99
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