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AN ACT

RELATING TO STATE BUDGETS; PROVIDING FOR A BIENNIAL BUDGET

PILOT PROJECT TO DETERMINE THE EFFICACY OF BIENNIAL

BUDGETING.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. BIENNIAL BUDGET PILOT PROJECT.--

A. For the purposes of this section:

(1) "committee" means the legislative

finance committee;

(2) "department" means the department of

finance and administration;

(3) "division" means the state budget

division of the department;

(4) "evaluation team" means the joint

biennial budget pilot project staff evaluation team; and

(5) "participating agency" means an

executive agency with an annual budget of less than five

million dollars ($5,000,000).

B. The "biennial budget pilot project" is created

as a four-year project to determine whether biennial

budgeting enhances the state's budget process. The biennial

budget pilot project shall commence with preparation of the

fiscal year 2008 budget and conclude at the end of fiscal

year 2011. The biennium beginning July 1, 2007 shall be the

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2008-2009 biennium.

C. The department shall administer the biennial

budget pilot project in consultation with the committee

through the evaluation team; provided, however, that before

commencing the pilot project, the evaluation team shall

submit a plan for administering the project to the

department, the committee and the New Mexico legislative

council.

D. For the duration of the biennial budget pilot

project, the requirements of Sections 6-3-6, 6-3-7, 6-3-10,

6-3-11, 6-3-18, 6-3-19, 6-3-20, 6-3A-5, 6-3A-6, 6-3A-7,

6-5-10 and 6-10-4 NMSA 1978 shall be implemented for

participating agencies on a biennial basis rather than an

annual basis as specified in current statutory provisions.

In particular, the biennial budget process shall operate as

follows for participating agencies:

(1) on or before June 15 of each

even-numbered year, the division shall send to each

participating agency biennial budget forms that provide for

the collection of the information in Sections 6-3-18 and

6-3A-7 NMSA 1978 for the biennium last completed, the current

biennium and the succeeding biennium;

(2) on or before June 15 of each

odd-numbered year, the division shall send to each

participating agency supplemental budget forms to be

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submitted by participating agencies that plan to request a

deficiency appropriation or supplemental appropriation for

the remainder of the biennium. The division shall prescribe

the information required for each deficiency appropriation or

supplemental appropriation request;

(3) each participating agency shall fill out

the forms provided in Paragraphs (1) and (2) of this

subsection in the manner prescribed by the division.

Complete budget forms shall be returned to the division and

to the committee no later than September 1 of each year.

Participating agencies shall not fill out or complete any

budget forms in odd-numbered years when the agencies do not

plan to request a deficiency appropriation or a supplemental

appropriation for the remainder of the biennium;

(4) the governor shall include biennial

budget recommendations for participating agencies in the

governor's budget submission to the committee and to each

member of the legislature pursuant to Section 6-3-21 NMSA

1978 in odd-numbered years and shall include supplemental and

deficiency recommendations for participating agencies in the

governor's budget submission to the committee and to each

member of the legislature pursuant to Section 6-3-21 NMSA

1978 in even-numbered years;

(5) each participating agency shall, on or

before May 1 of each odd-numbered year, submit to the

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division a budget for each of the ensuing two fiscal years in

the form prescribed by the division and containing

information as may be prescribed by law or by rule of the

division. No expenditures shall be made by any participating

agency for the biennium covered by the budget until the

budget has been approved by the division;

(6) the division, subject to the approval of

the secretary of finance and administration, may provide

rules for the periodic allotment of funds that may be

expended by a participating agency. The expenditures of a

participating agency for the first eighteen-month period of

each biennium shall be limited to three-fourths of the

appropriation or approved budget, whichever is less, for that

biennium; provided that this restriction does not apply to

those agencies whose operations are more efficiently measured

by periods other than a fiscal year and further provided that

the department may also allow expenditure of more than

three-fourths of the appropriation or approved budget for

those agencies planning major expenditures for capital

outlay; and

(7) unexpended or unencumbered balances in

reverting funds remaining at the end of a fiscal year ending

in an even-numbered year shall not revert, and all

unreserved, undesignated fund balances in reverting funds and

accounts as reflected in the central financial reporting and

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accounting system as of June 30 of the second year of the

biennium shall revert by September 30. The department may

adjust the reversion within forty-five days of release of the

audit report for that biennium. The director of the

financial control division of the department may modify a

reversion if the reversion would violate federal law or rules

pertaining to the supplanting of state funds with federal

funds or other applicable federal provisions.

E. The evaluation team may exempt agencies from

participation in the pilot project. After two years of the

biennial budget pilot project, the evaluation team shall

recommend to the New Mexico legislative council, the

committee and the governor whether the biennial budget

process should be expanded to include additional state

agencies.

F. The department and the committee shall appoint

the "joint biennial budget pilot project staff evaluation

team", consisting of two staff members of the division and

two staff members of the committee. Members of the

evaluation team shall perform duties enumerated in this

subsection in addition to their usual responsibilities with

no additional compensation. The evaluation team shall:

(1) determine base-line data for each

participating agency's performance measures; the number of

budget analysts employed by the agency, job titles of other

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agency personnel who devote time to preparing annual budget

proposals and the number of hours spent by each in budget

preparation; the estimated cost of printing, postage,

supplies and other operating expenses used in preparing

annual budget proposals; the overtime or compensatory time

paid to employees to prepare annual budget proposals; the

number of budget hearings attended by agency personnel; the

number, types and amounts of budget adjustment requests by

each budget program; and the number of supplemental and

deficiency requests by each budget program;

(2) develop comparisons of base-line data

and comparable agency data during the biennial budget pilot

project;

(3) if funding becomes available, contract

with the national conference of state legislatures, the

national association of state budget officers or any other

external consultant or organization for an external

evaluation of the biennial budget pilot project;

(4) regularly report and consult with a

subcommittee of the committee appointed for the purpose of

advising the evaluation team and overseeing the biennial

budget pilot project; and

(5) provide an annual report on the biennial

budget pilot project to the New Mexico legislative council,

the committee and the governor by August 1 of each year.

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G. Annual reports shall include, at a minimum,

comparison of participating agencies' performance measures and

budget preparation staffing and costs before and during the

pilot project and changes in budget staffing; and

deliberations in the department and committee. The evaluation

team shall provide a final report in August 2010 with

recommendations regarding continuation or expansion of

biennial budgeting as well as modifications in the biennial

budgeting process.