Forty-seven states have begun their formal budget process for fiscal year 2018. Three states have already enacted a budget for fiscal year 2018 (Kentucky, Virginia, and Wyoming). This begins an intensive process throughout state government which culminates in the release of the Governor’s Executive Budget. There are three primary steps for building the Governor’s Executive Budget: 1) issuance of budget instructions to state agencies; 2) submission of agency requests to Governor’s Office; and 3) presentation of Governors’ budget recommendation to the legislature. Let’s take a closer look at each step in the budget process.
One of the first steps in the budget process for state governments is the issuance of budget instructions and guidance to state agencies. State agencies then prepare their budget requests in accordance with those budget instructions.
The budget instructions serve several purposes. The most basic purpose is to provide a uniform mechanism for presenting financial and descriptive information for prior years, the current budget year, and the next year or two years (for 17 biennial budget states). The budget instructions and accompanying directives from state budget offices also typically include a set of rules and policy guidance that agencies use to develop their budget requests. These rules can address both technical and policy elements of budget requests: how to organize budget request information, providing uniform assumptions on the treatment of certain cost elements (such as compensation and fringe benefits), setting some limits on certain types of budget requests, and setting expectations based on the state’s larger fiscal environment.
The calendar for communicating budget instructions to state agencies varies from April, 2016 to September, 2016. Most states transmitted their budget instructions to state agencies by August, 2016.
The next step is submission of agency requests and the vast majority of states require agencies to submit their budget requests by the end of October. In many instances much discussion between state budget offices and agencies has occurred prior to and during the development of agency budget requests. The state budget offices’ discussions, questions, inquiries, and analyses of agency budget requests gets much more intensive upon receipt of the agency budget requests.
All of this effort is leading up to Governors presenting their budget recommendation to their state legislatures and the public at-large. The schedule for these “Executive” budget recommendations are set by statute for most states and by the state constitution for a few. The most common timeline for the release of the Governors’ budget recommendations is mid-December to early February, but a few are earlier or later than that.
Over the next several months, budget analysts across the country will be busy analyzing requests and crafting funding levels and policies, performing the tasks critical to the operation of state government. The results from Governors’ recommended budgets for fiscal 2018 will be presented in NASBO’s Spring 2017 Fiscal Survey of States as well as a future edition of NASBO’s Proposed Executive Budget Summaries.
NASBO collected data on this subject from state budget offices in the fall of 2014 as part of the Budget Processes in the States report.