The bill introduces a zero-based budgeting (ZBB) system for state agencies, beginning in fiscal year 2026-27. Here’s a breakdown of the bill's provisions:
Key Provisions:
Implementation of Zero-Based Budgeting:
Fiscal Year 2026-27: The Department of Revenue, Department of Education, and Department of Transportation must begin using zero-based budgeting. This means that each year, all expenses (both existing and new) must be justified from scratch, and every function must be analyzed for its needs and costs.
Fiscal Year 2027-28 and Beyond: All state agencies within every principal department are required to adopt zero-based budgeting when submitting their budget requests.
Training and Support:
In fiscal year 2026-27, the Office of State Planning and Budgeting must provide zero-based budgeting training and resources to state agencies. This includes developing and distributing digital materials and offering virtual training sessions to help agencies implement the method.
In fiscal year 2027-28 and beyond, the office is tasked with submitting an annual report to the General Assembly evaluating the effectiveness of the zero-based budgeting process.
Public Accessibility and Oversight:
Public Access: Budget requests that follow the zero-based budgeting method must be made publicly available on the General Assembly’s website.
State Auditor’s Role: The State Auditor will conduct periodic financial audits to ensure compliance with the zero-based budgeting requirements.
Purpose:
To promote greater accountability and efficiency in state government budgeting by ensuring that every expenditure is justified annually, rather than assuming previous budgets are automatically continued.
To provide transparency by making all budget requests publicly available and subject to review by the state auditor.
This reform seeks to enhance fiscal responsibility by requiring a detailed evaluation of each agency's budget request, rather than simply building upon prior years' budgets.
Summary
In state fiscal year 2026-27, the bill requires the department of
revenue, the department of education, and the department of transportation to implement a budgeting method in which all expenses, both existing and new, must be justified for the fiscal year and every function is analyzed for its needs and costs (zero-based budgeting) when submitting a budget request. In state fiscal year 2027-28 and each state fiscal year thereafter, the bill requires all state agencies in all principal departments to implement zero-based budgeting when submitting a budget request.
In state fiscal year 2026-27 and each state fiscal year thereafter, the
office of state planning and budgeting is required to develop and digitally distribute to state agencies information related to zero-based budgeting training and to provide virtual sessions for the purpose of training state agencies to implement zero-based budgeting. In state fiscal year 2027-28 and each state fiscal year thereafter, the office of state planning and budgeting is required to submit to the general assembly an annual report detailing the effectiveness of zero-based budgeting.
All budget requests that implement zero-based budgeting must be
publicly accessible on the general assembly's website, and the state auditor is required to conduct periodic financial audits to ensure state agencies' compliance with zero-based budgeting requirements.
