Wonky Word Wednesdays: Base Budget

Aug 20, 2014

We are starting to get really wonky this week with base budget. After today, you should be able show off at the water cooler next time people start talking about the Legislature or Montana’s budget.

Here we go.

The Legislative Fiscal Division (LFD) defines base budget as the resources needed for the operation of state government that provide for expenses in the current biennium (remember biennium is how Montana budgets – every two years). Basically, it is the level of on-going funding that the legislature approved in the last biennium. I talked to LFD yesterday to get a clearer picture of what they mean and this is the equation they gave me.

(Total expenditures in the last Fiscal Year) – (non-ongoing funds) = base budget

So you may ask, what are “non-ongoing” funds? Well, let me tell you. There are three types of “non-ongoing" funds. 

  1. One-Time-Only Funds – often called OTO. These are funds that the previous legislature designated as only being appropriated one time. In your personal lives it would be like purchasing a new toaster. It is a one-time expense and doesn’t need to be included in your ongoing family budget.
  2. Statutory Appropriations. These include things like payments to local governments and payments to pension plans. These funds are included in a different part of Montana law and so do not need to be included in House Bill 2 or in the base budget.
  3. Budget Amendments. Last week, we talked about the unique situations where money can be invested outside of the legislative session and without legislative approval. An example is federal grants. In situations like these, Montana law allows these funds to be spent, but a report is given to the Interim Legislative Finance Committee.

The base budget is the starting point for how the Legislature builds its budget. It is the foundation. The last Legislature’s base budget was $1.577 billion, and that was based off of FY12’s expenditures. The next base budget for our upcoming Legislature will be released on September 1 and will be based on FY14 expenditures. After the base budget is established, the Legislature must look at what adjustments might be needed to continue current level of government services, and it must decide what else it wants to invest in, like any new programs or new spending. Next week, we will get into exciting topics like “present-law adjustments” and “new proposals” which are those additional investments. Don’t you feel smarter already?

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Montana Budget & Policy Center

Shaping policy for a stronger Montana.

MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.