The annual budget is a declaration of the Commonwealth’s priorities—a statement on how to allocate the limited collective resources that exist. In a recession, governments have fewer resources but the demand on public services is greater, which can make the budget development process challenging.
The operating budget enables the day-to-day functioning of state government. It pays for recurring expenditures for programs and services, employee salaries, utilities, supplies, insurance, and equipment repairs.
Developing the annual operating budget is a lengthy process that involves all three branches of government, hundreds of agencies, thousands of stakeholders and millions of residents. The Governor presents his budget recommendation to the Legislature. Then, the House of Representatives and the Senate will each separately review the Governor’s budget and develop their own recommendations. The House and Senate work together to reconcile their budgets and send the final bill to the Governor.
Fiscal year is a commonly used term to describe annual budgeting period. State fiscal year 2011 extends from July 1, 2010 to June 30, 2011. The budget process begins in the fiscal year preceding the fiscal year for which the budget will take effect. For example, planning for the fiscal year 2011 budget began in fiscal year 2010.
The annual budget process varies from state to state. Here in Massachusetts, the State Constitution and Massachusetts General Laws outline and govern the budgeting process. The Massachusetts Constitution requires the Governor to present a budget to the Legislature within 3 weeks of the beginning of the new session in January. State finance law (Chapter 29 of the Massachusetts General Laws) requires the Legislature and the Governor to approve a balanced budget for each fiscal year. In other words, the Commonwealth cannot spend more than it receives in revenue. Further, during the fiscal year, the Governor may approve no supplementary appropriation bills that would result in an unbalanced budget.
Funds for the Commonwealth’s programs and services must be appropriated by the Legislature each fiscal year. The final budget is a law known as the General Appropriations Act (GAA). The GAA specifies how agencies and departments may spend their appropriations and allocates specific dollar amounts authorized for a specific period and purpose. Agencies are not allowed to spend more than what has been appropriated to them in the GAA and supplemental budgets.
Fiscal Year 2011 Planning |
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Department Planning & (July-September 2009) |
Department and agency staff review their policies and programs, develop future plans, and submit budget requests to their respective Cabinet secretary for review. The Cabinet Secretaries evaluate the requests and develop a Secretariat-wide budget. Secretariats have been assigned a spending cap by the Executive Office of Administration and Finance (A&F). |
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Formal Budget Request (October-December 2009) |
Secretariats and agencies submit spending plans to A&F. Independents, Constitutional officers and the Judiciary also submit spending plans. The consensus revenue number is announced. The Executive and Legislative Branches jointly agree and commit to a single tax revenue projection for the next fiscal year. Both the Governor’s budget and the Legislature’s budget will be based off this number. A&F, under the direction of the Governor’s Office, prepares the Governor’s budget recommendations. For this year’s budget, each Secretariat held hearings across the state to solicit input on programs and services under their jurisdiction from the general public. This input was considered by agencies and A&F in the development of their spending plans. |
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Governor's Budget (January 27, 2010) |
The formal budget begins as a bill that the Governor submits to the Legislature. According to the Constitution of the Commonwealth of Massachusetts, the Governor must propose a budget for the next fiscal year within 3 weeks after the Legislature convenes, which this year translates into the 4th Wednesday of January. In odd years, the Governor’s budget is called House 1 (H.1) and in even years it is called House 2 (H.2). Accordingly, the fiscal year 2011 budget will be filed on January 27, 2010. More detailed information regarding the specific budget development process for fiscal year 2010 can be found in the “Expenditure Development” section. |
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House Budget (February-April 2010) |
The House Ways and Means Committee reviews the Governor's budget and then develops its own budget recommendation. Individual members of the House of Representatives submit budget amendments which are then debated on the House floor. Once debated, amended and voted on by the full House, it becomes the final House budget bill and moves to the Senate. |
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Senate Budget (February-May 2010) |
The Senate Ways & Means Committee reviews both the Governor's and House budgets and develops its own recommendation. Individual senators submit budget amendments which are then debated on the Senate floor. Once debated, amended and voted on, it becomes the final Senate's budget bill. |
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Conference Committee Budget (June 2010) |
House and Senate leadership assign members to a "conference committee" to negotiate the differences between the House and Senate bills. The conference committee report can only be approved or rejected - no additional amendments can be made. |
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Vetoes (June 2010) |
Once approved by both chambers of the Legislature, the Governor has ten days to review it. The Governor may approve or veto the entire budget, or may veto or reduce particular line items or sections, but may not add anything. If the Governor does not act within ten days, the conference committee bill becomes law. |
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Overrides (June 2010) |
The House and Senate may vote to override the Governor's vetoes. Overrides require a two-thirds roll-call vote in each chamber. |
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Final Budget (June - July 2010) |
Once the Governor signs the bill with his recommended vetoes, it becomes the budget for the fiscal year. The final budget is also known as the General Appropriations Act (GAA) or "Chapter (# to be determined) of the Acts of 2010." The new fiscal year 2011 begins on July 1, 2010. |