Legislative Operating Budgets: Format and Procedures

Separation of powers--a fundamental principle of American government--mandates, among other requirements, that each branch of government develop and maintain its own operating budget. This enables each branch to operate independently from the other, hire professional staff and allocate resources according to its priorities. Important checks govern this process: budget review, deliberation, enactment and oversight. Such checks help attain the goals of public budgeting, which include accountability, transparency, efficiency and proper accounting controls. Although these principles guide the budgets for each branch of government, this discussion focuses on the legislature's budget.

Legislative Budget Procedures in 16 States

State legislatures are diverse in the ways they develop, manage and oversee their operating budgets. Of the 16 states reviewed for this report, 10 operate with consolidated budgets and six with separate ones for various legislative entities (e.g., House, Senate, central nonpartisan staff). In some states, budget development, management and control are centralized, while in others, the processes are very decentralized. More detail on the legislative budget procedures in 16 states is provided in Table 1, Legislative Budget Processes in Selected States.

Because of the differences and nuances associated with internal operations and procedures, it can be difficult to assign Legislatures to clear-cut categories. They generally fall, however, into four categories regarding their operating budgets:

Consolidated budget, centralized management and control (e.g., Maine);
Consolidated budget, decentralized management and control (e.g., New Hampshire);
Three separate budgets--House, Senate, central nonpartisan staff agency (e.g., Iowa);
Separate budgets for multiple legislative entities (e.g., Arizona).

In many states, there are legislative commissions or other entities that fall within the Legislature's jurisdiction and budget (e.g., Maine's State House and Capitol Park Commission). This discussion does not address those types of entities, instead focusing only on legislative operating budgets.

Consolidated Legislative Budgets

States with consolidated legislative budgets can differ considerably in their degree of centralization in budget development and management.

In very centralized systems, the Legislature typically designates a central staff manager (e.g., the staff director for the Legislative Management Committee or Legislative Council) to coordinate the budget development process and administer the final budget. A very centralized system can be challenging because legislators or staff directors may not be entirely clear on their spending discretion. For such a system to be effective, the Legislature must establish clear guidelines for appropriate uses and amounts of legislative spending. This is especially important for term-limited Legislatures where there is frequent leadership turnover. Each chamber and legislative office also must be held accountable for decisions that affect the consolidated budget. Under a very centralized system, final budget oversight and responsibility typically reside with the Legislative Council (or other joint leadership management team), so any deviations from previously approved spending levels need pre-authorization from this oversight group.

In less centralized structures, the Legislature delegates budget development, management and control to specific entities within the House, Senate and specified legislative agencies. A decentralized budget management system is most effective when the separate line items within the consolidated budget are strictly adhered to and honored. Each entity is expected to operate within its own line item for all expenses, including those for administration, staffing, travel and so forth. When successfully executed, this structure provides budget managers with flexibility, discretion and accountability (if they are held responsible for their respective line items within the unified budget).

Three Separate Budgets

Many states have chosen to establish distinct and separate budgets for each chamber and their central non-partisan legislative staff operations. Separate budgets typically take two different forms: 1) entirely separate budgets that are transmitted to the executive for inclusion in the state budget bill as distinct appropriations requests, or 2) distinct budgets loosely organized under an overall legislative umbrella account. In either case, separate budgets typically require the addition of staff to manage and administer those budgets, leading to deliberate duplication of certain functions (e.g., accounting) within the legislative branch.

Under separate budgets, once amounts are appropriated, the three principal budget managers (e.g., House Clerk, Senate Secretary and central staff director) have considerable budget flexibility and discretion over their budgets. There is no need to coordinate with others on budget execution (although they may coordinate on other budget-related matters). There also is clear accountability for the effective management of the three budgets. Budget transparency is enhanced because spending levels and staff size clearly are identified within each separate budget. In this type of system, clear oversight responsibility typically is assigned to each budget. Usually that responsibility would fall to the Speaker, Senate President and executive director of the central staff agency (or their designees).

Multiple Legislative Budgets

Several state legislatures operate under very decentralized budgeting structures. In these states, each legislative agency is responsible for developing, managing and controlling its own budget. Agency budget managers (usually the executive directors of the agencies) have significant latitude in organizing and managing their operations, including decisions about staffing levels, travel and professional development and training.

Under this system, relevant legislative committees have specific oversight responsibility for each agency (e.g., a joint fiscal committee for the legislative fiscal office). Under this scenario, the committee chair or full committee reviews and approves budget and staff requests. Individual agency requests may or may not be reviewed by leadership (via a joint management committee) before advancing to the governor for inclusion in the budget. In such systems, each agency typically employs one or more staff devoted to budget management and administration (e.g., accounts receivable).

Posted October 2006.
See additional information on legislative budget procedures.
Email statebudget-info@ncsl.org for more information.
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