State Budget

An appropriation is a legislative allocation of money from a specific fund for a specific time period. This is a budget item, not an accounting item. In the State Budget Process, this is a self-balancing set of accounts, similar to funds, which are segregated for specific activities.

A fund is a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources which are segregated for the purpose of carrying on specific activities.

For budgetary purposes, the General Fund of the state receives those revenues of the State not required to be deposited in other funds. General Fund revenues are obtained from the payment of state taxes and from federal and non-tax revenue sources. Major tax revenues to the General Fund include the individual income tax, corporate income tax, sales/use tax, and certain other taxes and revenue.

The Economic Emergency Fund is separate from the General Fund of the State and the balance in the fund is not considered part of the General Fund. The monies in the fund do not revert to the General Fund, unless and to the extent the fund exceeds the maximum balance. The maximum balance of the fund is the amount equal to 2.5% of the adjusted revenue estimate for the fiscal year. If the amount of moneys in the Iowa Economic Emergency Fund is greater than the maximum balance, the excess is required to be transferred to the General Fund. The moneys in this fund may be appropriated by the General Assembly for emergency expenditures. However, starting in Fiscal Year 2012, there is a standing appropriation from the fund to the Executive Council to pay for performance of duty claims approved by the Executive Council. The balance in the Economic Emergency Fund may be used in determining the cash position of the General Fund of the State for payment of state obligations. Interest or earnings on moneys deposited in the Fund are credited to the Rebuild Iowa Infrastructure Fund.

The Cash Reserve Fund is separate from the General Fund of the State and the balance in the fund is not considered part of the General Fund. The moneys in the Cash Reserve Fund cannot be transferred, used, obligated, appropriated or otherwise encumbered except as provided under Iowa Code section 8.56. Interest or earnings on moneys deposited in the Fund are credited to the Rebuild Iowa Infrastructure Fund. The balance in the Fund may be used in determining the cash position of the General Fund of the State for payment of state obligations. The maximum balance of the fund is the amount equal to 7.5% of the adjusted revenue estimate for the fiscal year. If the amount of moneys in the Cash Reserve Fund is greater than the maximum balance, the excess is required to be transferred first to the GAAP Retirement Account and if not needed in this account, then transferred to the Economic Emergency Fund.

The base budget is used as teh base for new fiscal year requests. It is typically a percentage of prior year enacted budgets, or other base period (such as Governor’s recommendation for the prior year) with some adjustments for changes in funding, item vetoes, and similar items.

Decision packages are requests above or below 100% of current year funding level by appropriation or other amount as determined by the department.

A budget request is the budget at the stage in the budget cycle representing the department request. It is also known as the department request.

A budget recommendation is the budget at the stage in the budget cycle representing the Governor's recommendation to the Legislature. It is also known as Governor Recommendation or Gov Rec.

The legislated budget is the budget at the stage in the budget cycle representing the appropriation bills passed by the Legislature. It is also known as the Appropriated Budget.

The adopted budget is the budget that will be passed to the financial system for initial set up of new year. It is the budget used for control purposes. It accounts for salary projections and line-item vetos. It is also known as the spending plan or enacted budget.

Actuals are actual expenditures and revenues associated with past or current fiscal years.

Departments may request revisions to allotments, appropriation transfers, or supplemental appropriations. The Department of Management approves revised allotments within an appropriation, subject to the Governor’s review. The Governor and the Department of Management approve all appropriation transfers. The Governor and the General Assembly act on supplemental appropriation bills in a manner similar to original appropriations. Appropriations lapse at fiscal year-end and unobligated balances revert to the state treasury, unless otherwise provided.

The General Fund expenditure limitation is 99% of the adjusted appropriable revenue estimate. The adjusted revenue estimate is the appropriable revenue estimate for the General Fund following fiscal year as determined by the Revenue Estimating Conference. Adjustments may be made by adding any new revenues which may be considered to be eligible for deposit into the General Fund subtracted by any revenues which are considered not eligible for deposit into the General Fund, that are determined to happen after the Revenue Estimating Conference meets. “New revenues” means moneys which are estimated to be received by the State due to increased tax rates or changes in tax structures and increased or newly created fees. For expenditure limitation purposes, only 95% of the new revenues may be added. Reductions to the General Fund estimate due to tax rate or structure changes and reduced or eliminated fees are reduced at 100% of the amount.

All claims presented for payment must be approved by the appropriate department. The expenditure must be for a purpose intended by law and a sufficient existing and unexpended appropriation balance must be available. Budgetary controls are incorporated into state accounting systems. The annual budget of the state is established through separate appropriations to individual departments for specific purposes, special outlays and/or operating expenditures. Budget control is essentially maintained at the department level except for certain grant and aid programs where control is maintained at the program level.