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The Operating Budget

What is the Operating Budget?
Per AS 37.07.020-060, the Governor is required to prepare an operating budget for the following fiscal year, which includes each State agency's goals, objectives, plans, and budget requests as detailed in AS 37.07.050. An appropriation bill covering the succeeding fiscal year's operating budget plan must be submitted to the legislature on the 15th day of December, just prior to each regular legislative session. The operating budget bill must be delivered to the Rules Committee of each house before the fourth legislative day prior to the regular legislative session. The legislature reviews the proposed operating budget and makes decisions necessary to support state services.

What is an operating appropriaton?
An operating appropriation is statutory authorization to spend a specific amount of funds for a stated purpose. Appropriations to specified State agencies are often subdivided into allocations in the "numbers section" of an appropriation bill. Other, more specific, operating appropriations are stated in the "language section" of a bill. Funds may not be spent without an appropriation made by law.

What is the process for developing the operating bill?
State agencies prepare their budgets during late summer and fall of each year and submit them to the Governor's Office of Management and Budget (OMB) for review. After OMB reviews agency requests for accuracy, the Governor then reviews the requests, sets budget amounts, and submits the operating bill and relevant budget documents to the House Rules Committee by December 15. The House and Senate Rules Committees introduce companion operating bills (HB & SB) which receive their first reading and are referred to the House and Senate Finance Committees, respectively.

The finance committees appoint subcommittees to work on each department's budget in which public meetings are held to discuss on the Governor's proposals. The finance subcommittees then submits their recommendations to the full finance committees for further deliberation. Each finance committee works on and finalizes the budget by department and moves a committee substitute bill out of the committee. Though work usually progresses simultaneously, the House typically acts on the bill first, then submits its version to the Senate.

How does the operating bill get amended?
Statutorily, the Governor may submit budget amendments through the 30th day of session. However, amendments from the Governor can be accepted any time during the budget process as long as the operating bill has not moved from the Finance Committee. These amendments may or may not be considered during the deliberative process while finalizing both bodies' versions of the operating budget bill. Finance Committee members also submit their amendments to be voted on during this process then a final bill from each body is sent to their respective floors. Once the operating bill is in the House and Senate floors, amendments can take place during the second reading of the bill to be voted on. Then, the bill can be voted on as amended prior to moving into Conference Committee. Legislative Finance and Legislative Legal Services are available to assist in the development of amendments.

What happens to the operating bill after it is passed from the Finance Committee?
The operating bill is then read on both the House and Senate floors, amended, and voted on. The Senate version of the operating bill is then sent back to the House for concurrence. Typically, the House does not concur, but asks the Senate to recede from their amendments. The Senate usually does not recede, and a conference committee is appointed.

The Conference Committee is made up of select members from each of the bodies' finance committees. The committee works out a compromise version of the budget by voting on indifferences between the two bills prior to sending a finalized version to the House and Senate floors for the final vote. No amendments are allowed to the Conference Committee bills. After the bill's approval by both bodies, the bill is sent to the Governor, who has 20 working dates (excluding Sundays) to review the bill and exercise line item veto power, if desired. The bill then becomes law and is typically effective on the first day of a fiscal year, unless otherwise stated in the appropriation bill.