Joint Budget Committee. Tier 2 transfers from the operational account of the severance tax trust fund occur in 3 installments: July 1, January 4, and April 1. Current law provides that in case of revenue shortfalls, as projected in the revenue estimate prepared by the staff of the legislative council, the January and April installments are to be proportionally reduced. The bill changes the automatic proportional reduction mechanism to commence with the July installment so that the effect of a proportional reduction to the entire transfer is spread over 3 installments instead of 2.
The bill specifies that the 15% reserve be used to offset any proportional reduction as follows:
One-third of the reserve for the July installment;
One-third of the reserve for the January installment; and
Any remaining reserve for the April installment.
The bill allows the April installment to include an increase to offset proportional reductions made in the July and January payments if revenue estimates indicate that the amount of severance tax revenues are sufficient to fund such increased installments and still meet the reserve requirement in current law.
The bill also reduces the required tier 1 operating appropriations portion of the total reserve calculation for the 2012-13 fiscal year by $1 million.
