Purpose

• Add a requirement to include the budget effects of fraud in the state’s budget forecast. The bill changes how the forecast is prepared and who is involved in the process, so fraud impacts are explicitly analyzed alongside revenues and expenditures.

Main Provisions

• Forecast parameters (Subd. 1a, added):

  • Assume continued enforcement of current laws.
  • Use reasonable estimates of growth in the national and state economies and in affected populations.
  • Estimate revenues from all sources allowed by current law.
  • Estimate expenditures for all legally required obligations and those driven by inflation or other unpredictable factors outside the legislature’s control.
  • Do not include assumptions about future authorizations of state general obligation bonds.
  • Require the forecast to address the budgetary impacts of fraud (fraud impact) as described in Subd. 1k.

• Forecast variables (Subd. 1b, amended):

  • When determining inflation, bond-related debt service, investment income, and other expenditure-related variables, the commissioner must consult with the chairs and lead minority members of the Senate Finance Committee and House Ways and Means Committee, and legislative fiscal staff.
  • This consultation must occur at least three weeks before the forecast is released.
  • The commissioner must inform these committee members and staff of any changes from the previous forecast no later than two weeks before release.
  • The same consultation and notice requirements apply to changes in the forecast variables related to inflation, debt service, bond impact, and investment income (as they affect the expenditure portion).

• Fraud impact (Subd. 1k, added in Sec. 3):

  • The forecast must estimate the budgetary impacts of fraud committed against state programs.

• Fraud-related forecasting process (Sec. 2 and Sec. 3 notes):

  • In addition to general forecast variables, the commissioner must consult with the chairs and lead minority members of the Senate Finance Committee and Taxes Committee, the House Ways and Means Committee and Taxes Committee, and legislative fiscal staff about fraud impacts.
  • The same timing requirements apply: at least three weeks before release for consultation, and notice of changes at least two weeks prior.

Significant Changes to Existing Law

• Adds explicit requirement to forecast the budgetary effects of fraud within the state’s budget forecast (Subd. 1k).
• Expands the consultation and notification process for forecast variables to include additional committees (Taxes Committees) and to formalize fraud impact discussions.
• Clarifies that bond authorizations are not assumed in expenditures related to state bonding.

Implementation Notes

• The forecast will now explicitly quantify how fraud affects state revenues and expenditures, and it will require coordinated input from multiple legislative committees and fiscal staff well before forecast release.
• The changes aim to improve transparency about fraud risk and its financial consequences on state programs and overall budgeting.

Relevant Terms fraud, fraud impact, budget forecast, forecast parameters, forecast variables, inflation, debt service, state bonding, general obligation bonds, investment income, forecast release, revenue, expenditures, state programs, committees (Senate Finance Committee, Senate Taxes Committee, House Ways and Means Committee, House Taxes Committee), legislative fiscal staff, consultation, lead minority members, budgetary impacts.