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SB 25B-001

Processes to Reduce Spending During Shortfall

2025 First Extraordinary Session Introduced by Judy Amabile and 28 co-sponsors

Authorizes the Governor to suspend state functions and impose General Fund spending cuts during revenue shortfalls, with mandatory JBC notification/hearings and thresholds.

Governor Signed
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Bill Summary · SB 25B-001

SB 25B-001 — Processes to Reduce Spending During Shortfall

Status: Governor Signed (effective Aug 28, 2025)
Introduced: Aug 21, 2025

Main purpose

To formalize interaction between the Governor and the Joint Budget Committee (JBC) when the state faces revenue shortfalls and the Governor proposes suspension/pauses of state functions or must implement General Fund spending reductions. The law clarifies triggers that require the Governor to develop a spending-reduction plan and requires prompt notification and hearings with the JBC.

Key provisions

  • Relocates and updates existing statutory authority for the Governor to suspend or discontinue state functions by executive order when revenues are insufficient (moved into §24-75-201.5).
  • Notification and hearings:
    • The Governor must promptly notify the JBC of any executive order issued under this authority.
    • The JBC must hold a meeting to discuss the Governor’s plan as soon as practicable and make reasonable efforts to meet before the first day of the calendar month following the order.
    • At meetings, the Governor and/or the Office of State Planning and Budgeting (OSPB) shall present the executive order or plan; the JBC may provide advice.
    • The JBC is not required to hold a second meeting if it already met under the statute for the same plan, but it may do so.
  • Required spending‑reduction triggers (final enacted thresholds):
    • A regular or interim OSPB/ Governor revenue estimate indicates state spending will dip into the General Fund reserve by the lesser of:
    • 3% of current‑year General Fund appropriations; or
    • 50% of the required reserve; OR
    • The projected year‑end reserve balance will be below $1 billion.
    • When triggered, the Governor must formulate, notify the General Assembly, present to the JBC, and promptly implement a plan to reduce General Fund expenditures using existing statutory procedures.
  • Protections/exceptions:
    • Proposed reductions may not reduce expenditures for the Judicial Department, Legislative Department, or elective officers other than the Governor.
    • Existing limits on capital construction fund authority remain governed by separate provisions.

Who is affected

  • Primary: Governor’s Office, OSPB, and JBC (increased coordination and hearings).
  • State agencies: potentially subject to suspension or spending reductions under the Governor’s executive order.
  • Legislative Department: may incur minimal increased per diem/travel costs when additional JBC hearings are required.
  • Judicial Department, Legislative Department, and other elected officers (other than the Governor) are protected from expenditure reductions under Governor plans.

Fiscal and procedural impact

  • Fiscal note (final): Minimal ongoing workload and minimal legislative travel/per diem costs; no appropriation required and no measurable change in state revenue or FTE.
  • The statutory implementation uses existing procedures (e.g., §24-2-102(4) and §24-50-109.5) for enacting spending reductions.
  • Effective Date: Took effect Aug 28, 2025 and applies to revenue estimates and executive orders on or after that date.

Sponsors & legislative action (high level)

Primary sponsors: Senators Judy Amabile and James Coleman; Representatives Julie McCluskie and Emily Sirota.
Key dates: Introduced Aug 21, 2025; passed both chambers (late Aug 2025); sent to Governor Aug 26; Governor signed Aug 28, 2025.

Compiled from official sources — confirm details with the bill’s official record.

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