A. The Governor shall report to the General Assembly regarding the proposed implementation of this section.

B. If any state program is authorized or mandated by a federal statute, no state funds for the program shall be appropriated unless:

1. The state program is necessary to protect the public health, safety, and welfare;

2. The state program is necessary to implement the federal statute;

3. The operation of the state program benefits the state by providing a cost-effective implementation of the federal statute by the Commonwealth, local government, and business; or

4. The state program benefits the Commonwealth, local government, and business by providing a cost-effective means to meet a higher public health, safety, and welfare standard established under state law.

C. Each agency making a budget request for state appropriations for a state program authorized or mandated by federal statute shall include in its budget request citations to the federal constitutional provisions and the state constitutional or statutory provisions that authorize the state program. The Governor shall review the budget request and determine whether additional state statutory authority is required in order to implement the state program and shall make recommendations to the General Assembly.

D. The General Assembly, after receiving a recommendation from the Governor, shall determine whether a state program is necessary and whether federal constitutional authority and state constitutional or statutory authority exist. The General Assembly shall review toward the interpretation of the federal statute found in federal regulations, guidelines, or policies. Appropriation of state funds for a state program shall constitute the General Assembly's determination that the state program is necessary and that federal constitutional authority and state constitutional or statutory authority exist. State appropriations may not be based solely on requirements found in regulations, guidelines, or policies of a federal agency.

E. Prior to recommending to the General Assembly any budget for an agency that is charged with implementing federal mandates, the Governor shall request that the agency provide information to the Department of Planning and Budget regarding any monetary savings for the state and any reduction in regulatory burdens on the public and on local governments that could be or have been achieved through the development of state policies that meet the intent of the federal statute but do not necessarily follow all applicable federal regulations, guidelines, or policies. The agency shall also provide advice to the Department of Planning and Budget regarding any changes in law that are necessary to provide the agency with the authority to implement state policies in such a way as to create additional savings or greater reductions in regulatory burdens. The Department of Planning and Budget shall review and compile the information received from agencies pursuant to this section and shall include recommendations in the executive budget.

F. For purposes of this section, "state program" shall not include any portion of a program that is funded with nontax or nonfee revenue, or both, which state authorities are required to administer in a trusteeship or custodial capacity and that are not subject to appropriation by the General Assembly.

1995, c. 604, § 2.1-799; 2001, c. 844.