Say So Long to State Budget Deficits

Wednesday, September 10, 2003

By Bob Williams and Lynn Harsh
Fox News

Years of increased government spending followed by a national recession means most state budgets are in the red. Tax increases or big cuts in public safety services are the solutions advanced by most lawmakers.

Neither course of action is necessary...if your state officials are willing to take a deep interest in the budget process and offend some high-powered agency directors and lobbyists (search) in the process.

Debating, writing and approving a state budget is the primary task legislators must accomplish because the budget drives all policy. The governor and state agencies can’t spend even one dollar without legislative approval. This important and difficult task has become even harder as state resources grow scarce.

Conventional budget-writing tactics call for adjusting new budgets for inflation (search), adding caseload increases, splicing in a few new initiatives and calling it good for another legislative session. If revenue drops, that same conventional thinking recommends three budget-balancing options: 1) raise taxes 2) cut important services or 3) some combination of both.

Another way exists: It’s called priority-based budgeting (search), something most of us do at home, but a tactic government officials rarely consider. Priority-based budgeting means state officials and citizens must first determine what they believe are government’s core functions. While this may seem like an elementary step, it is seldom taken before legislative appropriations are made.

Gaining control of a state budget (search) means the following questions must be answered:

--What is the role of government?

--What are the essential services government must provide to fulfill its purpose?

--How will we know if government is doing a good job?

--What should all of this cost?

--When cuts must be made, how will they be properly prioritized?

Only by carefully considering the proper role of government can legislators and governors do a good job protecting individual rights (search) while providing essential services to taxpayers in an efficient, cost-effective manner. This is not an “anti-government” philosophy; rather it is ensuring that what government is supposed to do, it will do well.

Furthermore, great savings can be obtained if legislators and agencies do not spend time determining how a particular function can be performed better, faster and cheaper if it is not a core function of government to begin with.

This method of budgeting may not seem revolutionary to taxpayers, but it is very revolutionary in government circles. Nonetheless, in 2003, Washingtonstate became a poster child for the budget revolution. Facing a potential budget shortfall of more than $2 billion and realizing that tax increases were politically unacceptable, Washington state’s Gov. Gary Locke (search) and his fiscal team used a budget prioritization approach and developed what they call Priorities of Government (search) (POG). They first identified the estimated revenue for the next budget cycle and then prioritized state spending into what they determined were ten core government functions.

As might be expected, disagreement exists over the governor’s priorities, but it gave the legislature a sensible and objective place to begin the debate. Locke and his budget team asked the right questions, developed a logical process to determine the answers, and prioritized spending accordingly. They created a new set of tools that can and should be used by both political parties as a starting point for healthy discussion. The result: Washington state lawmakers passed a budget balanced within existing priorities without making drastic budget cuts.

Cash-strapped states will find that a process like POG greatly increases spending efficiency and economy.

Of course, the different political and economic climates in the states mean timelines for adopting such a model will vary. This is perfectly understandable, but a caution is in order: For a model like POG to work, it must be applied to the entire budget, not only the carefully selected, politically manageable portions.

When deciding the core functions of government, the following questions should be asked:

--Is this a proper function of government, or is it best left to the individual (family) or charitable organization?

--If intervention is necessary, is it best left to local government which is closer to the people?

--Does it further increase taxes, regulations or the size of government? If so, is this justified?

Many lawmakers are unwilling to determine core functions of government because 1) it is hard work and may take years to get right 2) fierce philosophical battles must be waged with the end result being a compromise that may please no one and 3) most lobbyists and other special interests hate it (because it’s new and less pliable once adopted).

Still, the ultimate responsibility of lawmakers is to look taxpayers in the eye and honestly report to them that government is functioning excellently within its boundaries and its means. Starting the governing process with sound core principles ensures this possibility.

Bob Williams is president of the Evergreen Freedom Foundation, a state-based policy research organization. Lynn Harsh is the foundation's executive director and senior education analyst. This is an excerpt from the EFF study The Stewardship Project.