Federalism

Priority-Based Budgeting: Protecting Taxpayers

By Patricia Cuadros

Back in October 2011, Governor Jerry Brown vetoed a performance audit bill from the California state legislature, calling it the “siren song of budget reform”. Soon after, he issued an executive order to rescind previous initiatives that promoted government transparency online. It is interesting that in the same year, online transparency measures were passed in Nevada and the issue is under consideration in Arkansas.

The reality is that more state legislators are trying to implement aspects of priorities-based budgeting to fix economic woes without raising taxes. States are generating sizeable surpluses, such as Utah at $128 million and Michigan at over $400 million. Governors in Iowa, Florida, Georgia and South Carolina have expressed their intent to implement budget initiatives emphasizing performance and achieving goals with taxpayer money. Georgia Governor Nathan Deal recently declared these measures “will bring a new level of accountability to state government and verify that taxpayer dollars are being spent to meet the priorities of Georgians!”

The momentum is not surprising, given figures released by the Congressional Budget Office last month on the federal deficit. CBO reported a national deficit of $1.30 trillion for 2011 and projects similar results for 2012, marking the fourth trillion-dollar deficit in a row. Taxpayers look to the states for relief, a message that has been received. According to Americans for Tax Reform, 1,278 state legislators have signed a pledge to protect the American taxpayer from tax increases. Many state legislators realize that old methods of tax-and-spend will not create jobs and increase revenue, a point noted in Rich States, Poor States, an ALEC study about states and their economic competitiveness.

Last year, ALEC released its State Budget Reform Toolkit to help state legislators tackle the challenges of responsible budgeting. The task is difficult because every state has different needs and priorities to address. However, the important questions are the same:

  • What is the role of government?
  • What are the essential services the 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?

Priority-based budgeting requires legislators to increase efficiency through controlling costs, streamlining activities of agencies, and eliminating waste without tax increases. Program performance is reviewed, determining which programs continue to receive funding. This method differs markedly from baseline budgets, which consist of a base amount and subsequent yearly increases to account for inflation and additional agency needs that may be unnecessary. In priority-based budgeting, any additional spending has to be justified through reports before it can be approved. The focus shifts from an approach centered upon “business-as-usual” to one that requires accountability to the taxpayers. Contrary to being “a siren”, priority-based budget reform can help legislators answer the calls for responsible government.

To view a copy of the State Budget Reform Toolkit, please visit www.alec.org/toolkit.


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