State Budgets

Senate Budget Committee Looks to the States for Guidance on Responsible Budgeting

This week the Senate Budget Committee, chaired by U.S. Senator Mike Enzi from Wyoming held an important hearing entitled “Fixing a Broken Budget and Spending Process: Lessons from States.” The witnesses for the hearing included Wyoming State Senator Eli Bebout and John Hicks of the National Association of State Budget Officers (NASBO).

Chairman Mike Enzi began the hearing by calling states the laboratories of democracy and insisted that the federal government, therefore, should seek to adopt the budget and spending processes that have proved successful in these 50 laboratories. The Congressional Budget Office, in their Budget Projections for Fiscal Year 2019, projects that this fiscal year’s deficit will stand around $896 billion. The federal government’s lack of accountability and irresponsible spending continues to catch up to them. In an attempt to turn this trend around, the Senate Budget Committee wisely decided to look towards the methods by which states implement balanced and responsible budgets.

State Senator Eli Bebout and John Hicks had a bold message for Congress: adopt a balanced budget constitutional amendment. Senator Mike Braun and Chairman Enzi echoed these ideas, eager to discuss and learn how these policies might transform the United States’. The ALEC State Budget Reform Toolkit outlines best practices for a sound balanced budget requirement.

Senator Bebout also discussed at length how Wyoming balances both its capital and operating budgets. He noted that the legislature started saving funds for their capitol building renovations 10 years prior to renovations starting. This meant that the renovations were fully funded when the work started, and the taxpayers were not left with unnecessary debt.

Aside from a balanced budget requirement, lawmakers discussed a number of other state budget processes: biennial budgeting, revenue forecasting, line-item veto powers, separating capital budgets and operating budgets, subjecting all spending to appropriation, accountability measures to pass a budget on time, and debt-management measures (like binding spending based on a debt-to-GDP ratio). The ALEC budget reform toolkit also recommends policies such as adopting a state hiring freeze, changing public pensions and other benefits to defined contribution models, and adopting a permanent sunset review commission to cut costs, reduce waste, and improve efficiency and service levels.

When asked for budget reform recommendations, all witnesses agreed on the need for budget transparency. Greater transparency in the budget process makes government accountable to its citizens. State Senator Bebout, in his concluding statement, asked the federal government a simple favor: spend within your means.

States like Wyoming regularly pass balanced budgets and hold their lawmakers accountable for excessive spending—it is great to see the Senate Budget Committee taking the lead to discuss needed budget reforms. Taking lessons from our laboratories of democracy is exactly the right place to start.

 


In Depth: State Budgets

Smart budgeting is vital to a state’s financial health. The ALEC State Budget Reform Toolkit offers more than 20 policy ideas for addressing today’s shortfalls in a forthright manner, without resorting to budget gimmicks or damaging tax increases. One way to stabilize budgets over time is to embrace …

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