State Budgets

New Year’s Resolutions for State Legislators

For the majority of states, July 1 is the Fiscal New Year! Here are some new year’s resolutions that we hope state legislatures will adopt.

Implement priority-based budgeting

First and foremost, state lawmakers should resolve to implement priority-based budgeting (PBB), which is also known as outcome performance based budgeting. The budget process in most states is severely flawed because it is based on the outmoded system that relies on baseline budgeting and the measuring of performance based solely on how much money is spent. The process is limited to a few key legislators to writing a budget using historical rates of agency funding. PBB instead promotes the idea that all legislators must be involved and that priorities and performance should drive budget allocations.

There are four questions that lawmakers must ask:

1)    What must the state accomplish?

2)    How will the state measure progress and success?

3)    How much money does the state have available to spend?

4)    What is the most efficient and effective way to deliver essential services within available funds?

To learn more about how priority-based budgeting works, please check out State Budget Solutions’ resources on the topic.

Put an end to budget gimmicks

Legislators and governors must resolve to stop using budget gimmicks. These are tricks that allow politicians to claim they have “balanced” the budget when in reality, all they have done is hidden the state debt burden in some other way. Budget gimmicks include

  • Failing to make annual contributions to the pension plan
  • Using surplus in dedicated funds to “balance” the overall budget books
  • Delaying payments to the following fiscal year (something to look out for TODAY)
  • Accelerating or inflating revenue projections
  • Altering what moneys are listed in the budget

What all of these tactics have in common is that they only delay the inevitable shortfalls that are in store for state governments. Rather than ignore these mounting problems, stats must resolve to cut out the chicanery and balance their budgets honestly.

Foster greater budgetary transparency

State legislators should resolve to post budgets online for 72 hours before a vote is taken. Budgeting should be a transparent process. All legislators and the public should have the opportunity to examine the budget before a vote is taken. That will help taxpayers and others find out if lawmakers are employing appropriate measures for spending and if there are any budget gimmicks that would put the state into a bigger debt hole.

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…

+ State Budgets In Depth