POLICY HIGHLIGHTER

Volume 15, Number 10
April 5, 2005

Capital budget should focus on "state" projects

Last week the Senate approved a $3.3 billion capital budget loaded with millions of dollars in local community projects (non-state needs). The state's capital budget is supposed to focus on purchases of land and buildings that serve a need of state government. Construction of local skate parks and theaters financed by state taxpayers do not meet this requirement and are contributing to a growing capital budget problem identified earlier this year in a legislative audit.

On February 8, 2005, the Joint Legislative Audit and Review Committee (JLARC) released an audit, Performance Audit of Capital Budget Processes, which highlighted a troubling oversight problem that may be directly related to the amount of local (pork) projects being funded in the state's capital budget.

JLARC's report noted: "...executive oversight of facility projects is not being accomplished in the manner required by statue and [the Office of Financial Management's (OFM)] own process as outlined in the Capital Budget Instructions. . . . The greatest weakness we found centered on resources and priorities for OFM."

Stating that the "[m]aximum ability to influence project costs and outcomes occurs in the early planning and design stages of projects," JLARC found that the majority of OFM's time reviewing projects does not occur at this "front-end," but instead "were focused on approving spending plans after the project moved past a point where OFM has the greatest opportunity to affect costs."

JLARC determined this oversight problem was occurring (in part) as a result of OFM's workload: "Changing workloads have compromised OFM's ability to conduct front-end capital program evaluation. Moreover, the Legislature has contributed to this shift." One of the reasons identified by JLARC as contributing to OFM's capital budget "workload" problem is legislators' "[r]ising capital investment in local government and community-based projects, resulting in less time available to work on advancing state facility projects."

Highlighting its finding that "OFM's lack of benchmarks, uniform procedures, and historical performance information causes inefficiency in approving spending plans," JLARC concluded its report by noting: "OFM's ability to evaluate proposed major projects is compromised by heavy workload demands, unclear priorities and legislative directives, and weak information systems for front-end evaluation and cash control review."

This problem could be easily avoided. By focusing the capital budget on the priorities of government (POG) model and on projects of actual statewide significance, legislators could assist OFM to focus its workload on the state projects it is supposed to be analyzing. Funding for an updated OFM capital budget information system, as highlighted by JLARC, is more of a statewide capital budget need than the millions of dollars earmarked for the numerous local pork projects approved in the Senate's capital budget.

Prepared by: Jason Mercier | Budget Research Analyst | 360.956.3482

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org