2007 POLICY HIGHLIGHTER

April 02, 2007

Democrats Trust in "Faith-based" Budgeting
Volume 17, Number 10

By Jason Mercier

As a rule, planned budget expenditures should be based on prudent and conservative revenue assumptions. By taking this cautious approach, any revenue surprises will more than likely be positive than negative, avoiding the prospect of drastic cuts or tax increases to balance the budget. Unfortunately, the budgets adopted by the House and Senate knowingly exceed forecasted revenue, creating a forecasted deficit even without a downturn in the economy.

By taking this irresponsible fiscal approach, majorities in the legislature are embarking on “faith-based” budgeting. The current budget proposals represent their faith that: 1) the state’s revenue forecasts are wrong and that the economy will continue to outperform expectations; 2) the state Supreme Court will overturn a ruling invalidating the games played with the people’s I-601 tax and spending limitations; and 3) the billions in spending will actually produce results without first identifying the performance outcomes expected.

Hoping stateÂ’s economists are wrong
The first major act of faith by Democrats in their budget proposals is that the stateÂ’s professional economists are wrong and that the economy will continue to outpace historic and projected growth. Even without an unforeseen downturn in the economy, the planned spending levels outpace forecasted revenue by nearly $1.3 billion.

2007-2009 Near General Fund State – Senate Budget
(Dollars in Millions)

Trusting in a court reversal
By engaging in nearly $500 million in budget gimmicks in the 2007 supplemental to artificially increase the revised I-601 spending limit, Democrats display their faith that the state Supreme Court will overturn a 2006 court ruling that found similar budget games played in 2005 to be illegal.

Should the state Supreme Court uphold the previous court ruling, the current budgetÂ’s legality and overall spending levels will be called into question. A ruling is expected by the Court any day.

Assuming performance without clear expectations
The final act of faith displayed by the DemocratsÂ’ proposals is that the billions in spending will actually deliver meaningful performance. The nearly 500 page appropriation bill, with rare exception, reads like a laundry list of ways to spend money without identifying the expected performance outcomes for these investments. Without measurable performance outcomes identified in the bill, there are no clear expectations for what results will be achieved and no way to determine if the programs actually delivered the performance expected.

Conclusion
Budgets should never be adopted based on faith; they should only be built around sound fiscal forecasts. Adopting a budget based on the expectation of revenue not forecasted increases the likelihood that budget cuts and or tax increases will be necessary. Engaging in budget gimmicks should never be tolerated; if Democrats do not want to comply with the spending limit they should use their majority to repeal it and face the voters on this decision. Finally, spending without identifying expected performance outcomes fails to provide the expected accountability of tax dollars. Anyone voting for these proposals should pledge to taxpayers that they will not pursue tax increases to address the self-inflicted deficit projected.

Additional Information

Transparent and accountable budget within reach

Jason Mercier serves as a voting member on the American Legislative Exchange Council’s Tax and Fiscal Policy Task Force and is often consulted by media outlets and legislative staff for issue briefs and policy analysis. He is the author or co-author of numerous policy highlighters and in-brief reports. His editorials have appeared in newspapers and magazines including The Washington Post and on FoxNews.com. Jason served on the board of the Washington Coalition for Open Government (2005-06) and remains a liaison for the board. He is a contributing editor of Heartland’s Budget & Tax News. Jason served as an advisor to the 2002 Washington State Tax Structure Committee. He received a B.A. in Political Science from Washington State University.

Contact: Booker T. Stallworth

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Communications Director

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(360) 956-3482

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