2009 COMMENTARY

January 12, 2009

Open letter to legislators regarding the budget deficit

As the session begins, you are facing a major challenge with the state budget.  The Senate Ways and Means staff has identified a $6.142 billion difference between forecasted revenues and expenditures for 2009, 2010 and 2011.  Of this total, $503 million is a projected shortfall for the current budget.

We urge the legislature to receive this budget challenge as a profound opportunity to review state spending priorities and the actual performance outcomes from past investments.

Budgeting as usual will not solve this problem. Typically, not many legislators are fully involved in the budget process.  Frequently, the policy committees pass legislation without regard to how spending fits into overall state budget priorities.  Standing committees rarely hold hearings to review past agency performance (looking at outcome performance measures). 

Clearly this approach will not work with our current budget challenges. We are therefore recommending the legislature take a new approach to this problem and involve all legislators in the budget process.

The budget bills are the most important pieces of legislation passed during session. Bottom line: The budget is the only legal way to hold agencies accountable for results.

EFF recommendations for a new budget process:

     1.    Pass a supplemental budget during the first week of session that permanently 
reduces spending by $500 million for this biennium. Note: The governor has ordered cuts, but many of these are one-time and will not carry forward to the next biennium.  We suggest the legislature use the Priorities of Government criteria (POG) and move the “buy line” up by $500 million. In other words, do not fund the lowest $500 million in priorities. This will enable you to achieve savings of more than $2.5 billion ($500 million over the last six months of this biennium and $2.0 billion for the 2009-11 biennium).

2. By January 19, 2009, pass a Joint Resolution for the 2009-11 biennium setting a buy line for all 10 Statewide Results Areas (POGs) at $29.5 billon (Revenue forecast of $30.1 billion less a 2% reserve). 
3. Set up ten subcommittees of the Ways and Means Committees (one for each POG).
4. Allocate each subcommittee a percentage of the $29.5 billion budget based on prior spending history.
5. Hold POG subcommittee hearings to review priorities and performance outcomes for past items purchased.
6. Bring together full Ways and Means Committee and discuss possible trade offs between the 10 POGs.
7. Publish budget and require a 72-hour “cooling off” period before holding public hearings.

EFF will be glad to work with the legislature on implementing this new budget process.

More Information:

How to build a sustainable budget
Lawmakers need a 72-hour budget timeout

 

Sincerely,

 

 

Contact: Amber Gunn

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Director of the Economic Policy Center

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