How about that state budget?
by Bob Williams

On March 8 of this year, EFF issued a Policy Highlighter assessing the proposed deficit solutions being offered by the governor and both legislative houses. We concluded:

All three current budget proposals guarantee an instant deficit for the next biennium exceeding $1.2 billion. Responsible leaders would address the root cause of Washington’s budget deficit—out-of-control spending—instead of relying on one-time revenue sources to create the facade of fiscal management.

The governor and Democrat budget writers did not heed our warning and declared that their adopted supplemental budget had successfully addressed the state’s deficit. Now they’re eating their words.

In July, staff of Senator Lisa Brown’s Senate Ways and Means Committee issued a report showing that the budget deficit facing taxpayers at the start of the next biennium (July 2003) will be “between $900 million and $2.3 billion.” They are calling the problem a “structural budget deficit.” This is an obscure way to describe the real problem: “out-of-control state spending.”

In August, staff of the governor’s Office of Financial Management forecasted a $1.8 billion deficit starting next July.

EFF has been around for more than a decade now, and during that time we have identified hundreds of millions of dollars in state budget savings. Finding the waste and developing potential solutions is the easy part. The hard part is getting state officials to do something about it.

In recent years, we have highlighted four important budget reforms:

1. Identify government waste. As previously mentioned, this isn’t difficult to do. Unfortunately, many legislators don’t seem interested in specific budget savings, and the reason is simple: For every government spending program there are vocal constituents who gain from the program even if it wastes money. Many legislators find it easier to increase taxes than cut wasteful spending.

2. Fix dysfunctional delivery systems. In many of the state’s major programs money is pouring in one side but services and goods are not efficiently making it out the other side to the individuals who need them. In reality, no amount of spending will satisfy the appetites of the spenders. That is why we need to “starve the beast” until K-12, higher education, health care, transportation and social services are restructured to ensure they’re operating as efficiently and effectively as possible. We recommend that the money follow the client (student, welfare recipient, etc.) rather than go through inefficient bureaucratic systems.

3. Restructure the budget around core functions. Government spending needs to be limited to core functions. Legislators have widely differing ideas on what those core functions are, but they should find their common ground and start there. (We define core functions as essential, constitutionally mandated services that the private sector cannot adequately provide). Once those essential services are defined, legislators need to focus on excellent delivery.

4. Institute performance-based budgets. Performance-based budgeting is simple: All state agencies and programs should have clear mission statements related to their core functions, with measurable goals and objectives. Their funding should be contingent upon achieving their mission and meeting their goals.

Former Governor Mike Lowry made a serious effort to make sure state agencies had sensible mission statements and goals, and we have been very encouraged by the work of Governor Locke’s budget director, Marty Brown, and his staff.

Brown issued a directive to all state agencies in May that might have been written by EFF (Sorry, Marty.). In it he stated that Governor Locke intends “to build a budget [2003-05] that concentrates on core government functions.” Brown’s office asked all agencies to provide “more detail about what services are delivered, who benefits, how much these services cost, and—most importantly—what results you expect to achieve.” The instructions also requested that agencies prioritize their activities into categories of higher, medium and lower priorities, with at least one third of the agency’s programs and expenditures in the lowest tier. This is excellent!

The OFM directive gets even better: “We ask that you [the agencies] be prepared to work with OFM analysts to identify cost-saving policy changes and lower-priority activities that can be cut or reshaped. It is also important to understand that the need to refocus services applies to all of state government—not just general fund activities. . . . As you prepare new budget requests, work with the principles we outlined last fall:

• Define your most important, central missions.
• Minimize impact on quality of life.
• Maintain the social service safety net.
• Maintain performance standards.”

The directive concludes with the following: “These are extraordinary times for Washington. Citizens across the state are coping with economic conditions that require them to rethink family budgets. The state should not do less. Our challenge is to match state government’s highest priorities with available resources.”

Amen! Now, if we can just get the legislative branch equally committed to performance-based budgeting! We are calling on lawmakers to take advantage of the crucial tool OFM is assembling and start analyzing the budget in terms of agency mission statements, goals and objectives, and the lowest one-third of each agency’s programs. It is inexcusable for legislators to be determined or willing to spend more of their constituents’ tax dollars before taking these steps.

Achieving these four reforms is tedious work that often goes unnoticed, but it is crucial, and I am happy to say we have made some slow but steady progress in the past few years. As it is useful and possible, we will continue to work with elected officials and their staffs, especially when it comes to understanding and implementing performance-based budgeting.

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Contact: Marsha Richards, Communications Director, (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