OPINION-EDITORIAL

December 22, 2003

Locke's budget amnesia

Jason Mercier & Bob Williams | Evergreen Freedom Foundation
Just when it appeared that out-going Governor Gary Locke was going to build his legacy around moving Washington toward priority-based budgets, he seems to have developed budget amnesia.

While declaring Washington's budget crisis over, Locke failed to mention the six-year budget forecasts released just weeks ago by his own budget office and the Senate Ways and Means Committee, which warn of future multi-billion dollar deficits. With knowledge of these forecasts, it's difficult to understand why the governor is running away from his own priorities-of-government (POG) budget model with his suggestion that Washington increase spending by $193 million, while practically eliminating all state reserves.

Yet this is exactly what the governor is doing.

Just a year ago Governor Locke received well-deserved praise for structuring the budget debate around the POG model. This allowed the state to build a budget around program results (output) instead of simply looking at increased costs and demands and scrambling to find more money. By using POG, Washington built the budget much like hard-working individuals and families do, starting with the question: How much money is available, and which spending needs are the highest priority?

Rather than continuing this process in the development of his supplemental budget, the governor decided to see which state accounts and reserves he could raid to fund increased spending.

With all the budget progress made this past year, the 2003-05 budget still spends more than forecasted revenue. Locke's supplemental budget nearly doubles this deficit (to more than $450 million) while leaving reserves of less than one percent of the budget. With such miniscule reserves, a natural disaster or downturn in the economy would leave the state staring at an immediate fiscal crisis.

It is important to remember that every conceivable state program is a priority for someone. This is why POG develops the budget around the question of which results can be achieved with the money available rather than how much money is necessary to buy everything on the wish list. Locke's supplemental budget focused on the wrong question.

In addition to adding to the state's deficit, Locke's supplemental budget violates the principles of POG by rewarding poor performance and agency overspending. For example: While state universities have enrolled more students than the legislature allocated funding for, this does not mean the governor should bail them out by increasing their funds. Locke is also increasing spending for standardized test retakes, which usually amounts to rewarding the K-12 system for failing to do an adequate job educating students before they move on to college.

While education is a state priority, the dollars spent do not equate to meeting this priority. Rather, results achieved should be the measurement. The governor did not include any performance measures for the increased funds, such as setting standards for reducing the number of community college students who must take high school level courses (currently 55% of Washington high school graduates who enroll in community colleges); reducing the additional time it takes many students to finish what should be a four-year college degree; increasing college faculty productivity; increasing K-12 standardized test scores; etc.

Priorities of Government (POG) is a simple, common sense model. It has four key steps:

1. Identify available revenue. How much money does the state have? The governor's supplemental budget increases spending far beyond modest increases in forecasted revenue.

2. Identify the results that matter most to citizens. What do citizens need from government? The governor did not answer this question before proposing new spending.

3. Decide how to allocate limited funds to achieve the state's highest priorities. How can the state use its resources to deliver the best results? The governor's original budget listed funded and unfunded priorities, ranking them from least to most important. The supplemental budget does not.

4. Show how results can best be delivered. How does the state get necessary services to citizens as efficiently and effectively as possible? The governor did not consider options for eliminating waste or increasing efficiency.

Under the POG model, if the governor decided increased funding was necessary in some areas for increased caseloads or new programs, he would find a corresponding reduction in lower priority items to offset the new spending, or would create savings by delivering services more efficiently. In either case, the budget would remain balanced. Expenditures would not exceed revenue.

Unfortunately, the governor did not make these necessary decisions. Since the governor appears to have forgotten how to prioritize spending, it will now be up to legislators to keep the state on the right fiscal track. Should legislators fail to do so, Washingtonians will have serious deficits and looming tax increases to look forward to instead of a responsible government living within its means.

Jason Mercier is a budget research analyst for the Evergreen Freedom Foundation, a non-profit public policy research organization dedicated to individual liberty, free enterprise and accountable government. Bob Williams is the foundation's President.

Contact: 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