By Dennis Polhill, Nathan Pawlicki
The tax spenders (politicians, lobbyists, and special interest groups) claim that Colorado has a budget crisis. They say the $150 million shortfall in the $15.2 billion State budget can be remedied only with more taxpayer money. This same budget was $6.3 billion in 1992 and $3.4 billion in 1984.
Referendum C would retain an estimated $3.7 billion in constitutionally required taxpayer refunds over the next 5 years to cover the $150 million shortfall. The extra revenue would be used for new programs or to grow existing programs.
As if addressing Colorado, President Calvin Coolidge said, “Nothing is easier than the expenditure of public money. It doesn’t appear to belong to anyone. The temptation is overwhelming to bestow it on somebody.” The process of “bestowing” is fun and beneficial to politicians. Interest groups reward them in subsequent elections. In other words, it is natural for politicians to focus on the revenue side. When Ref-C fails, perhaps politicians will look elsewhere. Washington State did.
In 2002, Democrat Washington Governor Gary Locke faced closing a budget gap of over $2.7 billion, a 15 percent shortfall. The historic budgeting process of adding taxpayer money to cover inflation was a nonstarter.
Director Marty Brown of the Office of Financial Management asked, “Why aren’t we asking the right questions? Why are we so focused on the cuts and not on the keeps?” Indeed! It was this creative and iconoclastic thought that helped Washington State to emerge from the wilderness.
By asking the right question Washington was able to focus on maximizing results. This helped to validate the missions of respective departments rather than accepting the assumption that everything being done should forever continue. “Outcome Budgeting” is one of many budgeting methodologies. Unfortunately these methodologies are theoretical abstractions because virtually all government budgeting merely adds more taxpayer money to the last budget. Without a “budget crisis” there would be no “political will” to exercise fiscal discipline.
Governor Locke’s staff designed five key questions for the budget process: “Is the real problem short or long term?; How much are citizens willing to spend?; What results do citizens want for their money?; How much will the state spend to produce each of these results?; How best can that money be spent to achieve each of the core results?” These spawned a challenge list and detailed purchasing plans.
Ten “Results Team” leaders divided up the 1300 state functions, assisting department heads with the process. Fiscal pressure yielded creative cooperation. Spending in one area can contribute to outcomes elsewhere. The higher education team used some of its funds to pay for better K-12 education, to better prepare its incoming students and reduce its funding of remedial programs. Two teams jointly brought forth increased effort to protect water quality.
The budget would be painful. It eliminated health insurance for 60,000; limited Medicaid coverage; and ended 2,500 state jobs. Cost of living increases for state employees were frozen, university tuition would increase, 1,200 low risk felons would be released from prison and several small programs would be shut down.
The Tacoma News Tribune reported, “Few Washingtonians will find much to like about the brutal state spending plan. But as ugly as the result was, there’s a lot to like about the way Locke and his staff arrived at it, using a new process that forced hard choices about the core priorities of state government.”
“Core Priorities” is the foundation principle. By passing TABOR, Colorado voters stated that their government was big enough. Voters left to legislators the tough task of debating and deciding “core priorities.” Because spending is more fun and focusing on “core priorities” is hard work, legislators have put Ref-C on the ballot. Ref-C essentially asks Colorado to validate the 1992 TABOR decision, “Are you really sure you want fiscal discipline in state government?”
Without a “budget crisis,” Washington State would not have implemented “Outcome Budgeting” and would not have saved its 6 million taxpayers from a $2.7 billion budget debacle. Perhaps Colorado’s $150 million “budget crisis” is too small to spark interest in budgeting reform or to motivate political leaders to have a serious look at “core priorities” or to focus on the spending side.
Why wait for a “budget crisis?” Nothing precludes forward thinking political leaders from exercising innovative action in the absence of a true “budget crisis,” except their will to do so.
Dennis Polhill is a Senior Fellow at the Independence Institute
Nathan Pawlicki is a former Independence Institute intern and a graduate student at Regis College.