Feds point to Washington State as example of priority-based budgeting

Evergreen Freedom Foundation ^ | 2-22-05 | Jason Mercier

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It looks like Olympia's recent attention to priority-based budgeting has drawn the interest of the federal government. In a recent study presented to Congress, the Government Accountability Office (GAO) highlighted Washington's priorities of government (POG) budget reform as a model to adopt in reviewing and crafting the federal budget.

The GAO's report entitled, "Reexamining the Base of the Federal Government" notes:

States and other nations also have engaged in reexamination exercises. States have variously examined their bases, through cutback management, performance and strategic planning, budget reform, and privatization/contracting out. In recent years, various states have reexamined their various programs and priorities through such mechanisms as efficiency commissions and reprioritization exercises. For instance, the state of Washington adopted what it calls a statewide results-based approach to budgeting called "Priorities of Government" to address a budgetary shortfall of $2.4 billion for the 2003-05 biennium. Under this system, programs and activities were reviewed and ranked based on their relative contribution to eleven broader performance goals, leading to cuts for programs below the line of available revenues.

You may recall that POG requires budget writers to ask and answer the following questions:

1) How much money does the state have? What is the existing and forecasted revenue?

2) What does the state want to accomplish? What are the essential services we must deliver to citizens?

3) How will the state measure its progress in meeting those goals?

4) What is the most effective way to accomplish the state's goals with the money available?

By following the POG process, agency programs and activities are prioritized to determine the most cost effective purchases the state can make in order to meet a specific priority. This creates a buy list for budget writers to determine what activities to purchase. Therefore, everything a budget writer decides to purchase, by definition, is a higher priority than those activities that are not funded. If not, the budget isn't truly prioritized.

Despite the praise Washington received for its POG budget reform, some in Olympia are now turning their backs on this common sense reform and suggesting a tax increase is necessary to close the gap between forecasted revenue and their spending desires.

Even though forecasted revenue for the state's 2005-07 budget is projected to increase by more than $1 billion over the current biennium's revenue, some state officials in Olympia want to increase spending by nearly $3 billion. This is what leads to the significant spending imbalance some keep calling a "deficit."

Rather than damage the state's fragile economy with tax increases, as some are now suggesting, lawmakers should instead redouble their efforts to enhance the priorities of government budget process. Thankfully, it appears some in Olympia hope to do just this.

Consider the fact that the House recently passed a bill that would put into statute the POG budget reform by requiring agencies to identify the statutory authorization of their programs and how effective they are in meeting defined performance indicators for their activities. This reform is a great tool for the governor and the legislature to have when crafting the state's budget.

Many other bills have also been introduced to reform the state's budget process, including bills that would require the legislature to approve the performance measures of agencies; a measure requiring sixty-percent legislative approval for any tax increases to be added to the constitution; and a constitutional amendment to create a safeguarded budget rainy day fund.

Because responsible budgeting requires a clear connection between core governing functions, agency mission statements, goals and objectives, performance measures, performance evaluation, and the budget-writing process itself, these reforms are worth adopting.

Although our state has made tremendous progress adopting the new priority-based budget model, it is time to take the next step and provide legislators, citizens and the media with a more transparent and accessible budget. This also means adopting true and independent performance audits to measure the state's success in meeting performance measures. A transparent and measurable budget is the best way to ensure efficiency, economy and effectiveness in state programs, and the best way to restore critical trust in government.

With the federal government now highlighting Washington's budget progress, it would be a shame to prove such praise premature by ignoring the POG process and resorting to unnecessary tax increases.

Jason Mercier is a budget analyst for the Evergreen Freedom Foundation, a non-partisan, public policy watchdog organization, focused on advancing individual liberty, a free-market economy, and limited and responsible government.