State Budget Reform: The Magic Number is Zero

State Budget Reform: The Magic Number is Zero

By Josh Cutler

The fiscal year is ending and there’s money left in your department’s annual budget.What do you do? All too often the answer and incentive is the wrong one: Spend it.

That scenario happens in every segment of our economy, whether it’s the corporate world, non-profit sector or in government bureaucracies. The good news is that when it comes to state government at least we can do something to fix this flawed approach.

The solution is called “zero”-based budgeting. Instead of relying on the budget from the previous year, we start from zero and build up to a realistic budget figure that is based on actual needs and demands.

The prior year’s budget amount would be irrelevant to this process so the incentive to spend down is removed.No more “maintenance” budgets that create incentives for spending down on supplies, salaries or that end of the year pizza party in order to protect department budget turf.Every four years the governor would be required to submit a “zero”-based budget that would set a budget figure for each state agency or department regardless of prior year spending, and instead based on objective criteria using performance benchmarks.

The prior year’s budget amount would be irrelevant to this process so the incentive to spend down is removed. This approach also pushes managers to root out waste and find cost effective ways to improve their operations.

A proposal to review zero-based budget options was approved in the state legislature during the last session and is currently being studied with an eye toward possible implementation in 2017. Already some other states have adopted zero based budgeting with positive results.

A symbolic name change without the underlying budget reform is meaningless.This is a significant change and if adopted needs to be done right to be effective. A symbolic name change without the underlying budget reform is meaningless. This requires legislators of both parties and leaders of all branches of government to work together regardless of political affiliation. It won’t work if we elect legislators who want to bring more Washington D.C. style gridlock to state government.

Massachusetts has been a leader in the past setting the agenda in other major policy areas. We can do so again. Budgeting isn’t exciting or sexy, but it’s your money and you deserve to know it is spent in the most cost-effective manner.

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