A capital idea

by Tom Campbell, Executive Producer and Moderator, NC SPIN, January 30, 2014.

Governor Pat McCrory is correct in pointing out the deplorable conditions in many state buildings and properties. For too long we have failed to maintain and improve current properties in favor of either building new facilities or, in tight economic times, doing practically nothing.

Einstein said that insanity was doing the same thing over and over and expecting different results. Let us suggest our current policies and funding for maintenance and improvement of public infrastructure are indeed insanity. We can and must do better.

Our state initiated a line item in the budget for maintenance but it has never been sufficiently funded and politicians often raid it. We are paying the price for deferred maintenance, both in the safety of people using our facilities, but also because material and labor costs tomorrow are sure to be more expensive than today and there is greater likelihood for other damage.

The late State Treasurer Harlan Boyles, “The Keeper of the Public Purse,” saw the problem more than twenty years ago and had a practical and workable solution for funding current and future public infrastructure needs. It resembles budget basics employed in many well-run corporations.

North Carolina’s state budget consists of two main categories: the continuation budget and expansion budget. The continuation budget contains all the programs and services the state has already agreed to fund while the expansion budget consists of new items approved for funding. Boyles suggested we need a third category – a capital budget.  In this capital budget we would include both the costs for maintaining current buildings and property while also funding new office buildings, classrooms, roads, bridges, water systems and other public infrastructure.

To ensure this was more than just a slush fund for pet projects or a category that received sporadic funding Boyles proposed this capital budget be funded with a fixed percentage of our continuation and expansion budgets, say ten percent. It is unlikely the overall state budget would be increased to accommodate the increase in capital spending so a major reorientation in priorities would be necessary. And we can free up many millions in current spending through better management and accountability.

Through the years we’ve added lots of state government programs but we are not so good at removing them. Once a program makes it into the continuation budget it is almost impossible to eliminate and seldom re-evaluated. North Carolina should return to a form of zero-based budgeting whereby every program would sunset or terminate periodically and be required to come before the legislature to justify its goals, outcomes and funding.

Hall of fame basketball coach John Wooden is remembered for saying, "If You Don’t Have Time to Do It Right, When Will You Have Time to Do It Over?" We could paraphrase by asking if North Carolina doesn’t have the time or money to maintain our current buildings and property today how are we ever going to meet tomorrow’s needs?

Both Wooden and Einstein were right. What we are currently doing isn’t working and if we don’t properly address our infrastructure needs now buildings will continue to deteriorate and our infrastructure needs will escalate. A capital budget with fixed funding could meet both needs. You might say it’s a capital idea.