Changing the State Budget Dance

by Tom Campbell, Executive Producer and Moderator, NC SPIN, November 20, 2014.

In January, Pat McCrory will begin his third year as Governor, but his first chance to fully develop a biennial budget that reflects his priorities. This truth highlights North Carolina’s poorly choreographed state budget dance that involves many participants, many steps and differing rhythms.

Governors are elected in November of even-numbered years and sworn into office in January of the odd-numbered year following. In addition to assembling a new team, learning the ropes of state government and administering a $20-plus billion operation, the new governor has the nearly impossible responsibility of presenting to the legislature, sometime in early March, budget recommendations for the next two years. The task is either helped or hindered by the outgoing governor, who hands over a highly developed “draft” budget two or three weeks before the incoming administration takes office. That document contains the priorities and philosophies of the exiting administration; there is little time to find out what it contains, much less change those priorities.

The new governor operates for the first six months within an inherited budget passed two years before, then revised in the summer before the election by the legislature. It is the third year in office before any governor can truly put his or her full priorities into budget recommendations, leaving little more than a year to implement and evaluate program or spending initiatives before the end of the first four-year term. Not an ideal arrangement.

The big cotillion is held at the legislature. The so-called “long” session of the General Assembly also convenes in odd-numbered years. Not to minimize other functions, but the primary purpose of that session is to pass a two-year budget, hopefully in time for the new fiscal budget year beginning on July 1^st. History demonstrates this seldom happens in a timely manner because it takes time to deliberate, negotiate and pass such a large budget. Again, not ideal.

State budgets are important. A poorly designed budget process can only lead to poor results. We can do better.

Here are several options to reform the budget process. We could begin by changing the state budget year from July 1 to January 1, allowing for a more orderly and intelligent examination and implementation prior to the start of the year. Another option would change the actual budgeting process from odd-numbered to even-numbered years, so that new governors and new legislative leaders would have more time to see what is or isn’t working before undertaking such a major task. Even better would be to abandon the concept of biennial budgeting altogether and go to annual budgets. The “short” session, in even-numbered years, was originally intended to spend three or four weeks adjusting spending and revenues but has become a lengthy, drawn-out ordeal. We might as well do it each year.

Regardless of other changes North Carolina should adopt zero-based budgets, requiring every state agency to zero out their budgets and make the case for every program, every person and every dollar spent. Outdated, ineffective programs could be cut. This is time consuming to be sure, but the only way to get the best bang for the buck.

It is time to abandon the frantic flailing of our current discordant budget dance and change to a more stately, graceful dance, like the Waltz.