States Provide Solutions to Federal Budget Woes | Citizens Against Government Waste

States Provide Solutions to Federal Budget Woes

The WasteWatcher

With looming trillion-dollar deficits, it’s time for the federal government to learn a thing or two about budget process reform and other cost-savings measures from state governments. 

Fundamentally, the federal budget process is similar to state budgets in that they acquire revenue, mostly through taxes, and spend it in ways that legislators see fit.  A glaring difference is that all states, except Vermont, have balanced budget requirements and even without a requirement, Vermont has balanced a budget every year since 1991.  In the meantime, the federal government has not had a balanced budget since 2001. One way state’s are able to accomplish a balanced budget is by utilizing a separate capital budget.  Capital budgets are intended for long-term projects, like roads, bridges, and infrastructure. While states must balance their operating budgets, states can borrow to finance capital projects such as roads or schools.  States can also build “rainy day” reserves during good times and use them during bad times. For example, in 2003, the Wyoming State legislature established a savings account, which accumulated over $100 million by the start of the project in 2014.  Instead of saving more like Wyoming, the federal government consistently spends more. 

Congress has made many efforts to pass a balanced budget amendment (BBA) to the Constitution, with no success.  In the 115th Congress, a BBA failed by a vote of 233-184. In the first seven months of the 116th Congress, 12 BBA resolutions have been introduced, all yet to move an inch from introduction.

Another recommendation would be to incorporate a biennial budget, a procedure utilized by 40 percent of state governments.  Biennial budgeting allows more time for non-budget activities, budget planning and stability, and reduces the probability of a government shutdown.  During a June 19, 2019 Senate Budget Committee hearing, Wyoming State Senator Eli Bebout (R-26) discussed Wyoming’s biennial budget process, highlighting that it “exemplifies unique qualities of efficiency, effectiveness and is grounded in a common sense fiscal approach.”  John Hicks, Executive Director of the National Association of State Budget Officers, argued that biennial budgets “allow more time for performance review and support a greater emphasis on program outcomes” rather than on controlling the budget itself.

Furthermore, enhanced oversight of the federal government’s financial records would help to create a more transparent and efficient budget process.  At the state level, for example, Ohio implemented the Ohio Checkbook, a public online database that has opened the books on state government spending and in turn, improved budget transparency.  Since the Checkbook’s introduction, Ohio’s transparency ranking has skyrocketed from 46 to 1 in the nation.  At the federal level, the Department of Defense’s (DoD) 2018 audit has already yielded savings for different military branches.  The Army successfully implemented a materiality-based physical inventory practice to depot asset counts.  This process improvement ensures a more accurate inventory count, in which the Army will save $10 million annually.  The Navy expanded its use of automatic data feeds to prepare for the audit, improving its efficiency and operations. As a result, the Navy has avoided $65 million in charges for service provider support that manual data entry would have required.  Although financial transparency is a step in the right direction, it will certainly take more than $75 million to fix the DoD’s $2.6 trillion balance sheet and long history of wasteful spending. 

State governments have proven that there are many ways in which the federal budget process can be improved to protect hard-earned taxpayer dollars.  Whether it’s a balanced budget amendment, financial transparency, or bevy of other solutions, Congress must take action to create a better budget process that will work toward stabilizing the nation’s long-term fiscal future.

-- Walter Aguilar

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