Since the beginning of the current economic downturn, a new reality has settled in. The revenue picture has changed dramatically for almost every jurisdiction. Recognizing that fact, a new movement calling for a fundamental change in the way government works and is funded has emerged: The ‘reset movement’. A movement that gained momentum following a paper last February by John Thomasian of the National Governors Association Center for Best Practices. Some of the recommendations from that paper, no doubt, were adapted by many of the states’ governors as they created their reset commissions, cabinets, or workgroups. Governors, because their state constitutions require them to balance their budgets, have been the leaders of the reset movement, and the media has been paying attention. For example, in its June 27, 2010 editorial, The News Tribune, out of Tacoma, Washington, complemented its governor, Chris Gregoire, for what they termed “talking the talk with state government reset”.
“Determining budget priorities by checking what’s in the wallet puts state spending on a roller coaster. The highs and lows are jarring – but even worse, they fuel the expectation that, even as state spending is plummeting, it soon will be climbing again.
Gregoire is proposing something better, albeit more wrenching: Recognize that state government cannot return to business as usual. Banish the expectation that every time the state gets a new dollar, it goes to replace the dollar lawmakers took to balance the last budget. Don’t just make cuts, make lasting changes in the way state government looks and operates.”
What Gregoire is proposing is not significantly different from what other governors have been saying. For example, Daniels (Indiana) articulated his vision last September in a Wall Street Journal opinion page and Kulongoski (Oregon) proposed his reset initiative in a June speech to the City Club of Portland following recommendation from his reset cabinet.
What these governors are also facing is the reality of traditional budgeting processes that make it difficult to operate rationally. Rational budgetary efforts based on real data generated from actual research generally fail because political coalitions that yield political victories also stay intact during the budgetary process, and subsequent considerations typically assume political characteristics that exhibit themselves when governments start looking at programs in questioning ways that threaten their existence. In the end, budgets are the ultimate expressions of political values whose contents signify victories for some just as they surely remind others of their defeats.
Because of this, funding mechanisms are never based on rational considerations beyond the political coalitions that yield the eventual formula of who gets what, when, and how. Every program has its constituency and each constituency its own advocates. Program advocates often include legislators who sit on those programs’ committees because they have a strong interest in what that committee does and what that does for their constituency. For example rural legislatures typically like to sit on agricultural committees while urban legislators like to sit on transportation committees. One could argue that the system for funding government activity at every level is by default designed to increase spending in a climate where revenues generally continue to grow as the economy expands. That environment is now gone, and a new reality has emerged.
But might this new reality be ripe for states in particular to reintroduce the Program Planning Budgeting System (PPBS) as a tool to facilitate their reset budgets and to reintroduce rationality to their spending choices? PPBS as budgetary system first appeared in the Federal System via Robert McNamara’s Pentagon in the early sixties as a tool to manage the runaway defence budget Eisenhower had warned about during his farewell address to the nation. US Department of Defense still uses PPBS, particularly in their planning and evaluation of their weapon systems. Many states attempted to use the system, but by the mid-seventies just about all of them had abandoned it. At that time many argued that PPBS was not suited for the imperfect world of politics, and that the cognitive capacity to make it work was lacking. But given the circumstances faced by many governors, maybe its time for rationality to prevail and give politicians political cover to do what they have to do.
True, a vast majority of states are on annual budget cycles that don’t allow the elaborate planning stage necessary for PPBS to work. But given superior computing power that exists today, and an environment that appears politically ready to try new things, why not give it a try?