April 25, 2019

Six ideas for reforming Washington state's spending structure

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State spending is on auto-pilot and gaining altitude fast. The state budget has grown at 44 percent, adjusted for inflation, since the Great Recession. Despite having an economy growing faster than almost all other states, and record revenue, leadership from the majority party in Olympia say the abundant revenue is inadequate to fund priorities.

As a result, much of the debate among lawmakers in Olympia ends up being about whether and how much to raise taxes. What’s not discussed nearly as often as it should be is whether the programs and services that currently receive tax funding are effective. This latter conversation is more aligned with the views of Washington voters. In a recent poll, 33 percent said state government is doing too much, while only 14 percent said services should be expanded. 

Sen. Christine Rolfes, Chair of the Senate Ways & Means Committee, drafted a proposed budget that identified $203 million in cost savings for the 2019-21 budget out of a $52 billion spending plan. These savings come from three areas: (1) expanded “program integrity initiatives” in the area of managed care; (2) lowering the cost of overtime, travel, and equipment within various agencies; and (3) strengthening performance requirements for managed care organizations. 

The House budget proposal did not provide a public summary of any savings or program cuts, despite asking the taxpayers for billions in new taxes.

Surely, there is more that can be done to identify state spending that is wasteful, inefficient, or no longer in concert with our strongest priorities. The budget process should have a more systematic approach to exposing and analyzing the options for cost savings. 

Bills to create new programs or enhance existing programs outnumber bills to abolish ineffective programs 1,000 to one. The rare bills that propose consolidation or efficiency to save money often don’t receive a public hearing from the majority party. One example is Senate Bill 6011, a bipartisan proposal by Sens. Mark Mullet, D-Issaquah, and John Braun, R-Centralia, which would reduce the costs to the state by an estimated $400 million by reforming the health care benefit of part-time school district employees. It has not been scheduled for a public hearing.

So as lawmakers focus their attention on a supposed need to rebalance our tax code to work with the modern economy, here are six ideas to help them at least consider the other side of the coin: the effectiveness of current spending:

1. Give Us Details: Establish a regular user-friendly public report for each agency of cost drivers that illustrates the costs that are growing over time, showing the costs of employee compensation, utilities, goods and services, tort liability and other categories.

o Our state’s “open checkbook” website received a “C” grade from the Washington Public Interest Research Group and provides inadequate description and context to be useful in informing citizen participation in public debate.

o A spending-side corollary to the popular Department of Revenue Tax Exemption Report to summarize key fiscal points and performance metrics about spending programs for each agency should be our goal.

2. Study Effectiveness: Establish a Citizen Commission to review and establish performance measurements of spending programs.

o A process for public input on whether agency programs are accomplishing their mission at an affordable price to the taxpayer should be provided.

o This would be a spending-side corollary to the well-established Citizen Commission on the Performance of Tax Preferences.

3. Learn From Other States: Establish a legislative task force on spending reform to examine the efficacy of our spending programs relative to best practices and effectiveness of similar programs in other states.

4. Examine Impact of Lower Spending: House Bill 2153. This bill would require agency budget request submissions to the Governor to include an analysis of how an appropriation of money at specified percentages less than the current biennium’s appropriation level would impact agency activities.

5. Set a Spending Expiration Date: House Bill 2150. This bill would require that every new state spending program have an expiration date, a statement of how its performance should be measured for effectiveness specifying the data that will be collected, and performance review by the Joint Legislative Audit and Review Committee.

6. Start From Zero: House Bill 2149. This bill specifies that the Legislature can direct agencies to submit “zero-based budget reviews” for identified programs. A zero-based budget review is defined in the bill to be a sort of bottom-up analysis of the background and costs and benefits of the spending program. This information and analysis would be included as a separate document in an agency’s biennial budget request.

Citizens deserve smart spending — that their tax dollars be spent effectively to accomplish actual, measurable improvements in public health and safety. There are certainly a number of tools the legislature can and should provide citizens to improve their ability to participate in public debate on the state operating budget, and to hold state government accountable to a reasonable rate of growth in the budget.