Budget-improving bullet points
Tuesday, Dec 8, 2015 - Posted by Rich Miller
* From the U of I’s Institute for Government and Public Affairs…
Researchers from IGPA’s Fiscal Futures Project found that Illinois’ budget practices are badly in need of reform. They assert, “The buy-now, pay-later content choices of the past were facilitated, even disguised, by then-existing procedural and reporting practices. Reform of these practices would improve budget transparency and accountability, and help prevent Illinois from getting into such dire fiscal straits in the future.”
The IGPA team suggests five concrete steps that Illinois can take today:
1) Refine and expand multiyear budget planning,
2) Require meaningful fiscal notes to accompany legislation,
3) Modify cash-only budget reporting to include significant changes in liabilities and assets,
4) Clearly identify non-sustainable or one-time revenue sources, and
5) Adopt a broad-based budget reporting frame with meaningful spending and revenue categories consistently defined over time.
All of those would surely help. Requiring legit fiscal notes would be a good place to start, but so much more needs to be done.
The full report is here. Let us know what you think.
* Meanwhile…
A working paper released by the Volcker Alliance, a nonpartisan organization established in 2013 by former Federal Reserve Board Chairman Paul A. Volcker, sets forth six basic principles of sound budgeting for states and provides ten recommendations for improved budgetary transparency, including disclosure of 1) the use of one-time revenue sources to cover recurring expenditures, 2) deferrals of spending, and 3) underfunding of infrastructure maintenance and public-worker retirement obligations.
That report is here.
- Anonymous - Tuesday, Dec 8, 15 @ 9:22 am:
We are implementing multi-year budgeting right now. Oh wait, do they mean future years as opposed to past years?
- Anonin' - Tuesday, Dec 8, 15 @ 9:32 am:
Anonymous9:22 haw it right FY16-17 budget is in formation
BTW the U of I SuperStars might want to include:
-stop passing new programs/services/local mandates without payment methods
–repeal existing program/service/mandate without payment methods
- Jockey - Tuesday, Dec 8, 15 @ 9:32 am:
“Illinois has been doing backflips on a high wire, without a net.”
Paul Volcker,State Budget Crisis Task Force(2012)
- wordslinger - Tuesday, Dec 8, 15 @ 9:33 am:
All well and good, and trotted out many times before over the last 40 years or so.
About the only best-practice I can recall in recent years was Madigan/Cross agreeing on the same revenue projection for the coming fiscal year.
In the first budgets I covered back in the Thompson days, after the dust had cleared in end-of-session horsetrading, you’d get five different answers among the governor and The Four Tops as to what the final revenues and spending numbers were in an approved budget.
- Cassandra - Tuesday, Dec 8, 15 @ 9:34 am:
Sounds good to me, but why aren’t we doing all this right now. I could guess–it’s more beneficial to our politicians of both parties not to implement transparency and other reforms. All the reform prescriptions in the world won’t work without political will. And it seems, there isn’t any in Illinois.
- Oswego Willy - Tuesday, Dec 8, 15 @ 9:34 am:
The fiscal note aspect would help tremendously when trying to speak to the process of drilling down to where the monies are, the real costs, and the genuine revenue that exists to fulfill the monetary needs.
That would be huge.
- Henry Francis - Tuesday, Dec 8, 15 @ 9:41 am:
Choosing responsibleness over political convenience. Great concept.
When one campaigns on shakin up Springfield and reformin, this would be a good place to start. Achieve some success
here, gain some political capital, and then see what else you can accomplish.
- VanillaMan - Tuesday, Dec 8, 15 @ 9:43 am:
We’ve seen such a shift in public mentality regarding government spending, we need to reflect what has happened and adapt how government communicates budget issues. This is a small start.
Has anyone asked how people view their tax bills? If you did, you will discover that they are applying a “bill” approach to a document which is far more complex than they realize. It is more common for many citizens to view their tax bill like they do their department store credit card statements. This is understandable, and completely wrong.
Consequently, putting more information on a tax bill won’t work if the basic facts about how to read a tax bill isn’t included. Is it any help to have the newer 20 page phone bill over the smaller 5 page monthly statement?
We need to ask regular people what the want to know - then we need to ask our bureaucrats what regular people need to know.
Just because a bunch of us egg-heads have decided how to do this, doesn’t mean a hill of beans to the people for whom we are all doing this.
Talk to the citizens. Don’t do this in a vacuum.
- VanillaMan - Tuesday, Dec 8, 15 @ 9:46 am:
Choosing responsibleness over political convenience.
Think a bit. Do we have a constitutional convention every year? There are no real reasons why we can avoid annual budget fiascos by implementing multi-year budgets.
This is not about shopping at Kmart. It is bigger.
- Norseman - Tuesday, Dec 8, 15 @ 9:50 am:
I’m of the belief that the best thing to do is slow the legislative process down. An important part of that would involve requiring a committee report for each substantive bill. Required elements of the report would be a fiscal analysis, other impact analyses (pensions, prison …), and a discussion of goals, objectives and performance measures for new programs and revisions of existing programs. The time involved in creating and discussing the report would give affected folks more opportunities to impact the process.
=== Requiring legit fiscal notes would be a good place to start ===
Legit fiscal notes also involve the agencies. Submission time limits, the need to make assumptions and political considerations (gov staff want to help out solon) often make the notes inaccurate and less than legit.
Fiscal notes become totally useless if the majority rules that they don’t apply.
- Arizona Bob - Tuesday, Dec 8, 15 @ 10:07 am:
The problem isn’t that all the parties involved don’t know the responsible process for budgeting. The problem is that acting responsibly doesn’t fit their political agendas. The source of the problems in Illinois isn’t budgetary incompetence, it’s the pols in power for the last couple of decades not giving a darn about the best interests of the state and its citizens when those interests conflict with their selfish political interests…
- Langhorne - Tuesday, Dec 8, 15 @ 10:07 am:
Fine report. Great recommendations. But our reality is we are almost six months into the fiscal year and its news that the leaders actually talked face to face for the first time in months. The governor insists on “reforms” that cant pass, blithely harms the most vulnerable, and is content to speculate we might not have a budget until april. The republicans make it possible. So, good luck w reforming the process.
- TwoFeetThick - Tuesday, Dec 8, 15 @ 10:41 am:
The requirement for fiscal notes is already current law, it’s just almost always ignored, especially in the Senate. I would direct your attention to the Fiscal Note Act, 25 ILCS 50 et seq.
- steve schnorf - Tuesday, Dec 8, 15 @ 10:41 am:
as others have noted, a fine discussion of some of the trees but the precursor to any action is the forest
- VanillaMan - Tuesday, Dec 8, 15 @ 10:47 am:
The problem is that acting responsibly doesn’t fit their political agendas. The source of the problems in Illinois isn’t budgetary incompetence, it’s the pols in power for the last couple of decades not giving a darn about the best interests of the state and its citizens when those interests conflict with their selfish political interests…
Wrong, wrong and um…dead wrong. Oh, and completely unhelpful. Other than that, you are wrong.
- walker - Tuesday, Dec 8, 15 @ 10:49 am:
OK great. Good ideas. Many of which have been proposed, and some even partially implemented, for periods in the past twenty years.
Without political leadership willing to agree, and without compliance mechanisms that political leaders are willing to use, then these process improvements are premature or ineffectual.
- Robert the Bruce - Tuesday, Dec 8, 15 @ 10:55 am:
Great ideas…but we can’t get a budget done even with the ability to hide things.
- thechampaignlife - Tuesday, Dec 8, 15 @ 11:03 am:
An easy way to give fiscal notes some teeth: if the numbers don’t pan out, the agency’s budget eats the difference.
- VanillaMan - Tuesday, Dec 8, 15 @ 11:17 am:
An easy way to give fiscal notes some teeth: if the numbers don’t pan out, the agency’s budget eats the difference.
You mean a foolish way. Agencies are not businesses and they provide vital government services to your fellow Illinoisans. What they need is what they need. This idea of incentivizing government agencies like they are girl scouts selling cookies is applying an unconstructive business model.
BTW, don’t propose that agencies do gladiator battles, toss coins or throw dice either.
- Honeybear - Tuesday, Dec 8, 15 @ 11:43 am:
–BTW, don’t propose that agencies do gladiator battles, toss coins or throw dice either.–
I’d pop for payperview to watch the smackdown between DHS and CMS! Man, the times I’ve fantasized about something like that.
- Sir Reel - Tuesday, Dec 8, 15 @ 11:45 am:
In my former agency, I doubt staff could implement these recommendations. Most fiscal staff did not have the education or experience. They didn’t even know what questions to ask. I’d like to know how many agencies have economists on staff. Recommendations are great but you need the people to follow through. Illinois State government has lost too many knowledgeable staff in recent years to do much of anything.
- justacitizen - Tuesday, Dec 8, 15 @ 11:47 am:
Good report, but as the report notes, IL cash basis budget gimmicks such as showing transfers from other funds as revenue, holding bills at agencies and Comptroller’s Office, unrealistic revenue projections, etc., aren’t really “balanced” anyway.
- Buster - Tuesday, Dec 8, 15 @ 11:51 am:
Wouldn’t it be interesting if Rauner dropped his anti-union crusade and got behind an effective budget process instead? Maybe we’d have a serious Turnaround Agenda.
- Norseman - Tuesday, Dec 8, 15 @ 12:04 pm:
=== Wouldn’t it be interesting if Rauner dropped his anti-union crusade and got behind an effective budget process instead? ===
You mean actually governing? Nah, Rauner’s in it to save his wealthy buds money.
- blue dog dem - Tuesday, Dec 8, 15 @ 12:20 pm:
Sorry Vanilla,but your ship sailed. As much as I dont like the RAUN Man,there are going to be cuts to services provided in our great state. The debate will be which ones and by how much.
- Anon221 - Tuesday, Dec 8, 15 @ 12:57 pm:
blue dog dem- Fine, there will be cuts, but most likely cuts to programs that actually save the state money in the long run. When those “bills” come due in years to come, how do we “pay” for them then? Emily Miller had a list of some of the candidates yesterday.
- Liberty - Tuesday, Dec 8, 15 @ 1:52 pm:
and Rauner has proposed fixing how many of these problems?
- Qui Tam - Tuesday, Dec 8, 15 @ 2:26 pm:
Given that these common-sense practices have been cast aside for “political convenience” of the 2-party system for decades, shows that the voters don’t want them. The voters want something for nothing, decade after decade. Anyone who has been honest about paying for what we spend has been unelectable.
- Blue dog dem - Tuesday, Dec 8, 15 @ 3:37 pm:
Can anybody out there help old blue dog? I have been searching for IGPA annual budget, and can’t find a thing.
- Anon - Tuesday, Dec 8, 15 @ 3:38 pm:
Adopt realistic pension-fund projected returns of at most 6%.
Financial journalist Jason Zweig recently on the PBS program WealthTrack:
“[T]he pension fund at Berkshire Hathaway, Warren Buffett’s company, is looking at something like 6%. And if Warren Buffett doesn’t think the money under his watch can generate any more than 6%, I think anybody who’s quoting 7 or 8 or 10, you have to ask either what are you smoking, or why do you think you’re that much better than Warren Buffett?”
The pension-fund projected return is more of a political number than an economic number. It is in the short-term interests of politicians and public employees/retirees for this number to be as high as possible in order to maximize current pension benefits and minimize current taxes and other government revenue. The likely long-term effect is either large tax hikes or sharp reductions in pension benefits.
Despite small adjustments, public-pension return projections have not kept pace with recent sharp declines in interest rates and slower nominal GDP growth. Warren Buffett has the advantage of being able to adjust his expectations based on economic and financial considerations rather than politics.
- RNUG - Tuesday, Dec 8, 15 @ 10:13 pm:
Since you can’t reduce the pension benefits, any change in the assumed return will have to result in either reduced GRF spending on other state funded programs or a tax increase. It’s just math.
- Anon - Wednesday, Dec 9, 15 @ 12:20 am:
What the Illinois Supreme Court is saying now after more than a six-year bull market may prove untenable in the next downturn, when reducing pension benefits might appear more politically palatable.
Or perhaps a few years of high inflation will make the pension benefits and annual 3% increase easier to afford.
- RNUG - Wednesday, Dec 9, 15 @ 4:22 am:
The court has been consistent for 40 years … Since the 1975 IFT ruling. Longer if we count some of the pre-1970 cases. The language is plain and clear; I don’t expect they will rule differently in the future.