Colorado Study Offers New Approach to State Budgeting

by Peggy Kerns

To an outsider, the state budget cycle can seem like a maze of numbers and confusion, interwoven with posturing and politics.  The governor and legislators talk to the public about “priorities,” “funding,” and “limitations.” Elected officials may seek public input through town meetings, newsletters, surveys, websites, Facebook and other social media tools. But none of it makes much sense to the average citizen.

The process takes a different turn in recommendations released by the University of Denver’s Strategic Issues Panel on State Government.  The report, Rethinking Colorado’s Government, is the result of a year-long study by a non-partisan panel of 20 business, professional and community leaders from across the state.  I was fortunate to be on the panel as a member of NCSL staff and a former Colorado legislator.

Colorado is in a fiscal crisis with general fund revenues declining by $1.3 billion between fiscal years 2008 - 2010.  Acknowledging, as in the past, Colorado would climb out of the economic recession, the panel also recognized it could−and would−happen again, and reliance on severe budget cuts and voter-approved tax increases were not assured or smart.  With this in mind, the panel engaged in long discussions about citizens’ lack of understanding about the value they are getting for their money.  People complain about high taxes and complain about government services.  And, yet voters seem to approve tax increases more frequently if they understand where the money is going and can judge if it is spent effectively.

How to bring the two together?  To help us reach conclusions, we identified principles that could guide public officials to deal with budgets and policy.

• Place citizens, rather than the institution of government, at the center of decision making.
• Shift the focus of government to creating measurable value for citizens.
• Change the financial structure by using accountability centers to give citizens information on the cost of services.
• Focus on outcomes, with the state as an enabler, not always the provider of public services.
• Allocate resources based on citizen demand.
• Fully fund programs and annual state obligations.

When we, as a consumer, buy something, we usually balance the value of the product with its price.  Is the price of being warm on a blistering cold winter day worth a $50 coat?  We make a value choice.  When we shop for a new car, we assess the cost and benefits of the car, we know how much money we have to spend, and we make a decision.

In the public sector, it’s not so easy.  When people use government services, they may know the benefits of the services but have no knowledge of how much the services cost.  Therefore, they cannot weigh the value against the cost.

Cut the parks budget or close rest stops and people complain bitterly.  If they knew the specific amount of their tax dollars going to the rest stops, would they be willing to pay more to keep them opened?  No one likes long lines at drivers’ license stations.  If citizens know how much it costs to run each facility, so that there would be a link between benefits and price, they may think it’s OK to stand in line.

Under the panel’s plan, state agencies would set up Accountability Centers that link a dedicated revenue source with a specified area of service.  Obviously, not every line item could have a center, but agencies could select some that are most relevant to citizens.  A neutral non-partisan Taxpayer Value Council, established by the governor and legislature, would verify the data and provide information to the public that allows them to judge the value of state services−are they paying too much or too little?  The council makes no judgment on the service or the cost.  Its role is to disseminate the information.

For example, the Transportation Department creates an Accountability Center for highway maintenance.  The cost of the program is divided by the number of citizens, who now know how much they each are paying.  The old way−describing budget shortfalls and the need for more money − comes from the perspective of the supplier, not from the citizen consumers. The Taxpayer Value Council certifies the information and posts it on a website for easy access. Citizens and elected officials now have a basis for a discussion that is meaningful and relevant.

This approach breaks down the confusing maze of state budgeting and lets citizens see the value and effect of government in their lives.  The end result is that citizens have information to make judgments and are more engaged in the policy and budget process.

 

Comments

[Kristen Burroughs]

This is one of the most clear, orderly posts I have read this year. I agree.

thank you.

[bobwagner]

possibly, we could rate salaries of elected and appointed public servants too ! wouldn't this be interesting ? each person would have to be evaluated and rated on job performance . Let's get started!