Yesterday marked the beginning of the 2012 Legislative Session. Greeting lawmakers was a presentation by the Office of Financial Management on the state’s 6-yr budget outlook. Bottom line – we’ve some serious structural problems.
Here is a presentation by Stan Marshburn (Deputy Director of OFM) discussing the projections that show multi-billion dollar deficits going forward.
Among the major contributors to the projected future deficits are Initiatives 728 and 732 (the two “free” education initiatives passed in 2000 when the state had a multi-billion dollar surplus).
Since funding was not identified for I-728/732 (other than surplus funds) when originally adopted and the measures were subsequently suspended during tough budget times, voters were asked in 2004 to approve I-884 and in 2010 to approve I-1098 to pay in-part for the policies of I-728 and I-732. Both measures were overwhelming rejected statewide.
The 6-yr budget outlook is exhibit A for those demanding long-term reforms to take center stage during the 2012 Legislative Session. While it is true there are no short-term reforms that will entirely solve the current deficit, long-term reforms are needed to help improve the budget’s sustainability and outlook.
Here are a few of the long-term reforms the Legislature should consider:
- Enact a constitutional tax and spending limit (with two-thirds requirement to raise taxes) modeled after the original 1993 I-601 formula.
- Remove as many of the restrictions on lawmakers’ ability to set spending priorities as possible (collective bargaining restrictions on compensation, federal mandates, assumption of auto-pilot budgeting on programs).
- Reform competitive contracting. Allow agencies to make performance-based contracting more proactive (create a Competitive Contracting Council).
- Provide the Governor discretionary authority to cut spending.
- Repeal unaffordable programs instead of suspending them.
- Require at least a 5% reserve when adopting the next biennial budget.
- Require updated 4-yr budget outlooks to be published after each state revenue forecast or budget adoption.
- Require completed fiscal notes before bills can be acted on.
- Phase in a defined-contribution retirement plan that gives state workers benefits that can never be taken away.
If all the Legislature does is balance the budget for 2011-13, this session will be a failure. We need lawmakers to finally provide predictability to clients of state services, citizens and businesses by demonstrating they are putting the state’s budget roller coaster out of service. That’s where the structural reform conversation needs to focus and should go hand in hand with any short-term budget solution that is adopted.