Zero-Based Budgeting Will Help Eliminate Government Waste

By Larry Stutts

 

Every dollar that funds government comes from the pocket of a taxpayer.

This is a basic truth that politicians sometimes forget. At the national level, you have socialists like Bernie Sanders arguing the government should provide “free” health care, “free” college tuition, and basically a life “free” from all worries. The problem is, as the great conservative economist Milton Friedman observed, nothing is free: all government programs are funded with taxes.

What does this mean for state government in Alabama? It means that conservative legislators must remain laser-focused on eliminating wasteful spending in Montgomery.

This can be a difficult task. There are sixty-three state agencies, boards, and commissions to review in the budgeting process for the General Fund alone (including another twenty-six state funds like the judicial retirement system), involving billions of dollars: the combined budgets of the Education Trust Fund and General Fund for this year total $7.7 billion plus another $3.6 billion in statutory and constitutional earmarks. During the annual legislative session, it can be hard to peel back every layer of the onion to assess the true budget needs of each agency.

That is why, starting in January, the Legislature moved to zero-based budgeting for all state agencies. For decades, agencies have come before the legislature and used the previous year’s budget as a starting point. “Last year, our budget was $5 million, but this year we need $5.3 million because of X, Y, and Z,” an agency head might say. But obviously, if the previous year’s budget is the baseline, agencies will always request additional tax dollars and voila! The growth of government is never halted or reversed.

Under zero-based budgeting, agencies are now required to provide proof, line-by-line, supporting their budget request. Agencies must provide:

  • A detailed description of the agency which includes number of employees and contractors, and its funding sources (state, local, federal, etc… as well as earmarked funds);
  • A breakdown of each program or service provided by the agency, including its source(s) of funding and a summary of citizens served;
  • A line-item breakdown of operational costs to run each office or location; salaries, benefits, contracts, and travel;
  • A list of the agency’s financial assets (including real estate) as well as their debts/liabilities; and
  • Both a funding reduction plan and a cost-savings/efficiency plan.

Under these new guidelines, state government agencies made their presentations a few weeks ago to a joint meeting of the House and Senate budget committees, before the Legislature convenes in February. I sit on the Senate General Fund budget committee and the new, zero-based budget approach gave my colleagues and me an in-depth look at our state’s finances. I remain firmly convinced that we don’t have a revenue problem in Montgomery – there is more than enough tax money for state government to accomplish its core purposes.

Zero-based budgeting isn’t meant to produce “gotcha” moments of political theater. But the tendency of government agencies is to seek growth and self-preservation. The Legislature has a responsibility to the people of Alabama to root out waste and push state agencies to operate more efficiently. Moving to a zero-based budgeting system is an important step toward that goal.

The 2016 legislative session begins on Tuesday, February 2. If you have any questions about legislation that arises during the session, please contact my office at 334-242-7862.

Dr. Larry Stutts represents Senate District 6, comprised of all or parts of Marion, Lawrence, Lauderdale, Colbert, and Franklin counties, in the Alabama Senate. He can be reached at [email protected]