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Reason Foundation

Orange County Register

Base California's Budget on Performance, Not Politics

To Gov. Brown, it's more responsible for the state government to just keep spending money on autopilot without wasting time measuring effectiveness or reviewing results

Leonard Gilroy
January 29, 2013

Given California's chronic fiscal dysfunction, Gov. Jerry Brown touting "a solid and enduring budget" in his recent State of the State speech probably shocked quite a few taxpayers.

After all, just a few months ago, Gov. Brown was warning of the terrible repercussions the state would suffer if voters didn't pass his major tax increases. Perhaps anticipating a skeptical reaction to his latest sales pitch, Brown gave a slight nod to fiscal discipline, claiming he "would guard jealously" the anticipated revenues resulting from the voter-approved Proposition 30 tax hikes. According to Brown, this "means living within our means and not spending what we don't have. Fiscal discipline is not the enemy of our good intentions but the basis for realizing them."

It's unfortunate Brown didn't have this epiphany sooner. In late 2011, he vetoed legislation that would have helped California rein in wasteful spending and implement performance-based budgeting. The Democratic-led legislature had unanimously approved Senate Bill 14, which would have required the governor's budget (and all agency spending) to be built on a "system of budgeting that uses information on performance to inform resource allocation decisions, thereby establishing clear accountability."

Basically, performance-based budgeting aims to fund those programs that work and stop funding those that don't. Squandering state funds on failing or unneeded programs wastes taxpayer money. It also effectively crowds out spending on the services that government actually should be providing and the programs that truly deliver their intended results. In vetoing the bill, Brown called performance-based budgeting "another siren song of budget reform" and complained that reviewing each department would be a "costly waste of time." Gov. Brown apparently believes it's more responsible for the state government to just keep spending money on autopilot without wasting time measuring effectiveness or reviewing results. Compare Brown's approach to the outcome-based approach pioneered by David Osborne, who spearheaded then-Vice President Al Gore's "reinventing government" task force and authored the Clinton administration's National Performance Review report.

In a 2010 Reason Foundation study, Osborne outlined a "Budgeting for Outcomes" proposal for California. Osborne detailed how the state would estimate the level of revenues available to spend the coming year, engage citizens to determine what the highest priorities are (e.g., health care, education, transportation, etc.), rank programs according to their cost-effectiveness in achieving the desired performance outcomes (weeding out the poor performers), and then force programs to compete with one another for the funding available. Tax dollars would ultimately go to the programs that do the best job at meeting citizens' highest priorities.

Washington state's "Priorities of Government" budgeting process was built on this very concept and is still in place today after helping the state close a 15 percent budget deficit in 2003. According to the state, the process asks citizens what results they expect from government, identifies the most effective strategies in achieving those results, and then prioritizes spending to "buy" the programs and activities most effective at delivering those outcomes.

Numerous other state and local governments have moved to this model as well. It's an important shift away from the status quo, where agencies seek funding increases over the baseline of the previous year's budget. It doesn't matter what the agency or program accomplished, it's a year later and that must mean they 'deserve' more money.

Performance-based budgeting, by contrast, forces critical discussions of trade-offs, much like families do at the kitchen table. All government programs have to prove their worth each year. If one program seeks more funding, it must demonstrate how it would deliver more benefits than if that same dollar were spent elsewhere.

If Gov. Brown hadn't vetoed performance-based budgeting, he'd be able to simply and succinctly talk to taxpayers about their priorities, how the state is going to deliver the results they want on those priorities, and what programs had to be reduced or eliminated as a result of taxpayers' higher priorities. Instead, Brown is making grand claims about an alleged fiscally responsible government, claims that don't sync with the unaccountable bureaucracy he actually leads and protects.

Leonard Gilroy is director of government reform at Reason Foundation. This article was originally published by the Orange County Register on January 29, 2013.


Leonard Gilroy is Director of Government Reform


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