JFC Approves Significant Changes in Budget Management and Process
Legislators Change Guidelines for Agency Requests and Using Unanticipated Revenue
This afternoon the Joint Finance Committee (JFC) made several significant changes relating to how agencies’ biennial budget requests are submitted, as well as the size of the minimum budget balance and how the state handles “excess” revenue when General Fund revenue exceeds the projected amount. I think the changes approved today could be a case of taking two steps forward and one step back, but we may need to see the actual budget language before we can really assess the changes.
One of the motions that was approved (#417, offered by Rep. Knudson) will require agencies to submit their biennial budget requests under three different scenarios. It sounds odd, but I think it might help policymakers and the general public put the requests into context. The first scenario is no increase in funding, other than sum sufficient re-estimates (for things like entitlement programs). The second is a cost-to-continue budget that also adjusts for things like projected caseload changes and population adjustments (and not just in entitlement programs). The third scenario is similar to the second, but is modified to include any programmatic changes being requested by the agency.
I think the intent of the amendment, to help put the size of agency requests into context, is laudable. How well it achieves that might be debatable, and I think we need to examine the actual bill language carefully to see if it will truly help people to understand whether agency requests represent spending increases or decreases and to what degree.
Another significant change is to repeal the statute requiring the minimum budget balance to be increased to 2% of General Fund spending. I ‘m very disappointed by that decision because an increase in that balance is long overdue (see our recent blog post); however, another change approved today approaches the issue in a different way and could potentially be an improvement. The motion in question – #444, offered by Senator Darling – requires that when state General Fund revenues are greater than expected at the end of a fiscal year, half of the “excess” should be used to increase the “statutory reserve” rather than added to the rainy day fund, until that reserve grows to 2% of General Fund spending.
I think the motion leaves a lot of important questions unanswered about the logistics of how the statutory reserves will grow from one biennium to the next, but in concept I think the idea of using unanticipated revenue growth to increase that reserve is a good idea. Again, it will be very important to take a close look at the specifics of the new bill language, once that has been drafted.
These changes will be totally overshadowed by a number of much higher profile issues with much more obvious and more immediate consequences. Although pressing issues like K-12 funding certainly deserve immediate attention, it’s unfortunate that few people will even be aware of the budget process and management issues.
We’ll take a close look at them over the next week or two and try to assess whether they achieve the important goals of improving budget reserves and increasing understanding of agency budget requests.