The Terrible Legislative Budgeting Process

I suspect many Oklahomans envision that their state budget is carefully deliberated through the legislative committee system. They may believe the committee members understand the nuance for each significant agency expenditure under their purview and carefully vote on and approve proposed new budgets with each line item being built from zero up to a level that covers the legitimate needs of the agency and no more.

I wish it worked like this — but it doesn’t.

I recently attended a meeting of legislators regarding the ongoing state budget negotiations. Attendees were allowed to provide input about three or four very high level components of the prospective budget (such as the issuing of new debt, tax reform and tax credits). As the meeting concluded, a senior member opined that the process for soliciting legislator input on this handful of items represented the most open method of budget deliberations he had seen in years.

Based on my observations over the past six years, I think the senior legislator was probably right.

Isn’t that scary?

Think about it. Simply because the legislators have been briefed and solicited for their opinions on three or four of the highest level budget points, the process is described as being more open than ever before.

That is because the process for running a proposed budget through the germain appropriations committees is non existent. After a budget deal is reached, the budget subcommittee chairman will likely bring several of the subcommittee members into his office and let them know how much each agency will get. There isn’t any official vote of the subcommittee to approve or disapprove the budget. Short of voting against the entire state budget, subcommittee members have little or no ability to affect the appropriations of an individual agency.

Those responsible for appropriating $6.5 billion and overseeing the expenditure of more than $16 billion appear to have little to no understanding of the specific nuances for which they are appropriating. They are forced to take the word of a bureaucracy that solicits money but they have few tools to verify the necessity of the budget requests. Legislators should never apply the important concept of “trust but verify” simply because they do not have the ability to verify.

This system lends itself to a less than transparent appropriations policy. Much of the actual debate surrounding the budget takes place behind closed doors where powerful legislators can jockey for appropriations and pork.

The lack of competent oversight also allows agencies to play games with accounts receivable to make it appear as if they are cash poor until after the budget is approved and the legislative session ends. This simply cannot be allowed to continue.

I think most legislators realize the problem. There is a constant undertone of grumbling and frustration from some of the members. They know the system is broken. In fact, about ten years ago, the Legislature approved zero based budgeting but did not have the discipline to follow it.

Things are changing. During the next two weeks, I believe the Legislature will approve the implementation of performance metrics for state agencies. Can you imagine a business environment where those responsible for creation of the business budget didn’t understand the cost of each deliverable? You can’t, because anybody that doesn’t realise why is budgeting important shouldn’t have any control of the budgeting of a business. Performance metrics will allow Oklahoma policy makers and taxpayers to see agency performance. Now, this isn’t popular with some of the state agencies. Some of them have aggressively opposed the proposal. I find this opposition to accountability very disturbing but I believe we will overcome the opposition and see passage in the next few days.

The implementation of performance metrics represents a welcome and important step towards accountability. However, the Legislature must also do the right thing and re-institute zero based line item budgeting. The increased oversight should not just apply to the $6.5 billion of appropriated money, but also the $16.6 billion that is passed through state government each year.

Thank you for reading this article. Your interest and input are much appreciated. Please do not hesitate to email Jason.Murphey@hd31.org with your thoughts and suggestions.