Keeping the Budget Boring
By Neil Bergsman, Senior Policy Analyst at Maryland Nonprofits
with a 35-year background in Maryland government finance, both executive and legislative branches.
In the federal government, and in many states and localities the budget process is contentious with lots of drama. It’s exciting: red lines, brinkmanship and shut-downs. But excitement isn’t a good thing for budgeting.
In Maryland, there has been plenty of contention about budget priorities, what’s in and what’s out. But, despite sometimes intense debates during the process, the state goes beyond the statutory requirement that it pass a balanced budget – it does so a couple of months before the beginning of the new fiscal year, even in particularly difficult years like 2017, when 11 states failed to pass their budgets on time.
.For the past 105 years, Maryland's budget has been unique in that the legislature could not add to the budget proposed by the Governor. It could only cut or restrict the use of funds. Many observers of state budgeting believe that this limitation on the legislative budget power is what makes Maryland's budget process less contentious.
Next year that changes. The voters approved a constitutional amendment in 2020 that allows he legislature to add to the proposed budget, as long as they do not increase the total. They will have to find offsetting cuts. While this is still less budget power than many other states’ legislatures possess, it will be a big shift for our state. Will this change make Maryland’s budget more dramatic, and more dysfunctional? I don’t think so. I generally think that organizational culture is more important than formal structures. And I think Maryland has developed an organizational culture around a constructive and responsible budget process.
I’ve been involved in state budgeting in Maryland for more than 35 years. I’ve been the director and deputy director of the executive branch budget offices - both operating budget and capital budget. I’ve been an agency CFO, and I’ve been a nonprofit advocate.
Here are some things I’ve observed that I think will help Maryland avoid damaging budget drama.
Successful budgeting is mostly communications
Back when we actually “dialed” phones, I used to say that the most important numbers I know in the budget are phone numbers.
Frank communication among the people in the budget process can lead to better decisions and a smoother process. We always taught budget analysts to reach out to agency staff if there was a part of a budget request they did not understand. If the analyst sees that there is logic and justification behind the request, either a compromise can be made or mutually acceptable changes can be agreed upon.
At the policy level, the budget moves from request to proposal to adoptions more smoothly and with better decisions when people are talking to each other. I’m including the staff people communicating about the nuts and bolts, and about the agency heads, budget chief, and legislative budget committee members talking about the thinking behind the budget decisions.
I have noticed a decline in the degree to which there are day-to-day communication among decision-makers over the years. However, in the end they have seemed to come together and agree on a budget deal before the scheduled end of the 90-day legislative session.
Getting the numbers right is good. Getting agreement on the numbers is better.
In Maryland we are blessed to have long-established processes for agreeing to a lot of the basic numbers in the budget. We have consensus revenue estimating overseen by a board that includes the independently elected comptroller, the treasurer (elected by the legislature) and the budget chief (appointed by the governor). Once the Board of Revenue Estimates issues its report, everyone uses that number. It may not be right (though the track record is pretty good), but it removes one element of contention which complicates budget processes in many other states. There are similar processes for a lot of the technical assumptions that go into building the budget, like pension rates and debt service estimates.
When the governor, senate, house, democrats and republicans can all be working with the same numbers for these things, it allows the decision makers to focus on their more substantive disagreements.
A boring budget process is good for people
I’m proud of Maryland’s budget process. . When there are revenue losses or unexpected expenditure increases, the executive branch and legislative branch leaders have come together to negotiate a solution, normally one that combines expenditure cuts, transfers, reserves, and sometimes revenue increases.
Dramatic and contentious budget processes are harmful. They cause uncertainty and disruption for local governments, school systems, public employees, and people who depend on government payments. They erode confidence in government. They result in bad budget decisions that can waste taxpayers’ money and cause excessive liabilities in future years.
So, I urge everyone to make your budget more boring by agreeing on key estimates and assumptions, appreciating the pressures on the other people in the process, and communicating very actively.
The contents of this guest column reflect those of the author, and not necessarily those of Barrett and Greene, Inc.