Significantly reduce the cost of government and reallocate resources with a budget Iowa can afford
DEFINING THE CHALLENGE
State spending (in constant dollars) during the Branstad Administration (1983-1999) averaged just under $1,700 per person. During the Culver Administration this spending had ballooned to $2,000 per person (a real increase of nearly 18%). Iowans are paying for more government than they can afford and a significant reduction in the cost of government and reallocation of limited resources would better align our expenses with our ability to pay.
DEFINING THE SOLUTION
Governor Branstad recognizes one of the first steps towards curbing the growth of government and actually reducing its cost is to end those practices that cause bloated budgets and initiate budget reforms that encourage greater fiscal discipline and long range planning.
GOVERNOR BRANSTAD PROPOSES
1. End bad budget practices such as (a) using one time money for on-going expenses; (b) implementing new spending programs mid-year; (c) creating new automatic or "standing" appropriations; (d) shifting program funding to property taxes or fees; and (e) diverting funds authorized for a specific objective to other purposes. The governor also proposes to strictly enforce the state's spending limitation law.
2. End the practice of passing a new budget every year and replace it with a biennial budget process. Adopt a budget during the first year of each General Assembly that funds state government for the next two years. Use the second year of the General Assembly to focus on policy development and to provide adequate time for the Governor and Legislature to exercise meaningful oversight of all state government operations.
3. Develop and implement a five year financial plan for state government that uses sound estimating practices to match anticipated revenues and expenditures. The plan will be updated annually to reflect the true long-term costs of spending and revenue decisions made by the Governor and Legislature, not just in the first year of implementation, but for at least five years into the future.
Adopting budgets once every two years would (a) remove the incremental cost increases that creep into our base budgets simply due to the fact the budget is created annually and (b) provides additional funding stability to those entities dependent on state resources and may help smooth the highs and lows that can occur with annual budgeting.
A five year financial plan for state government will allow the Governor and Legislature to better track the long term impacts that tax and spending decisions in Year One have on the ability of the state to balance its budget, meet critical needs, and avoid budget cliffs for years into the future. Present practices tend to focus on a year-to-year approach to balancing the budget with little regard for how current decisions impact future budgets, potential new burdens for taxpayers, or our ability to meet critical needs.