The Method Behind Budget Solutions 2012

Budget Solutions 2012 is a balanced budget proposal that does not require budget gimmicks, tax increases or borrowing. It is an exercise in priority setting. The truth is that tax dollars cannot support state government at its current size.

Budget Solutions 2012 is a balanced budget proposal that does not require budget gimmicks, tax increases or borrowing. It is an exercise in priority setting. The truth is that tax dollars cannot support state government at its current size. Tough choices must be made.

Our budgeting process was based on the following five principles:

1. Setting Priorities: Every budget is an exercise in setting priorities because there is never enough money to pay for every program desired. When revenues fall, as they inevitably do every business cycle, the need to prioritize spending is even more acute. This includes paying for teachers before administrators, roads before expansive new rail proposals and public safety before public art.
2. Competitive Grant Funding: Every year the Illinois state budget is riddled with hundreds of grants and line items. Most of those are relatively small initiatives that receive relatively little attention – and even less scrutiny. Added together, the 328 items totaling $5 million or less equal almost $350 million per year, a sum larger than the total operating budget of several state agencies. Illinois taxpayers cannot continue to fund every single one of these programs. But that doesn’t mean they all must go. In Budget Solutions 2012 every item whose final 2011 funding was $5 million or below will not receive any automatic funding, but is qualified to potentially have its funding restored through a proposed program called “Competitive Grant Funding.” In short, if a small program is vital to an agency’s mission, then that agency can submit a detailed proposal to an independent review panel that will publish clear assessment guidelines. This can be modeled after the federal Government Accountability Office’s Program Assessment and Review Tool (PART) and the federal Department of Education Invest in Innovation Grant awards.This will increase transparency and produce standardized information unlike anything the state has ever seen, and based on that publicly available information with each proposal, policymakers will have to prioritize who is eligible for funding—and who is not. If successful, this program could serve as an accountable funding model for larger programs in future years. A detailed explanation of Competitive Grant Funding can be found in an accompanying Illinois Policy Institute brief. Budget Solutions 2012 makes $150 million available to be awarded through the program, saving taxpayers at least $200 million.
3. Transparency and Accountability: State government must accept its responsibilities, use taxpayers’ money in full sunlight and hold programs accountable for results. This budget proposal directs funds to make the workings of government transparent to the public, legislators and managers in executive agencies.Based on independent research relevant to government programs in Illinois, this budget recommends scaling back programs such as early childhood education where results have not met expectations, changing programs such as Medicaid to better align the incentives of recipients and taxpayers, and eliminating programs that lack evaluations or standards of success.

   We recommend that every state agency and local unit of government completely open their books. When spending reforms are attempted, many agencies will say that the changes are not possible. These agencies have an obligation to be fully transparent regarding every dollar spent and for what purpose so that the public can make its own judgment.

   The level of generality in the budget presentation makes it difficult to hold spending accountable in every instance. For example, it is clear that spending in the classroom produces better results than spending on administrators, but the state budget provides no way to determine how personnel expenses are currently distributed between functions. As a result, this alternative budget cannot show reallocations within line items – a more detailed budget proposal from the governor would allow for a more detailed critique.

4. Spending Fairness: Government expenditures are to improve the public welfare, not the welfare of specific groups. When community colleges offer subsidized training to selected companies, when select groups get scholarships to universities, when hand-picked businesses get marketing help, when some companies receive special tax breaks and grants or when the state tries to pick economic winners and losers, every other taxpayer bears the burden, and in the meantime, valuable state core services are crowded out.
5. Last In, First Out: Over the last decade, the state has created and/or expanded a variety of programs. The state needs to focus on core services and prioritize our budget accordingly. Where the merits of a program warrant more funding, this alternative budget increases spending.