Reining in Spending with Performance-Based Budgeting

The House State Government Committee held a hearing today on reforming the budgeting process. HB 726, sponsored by Rep. Stan Saylor, would institute performance based-budgeting.

Today, most of the budget debate focuses only on inputs, i.e., how much is needed from taxpayers to pay for current programs and expenses, instead of considering the cost, effectiveness and goals of existing programs. Our reality-based budgeting policy brief, co-authored by Bob Williams who testified today, explains:

When legislators discover their conventional baseline budget is higher than estimated revenue forecasts, they often focus exclusively on how to fill the budget gaps. Discussion turns toward program cuts, tax increases and accounting gimmicks, until spending lines up with expected revenue.

In contrast, performance-based budgeting would increase programs’ and departments’ funding based on performance, rather than lobbying or politics. As Rep. Saylor noted today (subscription):

“I have said repeatedly that we need to examine state spending to determine which programs are working and which are not,” said Saylor. “The performance-based budgeting model gives us a workable way to make that happen.” 

Read more about how to make budgets honest in Harrisburg here and listen to our podcast on building better budgets with Maurice McTigue and Bob Williams.