A Step Towards Smarter Spending

The governor and state lawmakers are taking a step towards tackling our spending problem.

On Tuesday a bicameral group of state lawmakers introduced a zero-based budgeting bill. This proposal would direct agencies to build their budgets from scratch, allowing for exposure of inefficient programs. Several weeks ago, Governor Wolf signed the Performance-Based Budgeting Act (SB 181) into law. This tool requires agencies assess the performance or success of programs.

In practice, the law establishes the Performance-Based Budgeting Board comprised of several key lawmakers and the Budget Secretary. The board has the power to approve or reject peformance-based budet plans developed by the Independent Fiscal Office (IFO) for state agencies. The statute also provides for a separate review process of new and existing tax credit programs.

Since the IFO has not yet created the review plan, it’s difficult to judge how effective the process will be. Moreover, the plan will not include require agency improvements or legislative action to fix failing programs.

Nonetheless, the performance-based budgeting law and the zero-based budgeting bills law are a step toward controlling runaway spending.

Mandatory spending reviews are a vast improvement over the current process where the IFO simply assumes spending increases.

The success of the law will depend on its implementation. To be effective, the IFO must create a plan with clear and meaningful outcomes. Likewise, lawmakers must consider and act on PBBB information.

Ultimately, the only way to guarantee smarter spending is to place requirements on lawmakers through means like the Taxpayer Protection Act, which would cap spending increases at the rates of inflation and population growth. Lawmakers could also slow the growth of spending by enacting targeted reforms like liquor privatization, education savings accounts, and welfare reform.

Establishing processes to evaluate state spending is a sensible first step, but Pennsylvania can’t stop there.