I spent some time over the weekend to focus on the budgets and in a rare Monday blog update, provide the following. We have a spending problem and an earmarking problem…and I’m sure other problems I’ve not discovered.
The Spending Problem - I sit on two committees, the Senate General Fund Committee, which allocates funding to a department, and the Contract Review Committee, which obligates, or spends, the funding allocated in the budget. Put another way, I get to see the state funding flow in and out. I say we have a spending problem because of the type of spending we continue to see. For example we recently reviewed a one year contract by the Department of Education in the amount of $214,000 to evaluate and assess principals across the state. Now, please don’t get me wrong, I agree in conducting assessments to ensure the best principals are in our schools; I just question that in the tough economic times we face – do we need to spend the money on this now?
I recognize there are times when federal funding is available based on state dollars spent, i.e., spend $200,000 state dollars on something and the federal government will match it 2:1; but that is an entirely different issue I struggle with and in my view encourages wasteful spending…we’ll save that discussion for another day. This was not the case in the contract referenced above.
The Contract Review Committee continues to encourage our state departments, boards and commissions to spend money budgeted to them wisely. We continually reiterate that what may have been an acceptable expense in past years should be delayed a year or so now. Of course compounding the problem is an antiquated mind-set that if a department does not spend what they are budgeted this year, then the budget will be reduced by that amount next year? We must work to counter this culture; perhaps reward delayed spending decisions by department heads. Of note, I’m really not picking on the Department of Education; this is simply a recent example for discussion.
Earmarking - Another significant problem we have with our budgets is earmarking – 84% of our revenue is earmarked before the legislature even touches a budget. Put another way, 84 cents of every dollar collected in taxes is told where to go before the budgets are debated. How does that compare with other states? The national average is about 30% and the next highest state is Michigan at 60%. As most readers know, Alabama has two budgets, the General Fund and the Education Trust Fund. I’ll focus on earmarking examples in the General Fund.
Below is a page from the 2013 budget introduced by Governor Bentley; note the “earmarked column”. You can click on the image to view full size. Please note, this is a random page from the budget (view the entire budget at this link) with randomly selected boards that I’ve highlighted – I’ve no intention of “targeting” any board or commission I’m simply using this as an example to make my point. Note how some earmarked amounts increase, others remain level funded and a few show a reduction? After reviewing the budget and recalling our earmarking predicament, I’ve requested additional information from the Chair of the General Fund on the what, when and how these earmarks came into being and which ones are legislative or constitutional. This will help me (and readers) understand where we may be able to undo some of the earmarking. For me, this is the answer to part of our state’s budget problems.