Lawmakers to introduce zero-based budgeting legislation

Lawmakers to introduce zero-based budgeting legislation

Author: Jason Gottesman/Tuesday, November 28, 2017/Categories: News and Views

Six “reform-minded” Republican state senators earlier this week declared their intent to introduce legislation that would require state agencies to engage in zero-based budgeting, essentially requiring them to build their budgets from zero dollars as a means to justify expenses.


Led by Sen. Scott Wagner (R-York), an already-declared candidate for the GOP gubernatorial nomination, the group is hoping that should the legislation be enacted it would result in millions of currently unrealized savings in the state budget.


“Instead of doing the heavy lifting of finding savings and managing state agencies, Gov. Wolf wants to raise taxes on hardworking Pennsylvanians,” Sen. Wagner said. “If we implement zero-based budgeting, state government can be responsible stewards of taxpayer money. We could balance our budget and start cutting waste.”


According to the members, zero-based budgeting is a model currently used by 13 other states and by private sector behemoths like Coca-Cola, Kraft-Heinz, and Kellogg’s; the latter of which found a $500 million return on its first round of zero-based budgeting use.


While not formally filed, the legislation in its early stages aims to create a five-year cycle where each year agencies will engage in zero-based budgeting for 20 percent of their budget.


At the time of submitting their zero-based budgeting materials to the General Assembly, the agencies will be required to submit: a description and mission of the agency and its activities, the legal justification for the agency and the activities, a description of adverse impacts that could occur should the activity cease, an itemized accounting of what it costs to keep programs running at statutory and current levels, and a ranking of an activity’s contribution to overall agency goals.


Along with Sen. Wagner, the legislation is co-prime sponsored by Sen. Scott Martin (R-Lancaster), Sen. Dan Laughlin (R-Erie), Sen. Mike Folmer (R-Lebanon), Sen. Mike Regan (R-Cumberland), and Sen. Guy Reschenthaler (R-Allegheny).


“We owe it to taxpayers to ensure every dollar they send to Harrisburg is used wisely and efficiently,” Sen. Martin said. “Every public policy decision should be driven by what is best for the citizens and the taxpayers of Pennsylvania, and not by what a department or agency spent in the previous year.”

Responding to the legislation's forthcoming introduction, Gov. Tom Wolf's press secretary JJ Abbott noted that the governor has taken steps to reform state spending, particularly by introducing a budget last year that would have reduced state expenditures by $2 billion and proposing to merge four state agencies--something which the legislature did not agree to. 

"This legislation seems to be a mechanism for some individuals in the General Assembly to abdicate their own responsibility in the budget process," he added. 

"Each year, the governor’s budget office and agencies spend months preparing for the release of the budget. They scrutinize programs, review program metrics, and seek ways to be more efficient and effective. They then attend dozens of budget hearings and supply hundreds of documents to face further scrutiny from the General Assembly. If the General Assembly wants to make cuts to programs, that is their prerogative to do so and they have plenty of information to make those decisions."


Attempting to overhaul how state government tries to put together its budget is not new in Pennsylvania. In fact, as recently as October, legislation sponsored by Sen. Bob Mensch (R-Montgomery) was signed into law by Gov. Wolf that would require performance-based budgeting reviews by an independent panel.


The legislation was the result of at least two sessions’ worth of work on the issue.


Different from zero-based budgeting, the performance-based budgeting bill requires agencies to defend the expenditure of dollars based upon the success or failure of a program.


According to Sen. Mensch, it’s a means to ensure taxpayers are not throwing good money after bad.


“Performance-based budgeting is a normal occurrence in the private sector and is utilized to ensure that every dollar spent produces the desired result. I think that we should be doing the same with taxpayer dollars,” Sen. Mensch said.


“This budgeting process will call on our legislators to make some tough decisions, but we have to stop increasing the size and scope of government operation without justification.”


The Mensch legislation, which will be effective at the earliest on December 29, 2017, requires the Independent Fiscal Office and the governor’s budget office to establish a schedule of performance-based budgeting reviews for state agencies every five years.


Those reviews will include a description of the agency and its appropriations, descriptive information and data related to existing performance measures for appropriations and programs, an agency mission statement and goals, and a review of other information the IFO might request.