PRIORITY BUDGETING

Despite a predicted $95 million state budget shortfall in the next two years, lawmakers are likely to consider scores of bills asking them to spend money to expand existing or create new programs. The budget constraints require new responsibility from lawmakers. That demand could be met with a familiar form of budgeting, often called pay-go.

The federal government not long ago lived on a pay-as-you-go or pay-go form of budgeting, in which every new dollar in spending or tax cut was offset by savings or additional revenue from elsewhere. To really make a difference, Maine lawmakers could take it a step further and institute pay-go 105.

Chronic revenue shortages – Maine’s shortfall ballooned from $10 million to $95 million in a matter of months – demonstrate that the current level of spending is not sustainable. But lawmakers should consider a requirement that would cut more than just the spending equivalent when proposing new programs. They should aim to cut 105 percent, hence pay-go 105. This would put the state in a better position to weather economic downturns and would force a necessary and useful review of current spending.

Pay-go 105 would recognize that new programs are often needed – even when state funding is in short supply – but it would demand that lawmakers set priorities. Is a new program more important than an existing program or does it better serve the needs of a specific group? If so, identify the program that can be eliminated. If not, don’t fund the new one.

Given the state’s tax burden and the chronic structural gap – which in essence says the state provides more services than it can afford – legislators have tough choices to make about what gets funded. Setting the bar for new spending slightly higher demands that lawmakers truly value what they are adding before they approve it. New spending doesn’t just mean new programs. Approving mandatory jail sentences for a new set of crimes, for example, requires additional spending. Under pay-go 105, that spending would have to be offset by cuts, totaling 105 percent of the cost of the longer jail sentences. The alternative, which few lawmakers would support, would be to raise taxes to cover the cost.

Such offset requirements would be included in the language of all bills that required government spending. Such language would have to be approved by lawmakers before the new program, service or law went into effect.

Pay-go 105 would give lawmakers a needed tool to compare the thousands of items in a spending budget and compare them against one another to make a judgment about what should stay or go. It would help them account for the many good ideas that get proposed every year and to weigh them against programs that have outlived their usefulness.

It also would help create a more sustainable budget, not just for the next two years, but for years to come.