The need to reform state budgeting is more vital than ever before. Clearly, the “business-as-usual” budgeting approach of raiding non-general fund accounts and using tricky accounting techniques is not a viable long-term solution. States need innovative budgeting strategies to address today’s economic challenges—without resorting to economically damaging tax increases. As ALEC’s Rich States, Poor States publication so aptly points out, tax increases come at a very high cost: the erosion of state economic competitiveness.
ALEC is a valuable resource to help create true fiscal reform and protect taxpayer dollars. We provide sensible solutions for responsible budget reform by helping legislators understand what works and what fails. For more information about ALEC’s Center for State Fiscal Reform, contact Jonathan Williams at email@example.com or 202.742.8533.
States can build sensible, effective, responsible budgets by:
Fact: Overspending in the states, over-reliance on federal stimulus funds, and years of input-based budgeting has caused many state budgets to crumble.
ALEC’s Recommendation: Priority-based budgeting has to be the model for getting the states’ budgets back on track. Uncontrolled, “business as usual” —tax-and-spend governance—does not work.
Fact: State and local government growth has outpaced private sector growth over the past decade.ALEC’s Recommendation: Taxpayers deserve to see where their money is going. State governments should maintain a citizen-focused perspective, and assume necessary changes to maximize outcomes, provide a transparent budget process, and remove barriers that stand in the way of delivering results for taxpayers.
Addressing State Unfunded Liabilities
Fact: Currently, state and local government employees are receiving greater benefits than those received by employees in the private sector.
ALEC’s Recommendation: This is not fiscally sustainable. States should consider replacing their outdated defined-benefit pension plans with 401(k)-style defined-contribution plans for new employees. This would provide new employees with secure and portable retirement assets, and could potentially eliminate the nearly $3 trillion in unfunded pension liabilities facing the states.