Governor-elect Branstad is entertaining the idea of bringing a biennial budget process to the State of Iowa. This is a great idea and should be one of the top priorities for the legislature when they convene next month, but expect some resistance from legislators and those who represent special interests, especially those inside state government. As with any major internal process, there are pros and cons to biennial budgeting. Each side of the argument needs to be aired, but at the end of the day, biennial budgeting seems a great idea for Iowa and Iowans.
There are several advantages to biennial budgeting, particularly for a state like Iowa. Establishing a two year budget establishes discipline in the budgeting process that is not currently present. Depending on the rules for biennial budgeting, the Governor would propose a two year budget and the legislature would approve that budget. The first savings to the state would be time. State agencies would have more predictability in resource availability and would no longer need to lobby annually for more funding. Though I would propose an annual budget review and modification process as part of the overall package, imposing budget discipline is fundamental to good stewardship of the people’s resources.
Another reason for going to a biennial budget would be to force state agencies to discipline themselves on spending and to incent cost savings from one year to the next. The longer the budget cycle, the more likely agencies will examine internal operations to ensure that the greatest benefit will be gained for each dollar spent. If the Governor and legislature are serious about reducing the size of the state government, giving agencies two years to work toward internal changes seems to provide more transparency and flexibility in finding innovative ways to continue services with fewer personnel.
There are certainly drawbacks to the biennial budget process. Legislatures cede some independence as appropriators, especially in election years. In many states as legislatures gain stronger footing, there is less incentive to give the executive branch this much authority over the budget process.
The trend over the past 40 years has been back and forth on biennial budgeting. Each state must find ways to budget that best suits the state, its people and its revenue streams. Iowa used a biennial system until 1983 then returned to the annual budget system. As conditions have changed, perhaps it is time to go back to the biennial system as many states have.
It will be interesting to see if the new administration and legislature are really serious about reducing the size of government. The only way to effectively do that is to reduce the number of people on the state payroll. To give agency heads the opportunity to find savings that preserve services, the longer they can see into the future, the better. The biennial budget is a step in the right direction.
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