2002 NLPES Fall Conference Notes
Roundtable on the State and Federal
Budget Crisis
Facilitator: Martha Carter, Program Evaluation Analyst, Nebraska
Legislative Program Evaluation Unit.
This roundtable discussion centered on how, and to what extent, evaluation
and audit offices are affected by current budget predicaments and restraints.
Ms. Carter began the discussion by stating that about half of the individuals
responding to a question posted on the NLPES website regarding how offices
were affected by their state's current budget, stated that their office
was not significantly affected.
Texas has not yet seen significant effects, but expects to soon. The
governor has solicited ideas for cutting the budget, as a $5-12 billion
shortfall is estimated. The focus of the response to the shortfall is on
how to work more effectively and efficiently.
Florida has experienced a significant impact from budget issues. A special
legislative session authorized some reductions in state agency budgets.
Evaluators find it challenging to make recommendations in their reports
because of the recent reductions.
Roundtable participants were asked how their offices are coping with
the challenge of writing recommendations within moderate to severe budget
constraints. The following coping strategies were offered: agencies are
asked to prioritize their objectives and to work within existing budgets.
Agencies are also asked to examine specific possible tactics, such as re-working
vacant positions.
South Carolina has cut back on office space, and hasn't filled vacant
positions. The focus is on cost-savings in many audit reports being issued.
Arizona has reduced the size of its performance audit division. The
budget situation in Arizona is affected by several factors. Ballot initiatives
and lawsuits protect some state revenue. There is no state property tax,
and the sales tax, as a primary source of revenue, is declining with the
recent economic downturn. Arizona does not have a broad base of revenue
sources. Legislation will probably have to address some type of tax reform;
however, tax reform is complicated by the fact that a constitutional amendment
requires a super-majority legislative vote of 75% for a tax increase. The
Auditor General's Office has decreased personnel from 225 to 190, and is
looking at decreasing their workload.
Other participants from Arizona reported that they are careful in making
recommendations to state agencies that may impact budgets, such as hiring
more staff; however there remains a tension between audit findings and
auditors' ability to make appropriate recommendations.
As mentioned earlier, Texas is facing a budget shortfall and the State
Auditor's Office budget is restricted. The workforce has not been cut;
however there are no pay raises forthcoming. There is a lot of turnover
in the office. Their work is currently focused on assisting with the appropriations
process. For example they are looking at earmarked funds to determine if
any can be freed up. They are also looking at agency estimates. For example,
are state agencies properly estimating caseloads? Texas' budget problems
are similar to Arizona in regard to a small tax base. In addition, Texas
does not have a state property tax or income tax.
Colorado has similar budget problems in that the legislature cannot
raise taxes without voter approval. In addition, some revenue is dedicated
to education costs. There have been some budget cuts in the Office of the
State Auditor.
An administrator from an Arizona state agency noted that there have
been cuts made to the agency's travel and technology budgets. The agency
has submitted a supplemental budget request; however they are looking at
ways to cut 10% of their budget through scaling back on some tasks.
Arizona is also challenged in designing evaluative studies to assess
effectiveness of state programs within the context of budget constraints.
Louisiana is in a "budget standstill." The Legislative Auditor's Office
has had to cut resources in the planning and reporting phases of the audit
process.
A participant from Arizona stated that the Auditor General's Office
will be smaller because of budget constraints, but that there are opportunities
in the current budget crisis. For example, the audit managers have been
given the opportunity to work closely with the appropriations committee.
There was some discussion on whether or not states should be trying
to cut a little from all departments, or whether it would make more sense
to eliminate entire agencies or programs. Some of the discussion centered
on the political ramifications of trying to eliminate agencies, and the
fact that the programs likely to be eliminated would also be likely to
have insignificant fiscal impact. There were also questions raised about
the future costs of this strategy. For example, would cutting youth diversion
programs only lead to higher future costs in adult corrections?
Tennessee has concentrated on doing core functions more efficiently,
and has found that doing away with non-essentials has not impacted performance.
Taxes have been raised. In addition, the question was raised of whether
or not performance-based budgeting allows for legislative committees to
effectively cut budgets.
Florida's experience with performance-based budgeting indicates that
many agencies do not take this type of budgeting to heart, and that a better
method is to offer performance based fiscal incentives.
Louisiana has seen some impact from performance-based budgeting, but
the programs that are eliminated due to this type of budgeting are obvious
choices. Therefore performance-based budgeting probably won't be extremely
helpful in times of budget crises. In Louisiana measures for reporting
have been developed for performance-based budgeting; however most legislators
still budget according to line items. There is some question of whether
or not performance-based budgeting helps legislators.
In the Virginia Joint Legislative Audit and Review Commission, there
has been a 10% cut in staff, and the workload will probably be reduced.
In addition, Virginia's new governor will probably make some high profile
budget cuts.
Idaho's short term budget is reasonable if revenue forecasts are correct.
Some programs are being affected by budget issues and the Governor has
created a taskforce to look at possible budget cuts.
Louisiana may shift some of the revenue burden from sales tax to income
tax.
Utah has cut the state budget by 4% this year. Analysts expect the budget
to be flat, and suspect that the cost of benefits for state employees will
rise. However, the participant from Utah also sees opportunities in the
current budget predicament. For example, auditors have the opportunity
to help state agencies identify inefficiencies.
Florida experienced across the board cuts of 5% last year and 6% this
year. The participant from Florida stated that the office has not cut any
positions, but that they have a greater workload. There was some discussion
of the possibilities that exist to address the growing budget crisis, including
tax increases and broadening the existing tax base. The participant from
Florida noted that there are opportunities for evaluators and auditors
in the current fiscal atmosphere. These include working more closely with
fiscal committees and tracking the fiscal impact of recommendations.
 2002
Fall Training Conference Notes
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