state politics: idaho

So What Does Zero-Based Budgeting Mean, Anyway?

By Sharon Fisher, 1-08-08

Zero-based budgeting won’t start until next year, but Wayne Hammond, administrator of the Division of Financial Management, made it clear to the Joint Finance-Appropriations Committee that, to a certain extent, it was starting already.

“If the department couldn’t exhibit a clear benefit to the state of Idaho, the governor didn’t fund it,” Hammond said, noting that some existing programs – which he didn’t name – had not been funded.

The definition of zero-based budgeting was also discussed, with Hammond saying it might be better defined as performance-based budgeting. Regardless of what term is used, though, it will work like this: For each department, DFM will ask what it is required to do by statute, how it does that, and what resources it needs to do that. If the department is doing “a good thing that’s not required” by statute, “that’s what we’re going to have to look at,” he said.

In some cases, the statute might be changed, Hammond said. In particular, agencies will look at “we’ve always done it this way” programs, such as the way DFM has a large postage expense for mailing out monthly economic outlook reports that everyone reads on the Internet anyway, he said.

Such an examination of the base budget has always been the prerogative of the executive branch, and that it is probably appropriate that these bases be reviewed, said JFAC co-chair Senator Dean Cameron (R-Rupert).

In general, it appears that Governor Butch Otter is going to require much more accountability from agencies. “We need to know what it is that this money is going for,” said Hammond, in response to a question from Representative Margaret Henbest (D-Boise) about substance abuse programs and pointing out that 60% of participants hadn’t finished the program. “The [federal] grant is gone and we don’t have much to show for it. If throwing money at substance abuse was going to fix it, the federal grant would have done it.”

Similarly, when the transportation department asked for a 75% increase in registration fees because that was the amount of money needed to cover a $200 million shortfall, it was told to look at other options, such as charging vehicles by weight or fuel efficiency rather than the current system of charging by age, Hammond said.

Shirley Ringo (D-Moscow) offered up a zinger of her own, suggesting in the zero-based budgeting review process the governor also look at the existing “hodgepodge” of tax exemptions, with Hammond backpedaling to note that an interim committee was looking at tax exemptions and he was not the DFM tax expert.

JFAC staff and DFM – the budget teams of the Legislature and the Governor, respectively—have been holding joint meetings in order to work together better, Hammond said. They will be publishing a schedule of which agencies will undergo the zero-based budgeting review, over the next six years. First will be “a lot of small agencies” while the two groups figure out the process, followed by an entire year each devoted to Health & Welfare, Education, and Corrections, he said. This is all predicated on the assumption that Otter will continue to be in office for six years, “an assumption I’d like to make,” Hammond said.

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