About Alabama — Encouraging Smart Budgeting in Alabama’s Governments

Spring is budget time for Alabama’s state and local governments. The state budget has been under development since last fall and should be completed by April 26, when the Legislature’s regular session ends. Cities, counties and local school systems are in earlier stages of developing their budgets.

All are creating spending plans for the fiscal year beginning later in 2010, which will be the toughest year for public sector budgets in recent memory. The governor and Legislature are hoping for more than $500 million in one-time federal stimulus money to balance the state budget and waiting to see what Congress will do.

This may do no more than push the problem off until next year. Very soon, the state will have to live within the limits of its own resources. The smart way to budget is to build a plan for the long term, rather than simply budget each year to make ends meet.

In governments, the budget creates a bottom line. Done right, the budget is a plan for investing taxpayer dollars to accomplish public purposes. The connection between dollars and expected results should be clear, and spending should be itemized to create limits and accountability. Budgets built on these principles focus on plans and performance, not simply on how much money is available. Officials are then able to communicate with taxpayers about what is to be accomplished with their tax dollars.

The state of Alabama now requires its departments to develop plans with goals, but in other states, governors and legislatures are far ahead in using these to create performance-driven budgets. To see this, compare the online budget data from Virginia and Alabama (dpb.virginia.gov/budget/budget.cfm and budget.alabama.gov/pages/buddoc.aspx).

We are seeing great interest in smart budgeting techniques from Alabama’s local governments, which are closer to the people. In recent work with the city of Montgomery, we found a hands-on mayor setting high goals and working hard on budget issues and department heads willing to initiate changes that improve services and save money. The current city budget contains innovations even while cutting spending. All of our governments should adopt smart budgeting practices that encourage such results.

EDITOR’S NOTE — Jim Williams is executive director for the nonprofit, nonpartisan Public Affairs Research Council of Alabama.