At yesterday’s conference on state budget practices, several speakers stressed the importance of taking a multi-year perspective when budgeting. One-year budgets can look balanced, but often include short-term ‘solutions’ that unbalance year two, and subsequent years.
In its latest annual report “Budget Processes in the States,” the National Association of State Budget Officers (NASBO) includes a table identifying states in two buckets – those with an annual budget time frame, and those with a biennial time frame. That report also includes qualifying notes, for example, that Connecticut has a biennial budget in principle, but state officials note that “supplementals” effectively turn the biennial process into an annual process.
We’ve taken the 48 continental United States, and put them in two buckets: one with the 30 states with annual budgets, and one with the other 18 states with biennial budgets. Here’s a look at the average Truth in Accounting “Taxpayer Burden” for each of these two groups:
You have to wonder whether longer-term budgeting can be similarly abused, e.g. gamed to look balanced over two years with implications for years 3-5, etc., but this still looks like it could be useful recommendation.