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Budgeting in the public interest

The old adage: “If it ain’t broke, don’t fix it,” certainly isn’t applicable to Arizona’s budget. The state’s budget and budget process is broken and needs some serious fixing.

While elected officials and political pundits will no doubt continue to debate and disagree on whether to cut expenses and/or raise revenues, a more transparent budget and budget process is in the public’s interest and should be embraced by all decision makers. The Arizona Public Interest Research Group (Arizona PIRG) advocates for the following 10 principles to be applied to Arizona’s budget process to help avoid the problems we have seen in recent years:

• Openness – The public has a right to know how their money is spent.
Information related to the use of taxpayer dollars for private enterprises should be at least as transparent as when public agencies are entrusted to perform program functions. Budget negotiations must be open to public debate, with adequate time to examine documents for public comments.

• Accountability – Public money should be spent only for clear public benefit. Taxpayers should not subsidize or privilege projects that narrowly benefit special interests. Audits should be required of large economic development projects, with random audits conducted for smaller projects. Recipients of public money who fail to produce promised benefits should pay back the state treasury on a prorated basis.

• Enforcement – Public agencies must have adequate resources to ensure compliance with regulations. Money for enforcement can be dedicated from licensing and user fees or other stable sources. Diversion of these dedicated funds should be checked, such as through requirements for supermajority approval.

• Efficiency – Spending should deliver the greatest “bang for the buck,” while recognizing that government activities advance multiple aims, not all of which can be measured in dollars. Ineffective or redundant programs should be cut and red tape reduced.

• Stability – Resources and flexibility should be provided to adjust for economic downturns. Rainy day funds should be used to stabilize spending by saving during prosperous times and drawing down during recessions. Automatic-deposit mechanisms for stabilization funds can mitigate the political difficulty of assigning money during budget negotiations. Procedures should be created for how to cut expenditures between budget cycles if revenues fall substantially below forecasts.

• Sustainability – Revenue sources should be diversified. Long-term commitments should not be funded with short-term solutions. Excessive public debt that will limit future budget flexibility should be avoided.

• Fairness – Revenue burdens should be distributed according to recognized principles such as by use, by distribution of benefits, and ability to pay. Funding burdens should not be shifted to future generations or more local jurisdictions. Similar activities should be taxed similarly – unless compelling reasons exist for doing otherwise.

Tax expenditures should come under as much oversight and scrutiny as direct government spending.

• Adequacy – Revenue sources should ensure enough resources to maintain public services and take advantage of future opportunities.

• Comprehensiveness – Major contracts and long-term investments should be considered in terms of their net present value rather than their narrow effect on the immediate budget. Budgeting for preventative maintenance will save money for infrastructure in the long term.
Capital budget requests should include forecasts of operating and maintenance costs. Broad rules should be favored over ad hoc incentives. Strong statewide regulations are superior to a patchwork of local dispensations and special-revenue districts.

• Privacy – Individual tax information should not be disclosed to private entities. The public, however, has a right to know tax and income information about publicly traded companies and those receiving public subsidies or tax breaks.
Although budget discussions in Arizona have and likely will continue to point to policy and philosophical differences, a more transparent budget and budget process, incorporating the above principles, can begin to mend some of the shattered pieces of our existing system.

– Diane E. Brown is the executive director of the Arizona Public Interest Research Group (Arizona PIRG), a statewide public interest advocacy organization.

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