Candidates for governor will be asked many questions this fall, but I doubt you will hear the most basic of all: How will you prepare your first budget?

Budgets are boring, yes, but budgets define what governments can and cannot do. If we’re not paying attention, as citizen-taxpayers, we’re not getting our money’s worth.

It’s abundantly clear that the state budget process doesn’t work well. It’s not just a lack of money – the biggest problem now – but goes to the very structure of how we do things. In good times and bad, the budget process causes problems. It’s time to change it.

Maine’s next governor could do two enormously helpful things. The first is quite simple: switch to an annual budget.

The state’s two-year budget format is an incredible time-waster. Executive departments spend endless hours charting spending over two years (really almost three, from the start of planning), and rarely find numbers that stick. The Legislature spends many more hours trying to make the document work, and instead ends up crafting multiple supplemental budgets to fix the first one.

Two-year budgets are a historical accident — there were times when the Legislature didn’t meet every year. And no other entity the state deals with —  federal, county, municipal or business –- uses the biennial format. Scrap it, except for capital investment.

The second change is also simple, and even more important: Set budget targets.

The budget process is now governed entirely by how much revenue the state believes it will take in; revenues are calculated and spending adjusted accordingly. The problem with this approach is that it has almost nothing to do with the cost of services the state provides. The public’s need for roads, or health care, or schooling doesn’t decline just because revenues do.

And though we’ve been struggling with shrinking revenue for what seems like forever, the obverse is also true. In boom times, we don’t need to spend it all. The rise in state revenues during the late 1990s was breathtaking. Gov. Angus King and the Legislature almost couldn’t find enough ways to spend it, hard as that now seems to believe. Yet very little was banked or refunded to taxpayers.

One reason why it’s so difficult to raise taxes during a recession, when the coffers are bare, is that taxpayers never get a break in good times.

So what’s the answer? Budget targets. It’s simple. Your town or city budget is prepared using just this method.

First, selectmen or councilors figure out what their town or city needs in the coming year. They run the numbers, then figure out how much they think property taxpayers can afford. Some years, they opt for a tax increase; other years, such as now, they try to keep the tax rate flat. And sometimes the rate goes down, along with your taxes.

Whatever the ultimate decision, it’s based on weighing different priorities – not on slogans. Targets could be set anywhere – with an allowance for inflation (or not), with high-priority new programs (or not), or the elimination of programs found wanting. But the answers wouldn’t be based simply on how much money is flowing.

The difference might seem minor, but it would be a sea change for the state. With budget targets agreed to, we could raise (or lower) taxes, without the scorched-earth tactics that now reign.

It might seem strange to argue that municipal budgeters have a lot to teach the state, but they do.

And municipalities have a lot at stake. One of the primary purposes of the state tax system is to aid municipal governments and relieve property tax pressure. When you add up school aid, revenue sharing, and tax relief programs for individuals and businesses, fully half of general fund spending serves this purpose.

In the current fiscal meltdown, a lot of that municipal aid disappeared. No only did the state miss the 55% target for school aid, but its own spending is at a three-decade low, with only federal aid staving off disaster.

Towns and cities are supposed to get 5 percent of all sales and income revenue. They’re now getting 3.8 percent. That may not sound like much, but it’s $60 million out of $250 million in revenue sharing – a 24 percent reduction.

And so on down the line – reduced funding for the circuit breaker, lower homestead exemption — lower reimbursements all around.

This isn’t businesslike and it’s wrong. If the state is ever to be seen as a reliable partner again, it will have the change the way it budgets. And the best time to do it is with a new governor, next year.


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