Sen. Shirley Johnson (R-Troy) and Rep. Scott Hummel (R-DeWitt) know exactly what The Price of Government, a book that spells out the benefits of using “outcome” based budgeting to balance the state’s budget, will mean for tax payers. Johnson, the first female chair of the Senate Appropriations Committee, and Hummel, chair of the House Appropriations Committee, are charged with writing Michigan’s budget and setting spending priorities for state government.
As legislators work on the budget, they must come up with ways to stimulate Michigan’s economy, ease the unemployment rate and balance the budget. Using the methods described in The Price of Government, and using the book’s authors and staff, they have a busy spring and summer ahead. Expenses for The Price of Government project in Michigan were provided by the Michigan Association of REALTORS® and the Michigan Chamber of Commerce.
Michigan REALTOR® caught up with the two lawmakers for some questions and answers regarding The Price of Government. Here is what they said:
What’s the difference between zero-based budgeting and the outcome based bugeting model that is outlined in The Price of Government?
Johnson: Zero-based budgeting starts at zero. With this process, we start by setting the “price of government” up front. The State of Michigan will have roughly $39.7 billion dollars with which to achieve the results that people expect in the areas of stimulating job growth in our economy, providing a quality education, effective health care delivery, quality public safety services, protecting our most vulnerable residents and ensuring government is efficient and cost-effective. Each department is not asked to justify their expenditures, but to quantify how their programs help to achieve the results that people expect.
Hummel: Our process is focused more on results and accountability—what do the citizens of Michigan receive from this program? Zero-based budgeting entertains more of a “wish list” mentality without necessarily considering who is paying for the service. By demanding results and thinking of each program as a contract for purchasing services, I believe we will be able to prioritize best those things that contribute to achieving the most desired results.
How would you define success with this process?
Hummel: If we create a more efficient, effective government with greater accountability to the taxpayers, I will see that as success. In addition, I hope we provide a framework to be used for years to come. Ultimately departments and all branches of government must understand that customer (citizen) satisfaction with state-funded services is important—regardless of who is providing the service.
Johnson: As I mentioned earlier, we are the first legislative body to attempt to budget according to the general principles of the book The Price of Government. This is a long-term process to which we have made a commitment. For me, success will come in baby steps, not wholesale change made overnight. Success for me embodies three things: First, that at the end of the day we create a budget that meets our established “price of government.” Second, that the legislature spends its budgeting time asking state departments about whether their activities are achieving, in a quantifiable way, the results we have laid out. Third, that when this first attempt at “results budgeting” is completed, we have a set of identifiable programs, services or spending that we can point to and say were altered by our focus on seeking results. If we do these three things effectively, we will have laid the groundwork for further success in the future.
What are some of the new things you’ve learned from this process?
Johnson: Nothing surprises me anymore because I have learned that a Republican Legislature, with the backing of two pro-business (generally Republican-supported) organizations, would hire people to trim government who have based their budgeting theory on a book written by Democrats from Minnesota and Massachusetts.
Hummel: The interesting thing I’ve learned is that when you try something new, and have everybody on board at the beginning, that their true colors show up when you get further into the process. People that were excited before aren’t as enthusiastic as you thought. It’s just a different way, or new way, of looking at things and it’s easy to fall back into the old habit of looking for ways to cut, instead of looking for ways to justify results. Not having been on appropriations before, it’s been easier for me to dive into things. This process tends to disseminate some of the decision making power to all members of the chamber and there may be some that don’t like that.
Do you have a timeframe in mind in when this discussion will end?
Hummel: Our desire is to have the ranking done by the middle of May—in other words prioritize the different programs based on testimony from subcommittee hearings. Assuming the revenue estimating conference takes place on May 19th, we will then move ahead with the allocation of dollars and establish the percentages we will use to purchase the desired services. We plan to have everything done by June.
Johnson: It is my hope that we can complete action on a budget for fiscal year 2005-2006 within our traditional timeframe. Legislative leadership in both chambers have indicated a desire to see this new approach integrated into a process that concludes by summer adjournment, giving those who receive state funds ample opportunity to plan for their own new fiscal year.
How do you feel about having MAR as part of this endeavor?
Hummel: I’m very thankful for the REALTORS® giving us this opportunity to truly affect change in the budget process. Every level of government uses consultants, and MAR’s generosity has allowed us to use experienced budget consultants without a cost to the state. We’re very grateful for their help, as should be all citizens.
Johnson: I am proud of MAR’s desire to step up to the plate and make a tangible effort to help state government grapple with these difficult budget times. My observation over the years has been that most people are more than willing to sit on the sidelines and offer plenty of criticism of what goes on in Lansing. Rarely, does a group offer a constructive alternative to remedy what they claim is amiss. Even more rare is a group that offers an alternative and then goes the extra step to provide the resources to make it happen. The Michigan Association of REALTORS®, and its leadership, should be commended for its efforts.
What are your constituents saying?
Hummel: As I’ve explained this to them, they scratch their head and say, “Hey, that makes a lot of sense! Why haven’t you done this before?” I believe we became somewhat lazy in how we evaluated our spending of tax dollars in the 1990s and early 2000. We had so much money coming in that we failed to really look at how those end results justified the amount spent.
Johnson: I believe it is fair to say that a majority of my constituents only involve themselves with our state budget process when it directly affects their way of life. This traditionally occurs when taxes are raised or services are cut. Thus far, this remains a relatively new process, and its effect on my constituency not yet apparent.
What are other legislators saying?
Johnson: I have heard mixed reviews from my colleagues. Making the effort to integrate the concepts of the book The Price of Government into a budgeting process that has remained basically unchanged for nearly 50 years has been no easy task. It has been doubly difficult, as the processes outlined in the book have been based upon the development of a budget by an executive or administrative body, not a legislative one. Being the first legislative body to attempt this has meant coming to the realization that what works for the executive branch, doesn’t always work for the legislative branch!
Hummel: On the House side, the comments are positive—with some more enthusiastic than others. A few are taking a bit longer to get up to speed. I think freshmen legislators may actually have an easier time grasping the new process because they do not have any preconceived expectations. Overall, we are excited at making history by raising the standard of accountability. I think most see this as an investment with the ability to positively affect the way we do business for many years to come.
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