Instead of Measure J, let’s try zero budgeting

February 15, 2017

OPINION by GORDON MULLIN

Defeat of Measure J puts transportation projects at risk, a front page editorial by the Tribune’s own Stephanie Finucane, reminded me why I voted no on this tax measure last November. We were looking for money in the wrong drawer. With the ‘budget’ season for our local cities and the county right around the corner, it’s a good time to raise this subject again.

Ms. Finucane, like the proponents of the measure, cited Sacramento’s decision to pocket the funds. In years past, these funds used to be passed down to county and city governments, as the reason why we need additional funds to support local transportation “bottlenecks.”  Fair enough.

I had no quarrel with the list of “needed” projects cited by the SLO Council of Governments in the taxpayer funded booklets that we all received. Few words are as broadly defined today as “need,” perhaps with the exception of “fair.”

We can disagree with the extent of the need but I think most of us can support having further work done on our roads. I have my own list of potholes in the neighborhood which could benefit with a few shovels of asphalt. No doubt more funds would get them filled quicker.

My no vote on Measure J was not motivated by the disagreement over the proposed projects. My objection was based upon the request for additional taxes.

My question is: Why more taxes? Why not use my dollars which already sit in the county and city government coffers? Why not use some of those dollars to fill the potholes?

The answer to this query usually is: “we already using those dollars elsewhere. The budget is full up so if we want to fix the roads, or indeed do anything additional, we need more of your tax dollars.” This is the thinking that generated Measure J.

So I then ask: “Why not reallocate some of the existing funds? Take away dollars from current programs which are of lesser value and reallocate to fill the potholes.” Why not?

The answer to that question will take us into territory where governments seldom tread – axing an existing program. Now things become uncomfortable, if you’re an elected official.

Hands up if you’ve heard a government, at any level, acknowledge that if they want to do X, they will have to cut Y? Perhaps such stout-hearted politicians exist at the state or local level, but I’ve not heard the words. Federally, during the sequester, congress would have to “pay for” additional funds to a new program by cutting dollars from an existing one but it’s always a fight. At the state or local level, it doesn’t happen.

Consider, most of us have experience with just this situation in our personal lives. I’ve gone through times that my family’s income has dropped and we had to reallocate our resources; cancelled a trip; put off buying a new widget; had to drop out of a club to save money for more important family needs.

I’ve been in businesses that had a shortfall in revenues or increase in costs, and we had to make the hard decision regarding what to cut; who to lay off.  It was never comfortable but it was needed to do and we did it.

Moreover, business is more comfortable, compared to families or government, with reprioritizing expenditures due to the continued need to survive in competitive markets.  It’s in their DNA. Ask anyone still at the Tribune about their experience downsizing since the internet sucked their revenues away. It was painful but they did it.

So why not government? Why can’t governments reallocate revenues to new, more ‘vital’ programs and drop those which are less significant?

The reason that governments resist the reallocation of your tax dollar is because even the discussion will generate a good deal of animosity both from the civil servants who work in a program on the chopping block and from the recipients who reap the benefits.

Recall that politicians like the job. They after all ran for office and usually put out a great deal of time and effort to obtain it, far beyond the effort we normally put out to land a job. It’s a great gig. As one friend who held office once said to me, “People treat you as someone special.” We would all like that. But this continued “service” depends on, in part, annoying the least number of electorate.

Further, elected officials know that adding a program will usually generate sympathy (and votes) from a segment of the public supporting the move and will normally not lose many votes because it’s sold as a “much needed” program.

However, proposing cutbacks to any program will always generate opposition from a vocal segment of the electorate. It  will also foster a whirlwind of disapproval from unionized (hence well organized) civil servants who may lose their jobs and those on the receiving end of the program on the chopping block will always find a sympathetic reporter to convey the disaster that will befall them.

Let me quickly add that I know elected officials who today will stand up and defy their own constituents if they believe them wrong. My kudos to them.  But in my experience, they are the exception, not the rule.

Normally, politicians understandably avoid this scenario if at all possible. However, we have just seen in November that the majority of voters would wish some additional degree of taxes go to “transportation,” but it didn’t pass due to the two-thirds rule in place, so how do we get there? How can we achieve this reallocation of tax dollars to fill that pot hole in your neighborhood?

I have a suggestion. It’s called zero based budgeting and is currently in use across North America. My home uses it and perhaps yours does too when needed. As said above, businesses use it all the time yet may not in such a formal way.

It works like this: Every two to three years, start the budget allocation process from scratch. One year is too short a time frame.  Often a city, or county level government will appoint a committee. I know; I too don’t like the idea of more committees, but you’ll see my point shortly.

On this committee, no one can sit who gets a dollar from the government, directly or indirectly. The conflict is evident. That committee evaluates the “value” of every dollar currently spent, every program offered and prioritizes them; ranks them and will consider new expenditures (e.g. pot hole filling) as well.

They have nothing to do with revenues received. They are tasked with uncovering inefficiencies, looking for ways and means to save a buck, and asking “if we had to choose, would we axe or modify program X or Y or Z? Which is more important? Can we get service X done more efficiently? Can we find ways to provide this service cheaper? Are there duplications that can be combined? Can we contract this out and save a buck or two?”

You get the idea. An outside committee is used because it’s difficult for an elected person to say program X is more important than Y and Z should be eliminated. It’s easier for an external body to make that initial recommendation by going through the necessary, time-consuming public deliberation process.

Of course, the elected body will eventually have to make the final decisions on the budget and feel the heat, but it’s mitigated by the process of the committee’s deliberation, similar to the existing public committees of the county and city governments.

The politician can point to the committee and say “I’m following their suggestion.” It gives them some cover. It makes it easier to accomplish. And, let’s face it, this method would be better than our current, itched in stone, never reevaluate any dollar spent, process in place today.

I know that some of you will point to such procedures as exist today, like the public forum the City of San Luis just went through where everyone who shows up gets a few stickers to place upon their favorite “program” indicating preference. I suggest that this is an inadequate process because there’s never any dollar amount attached to any program or expenditure.

There’s never an effort to ask if there might be a means to consolidate positions or programs; seek out duplications; find out if we can farm the service out to the private sector. The process the City of SLO uses is just not the same as starting from scratch, the very heart of zero based budgeting.

The idea of zero based budgeting isn’t new and there are several models to choose from. But here’s my point. I want my pot holes filled and this is the best mechanism I know of to force government to rethink priorities. There may be others but this is the one I suggest. You got any better ideas?

Gordon Mullin is a financial planner based in SLO. You can reach him about this at gordmullin@gmail.com.