Helping States Better Understand Budget Choices

October 21, 2011 at 10:26 am

To understand how a proposed state policy change — say, expanding or restricting Medicaid eligibility — would affect the state’s budget, policymakers and the public need to know the cost of simply continuing the program in its current form, after adjusting for factors like inflation and demographic changes.  Yet only 22 states plus the District of Columbia (see map) produce the document needed to make this comparison, called a “current services baseline.”

Fewer Than Half of States Prepare Current Services Baselines

Our new report explains how a current service baseline improves the state budget process, summarizes current state practices, and explains how states without such a baseline could design one.

A current services baseline provides a reality check in the budget process.  It gives an honest assessment of the state’s overall fiscal health by enabling policymakers to see if the state will likely have enough resources to maintain services at current levels — or possibly expand them.

It helps legislators and the public understand whether a proposed funding level for a given program would expand the program, shrink it, or keep it at its current level.  And it can improve government efficiency by providing a regular, thorough examination of each program’s costs.

Finally, a current services baseline can enable the state to implement sensible budget controls such as PAYGO (pay-as-you-go), which requires lawmakers to offset the costs of legislated spending increases or revenue reductions compared to a baseline.  For more on how states could implement PAYGO, see this recent CBPP study.

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More About Elizabeth McNichol

Elizabeth McNichol

McNichol is a Senior Fellow specializing in state fiscal issues including methods of examining state budget processes and long-term structural reform of state budget and tax systems.

Full bio | Blog Archive | Research archive at CBPP.org

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