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Press Release · March 5, 2007

Saving Money On California’s Budget Process

Over the past 15 years, nearly 20 different study groups have put forth more than 100 proposals aimed at reforming some feature of California’s budget process. Despite all these studies and proposals, only one budget practice is actually used in the state today – and it’s one that is unlikely to deliver much in the way of savings, according to a new study by the Public Policy Institute of California (PPIC).

Budget practices – administrative mechanisms used to put the budget together each year – are key because they can make the complex budget process more efficient. Using some practices rather than others could save taxpayers money and free up funds for critical public services.

One practice currently in effect in California is the mid-session revision – better known as the “May revision” or “May revise.” However, PPIC’s analysis finds that this practice does not result in cost savings for the state. Moreover, states that use the mid-session revision do not spend significantly less than other states on putting their budgets together.

In contrast, three other budget practices not used in California have convincing money-saving potential. The one that could lead to the greatest savings is also the most politically challenging. “Legislative access” would give legislators a look at budget requests made by public agencies before the governor’s budget is prepared and sent to them for debate – and could result in an average 2 percent savings per capita. “This could facilitate communication and make decision making more efficient,” says the report’s author, PPIC research fellow Jaime Calleja Alderete. “But it would require tough political negotiations.”

Setting funding targets and implementing performance budgeting are two other practices that would likely contribute to a leaner budget process. The study, Budget Practices and State Expenditures: Lessons for California, notes that other high population states use more of the budget practices studied in the report than California does.

Please call Victoria Pike Bond at 415-291-4412 for further information.

The Public Policy Institute of California is a private, nonprofit organization dedicated to improving public policy in California through independent, objective, nonpartisan research on major economic, social, and political issues. The institute was established in 1994 with an endowment from William R. Hewlett.