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Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20190&cosponId=26776
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House of Representatives
Session of 2019 - 2020 Regular Session

MEMORANDUM

Posted: December 5, 2018 10:58 AM
From: Representative Seth M. Grove
To: All House members
Subject: SMART Act 2.0, Outcome-Based Budgeting (OBB) or combining Zero-Based Budgeting (ZBB) and Performance-Based Budgeting (PBB)
 
In November, The Independent Fiscal Office (IFO) released their annual report providing a five-year outlook on the commonwealth’s economic and fiscal affairs. The report gave a rather bleak outlook on the budget for the next few fiscal years projecting deficit of approximately $1.7 billion. While this number is disturbing, the presence of a deficit and the size of the deficit are not altogether surprising.

In 2016, the IFO stated that despite collecting 686 different performance measures, Pennsylvania rarely uses performance measures in making budgetary decisions. Rather than using performance measurements, when deciding how to use taxpayer money, spending is either increased incrementally or based on the political needs of the moment.

By not incorporating performance measurements into budgetary decisions, Pennsylvania has mismanaged public money and created a large structural deficit. This failure to handle taxpayer dollars is demonstrated by Pennsylvania ranking 47th in short-term solvency and 37th for our long-term solvency according to the Mercatus Center. At the same time, the commonwealth received a “D” by Truth in Accounting for the overall fiscal health of the state.

The current budget process is in dire need of reform having received its last comprehensive update in 1978. In the 40 years since that time, we have seen six different presidents, nine different governors and the advent of the internet. In order to reform the state’s outdated budget process, I plan to reintroduce House Bill 201 from last session which incorporates a bipartisan budgeting process from the State of Colorado. The law was originally introduced by former Speaker of the House Mark Ferrandino (D-Denver).

Under this legislation, Pennsylvania would move from an incremental budget process to a zero-based and performance-based model or outcome-based process which focuses our budget process around outcomes. It requires agencies to submit their budget requests to the governor using outcome-based budgeting. It does not affect the ability of the governor to propose a budget nor the general assembly from adopting a budget. It provides more data driven information to the governor and the general assembly at the beginning of the budget process.

By increasing the amount of information available to members of the general assembly, the new budget process will increase transparency and accountability with public funds. Additionally, the incorporation of performance metrics into the budget process will help us address the structural deficit and improve the state’s overall fiscal condition.

FORMER SPONSORS: TALLMAN, ORTITAY, GREINER, FEE, BLOOM, BARRAR, KAUFFMAN, PHILLIPS-HILL, B. MILLER, WARD, SACCONE, SIMMONS, METCALFE, IRVIN, GABLER, McGINNIS, DIAMOND, ELLIS, JAMES, CUTLER, KNOWLES, KEEFER, GILLEN, WARNER,

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Introduced as HB93