Baddour Leads Unanimous Senate to Pass State Finance Reform, Modernizing and Improving Efficiency of State Government
Performance management and Zero-based budgeting implemented
June 9, 2011 – Senator Steven A. Baddour (D-Methuen) on Thursday approved significant, fundamental changes in how state government operates, voting with a unanimous Senate in passing legislation that updates the Commonwealth’s finance laws and implements performance measurement requirements for government agencies and programs to improve efficiency, transparency and accountability.
“The laws governing our state finances have never received a comprehensive update, and it’s about time we do it,” said Senate President Therese Murray (D-Plymouth), the author and lead sponsor of the bill. “It’s also time we require all state-funded agencies and programs to start measuring performance and outcomes. We should no longer assume that the purpose of any state budget is to preserve existing programs and agencies.
“Instead, we need to continuously evaluate agencies and programs and invest in those that are high-performing,” Murray continued. “If we’re putting taxpayer money in, we need a better idea of what’s working and what isn’t. That’s what this bill does for us.”
The legislation requires government to use data to regularly evaluate the productivity, successes and failures of agencies and programs, and it establishes a special commission to make decisions about the ongoing need for existing state agencies and boards based on their core missions and performance.
“I am thrilled to see this legislation advance,” said Stephen M. Brewer (D-Barre), Chairman of the Senate Committee on Ways and Means. “This bill further solidifies the Senate’s mission for increased oversight and smart and effective management of the state’s finances. These initiatives will result in savings that are critical for improving our fiscal health as we continue to move out of this recession.”
“This bill fundamentally reforms the way state government works,” said Senator Steven A. Baddour (D-Methuen), vice-chairman of the Senate Committee on Ways and Means. “By requiring our government to be data-driven and requiring regular evaluations of our government’s productivity, successes and failures, this important measure will result in making agencies and programs more effective and accountable to the citizens of Massachusetts.”
“Moving Massachusetts to a system of zero-based budgeting is a monumental reform that will revolutionize the way we spend precious tax dollars,” said Senator Bruce E. Tarr (R-Gloucester), the Senate minority leader. “This change will unshackle us from continuing the same appropriations year after year and allow us to spend money on what truly counts, and measure the results of that spending.”
“This bill moves the state into the 21st century, updating finance laws to reflect how we do business today,” said Senator Kenneth J. Donnelly (D-Arlington), Senate chair of the Joint Committee of State Administration and Regulatory Oversight. “The legislation also helps to insure that we are using state resources in the most efficient way; that we fund programs that are working and reflect our priorities; and that we fix or eliminate programs that are not working.”
The bill pushes government agencies toward more efficient electronic accounting and reporting with the elimination of outdated paper-based systems, and it moves the Commonwealth away from traditional “maintenance”-based budgeting with a requirement for “zero”-based budgeting.
In zero-based budgeting, instead of relying on the previous year’s budget as a starting point, a budget starts from zero and builds to a number that reflects the input from performance measures and an evaluation of current needs and functions.
During debate on the Senate floor Thursday, an amendment proposed by Senator Tarr was included in the bill that requires the Governor to file a zero-based state budget starting in fiscal year 2017 for the first year and then at least once every four years after that.
Some states, including Washington, Utah and Virginia, are finding great success in moving toward a process of building their budgets from zero, rather than basing each year’s budget on the preceding year’s figures.
Other provisions in the bill include:
- Requiring quarterly cash flow reports to compare actual spending and revenue in a reporting period with the estimates previously made for that period and analyzing the discrepancies;
- Setting the state’s debt limit at $17.07 billion starting the first day of fiscal year 2012;
- Requiring an independent debt affordability study to be performed before the Governor sets a bond cap and issues bonds for a particular fiscal year, and requiring that report to be publicly available online; and
- To start distributing unrestricted local aid monthly rather than quarterly beginning in fiscal year 2013 to help cities and towns better identify their available cash flow and reduce the state’s reliance on short-term borrowing to support cash flow.
The finance reform legislation, when filed by Murray on April 28, received high praise from business groups, including the Associated Industries of Massachusetts, which called the plan “a significant and constructive contribution toward reshaping state government to meet the challenges of our times,” and the Massachusetts Competitive Partnership, which applauded the Senate President for bringing “this level of accountability” and said the legislation “will help make our Commonwealth much more effective and efficient in the future.”
The bill now goes to the House of Representatives.
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