Budget Setting: How It Works, Why You Should Care

Molly Messick / StateImpact Idaho

Cathy Holland-Smith has been working for the Legislative Services Office since 1994.

The Idaho Legislature’s Joint Finance-Appropriations Committee began budget setting in earnest this week, after weeks of hearings.  Writing the budget is the legislature’s only constitutional requirement, and it has to be balanced.  For a primer on the nuts and bolts of the process, StateImpact reached out to Cathy Holland-Smith.  She oversees budget and policy analysis for the state’s Legislative Services Office.

Q: The Joint Finance-Appropriations Committee has finished its weeks of hearings now, and we’re in the budget setting process.  What’s at stake?

A: It really is the future for the next 12 months for all of these agencies.  It’s key that our committee has heard from agencies over a five-week period.  We have three weeks to set the entire state budget, so we have to make sure that we get everything correct.  If we make an error for instance, and we don’t appropriate for an agency or program, that agency literally would not have funding for the next year, and we’d have to come back to special session.  It’s extremely challenging to make sure that we get all the bases covered.

Budget Setting: How It Works, Why You Should Care

Q: The programs that people care about – this is where that gets determined; how much funding programs get.

A: That’s correct.  First of all, what’s key is the governor’s recommendation, and that’s the first step.  The committee members are listening to what is important to the governor, what his priorities are, and they’re trying to fit that into a plan that will be a little bit different.  It always is.  They’re trying to take into consideration their constituents, their legislative goals, and make that fit all into a single plan, and it’s a real challenge.

Q: Walk us through the process.  What happens from this point?

A: The committee has an early morning meeting.  Their day begins at 7:00 a.m.  And they basically share with each other what they want to about what their motions will look like.  Motions that legislators have prepared for them are private and confidential.  They can choose to share that with other committee members.  When they do, basically it allows the committee to, I think, operate a little bit more smoothly when it goes out into a daily meeting which beings at 8 a.m., typically, and ends about 10:30 or 11:00 every morning.

MollyMessick / StateImpact Idaho

This hefty binder is the 2012 legislative budget book.

During that time, they will consider each and every program in state government.  And so they’ll make sometimes competing motions.  But it’s not uncommon that there could be just a single motion.  Legislators respect the work that other legislators do, and so they have to divvy up the state budget.  It’s so large and there’s 20 members.  We try to have a house member and a senate member on all of our motions, because they do have to – then, once they pass out of JFAC – go to each body.  And so we’re looking for a legislator on the committee who has to speak to both the house and the senate on what the committee has done, and we’re looking for support.

Q: The committee is not just agreeing on a certain amount of funding for a department, in other words.  The committee is making very specific decisions.

A: The committee is making very specific decisions about pay increases or potential pay increases for state employees, statewide, including public schools.  They’re making discrete decisions on what we call line-items.  They also have issues they need to fund.  For instance, if there’s a bill that passes both the House and Senate and it has a fiscal impact and it’s a new program, they come back and consider that in trailer bills.  So they’re looking at a fairly detailed level of information for all of these agencies.

Q: What kinds of questions might the committee be weighing if we’re looking at, say, Health and Welfare spending?

A: You know, it may be as simple as – for the agency, they have requests for alterations or repairs and vehicles and computer equipment.  So they may want the details – how much mileage is on a vehicle?  They may want to know how long, for instance, a computer expansion will take.  How much are you paying per hour for contractors, and so forth?   Or it may be as large as – tell us about where your growth is occurring in Medicaid, which providers need more funding, where are the rate increases?  The scope is from the minutiae to the very large, and sometimes it’s even easier for the committee to make a decision about multiple millions of dollars than it is some of the smaller amounts, because they can relate easier to the smaller amounts.

Q: What’s the biggest hang-up you can remember, if there’s a funny hang-up about a very small amount of money in past budget sessions?

A: Well, this is something that happens fairly often.  The committee may come to a bit of a tiff over something as simple as a $15,000 vehicle.  One committee member may have experience that says, you know, “That vehicle should only cost $10,000.”  We actually had an argument about Fish and Game, and we had one legislator who did not want them to buy air conditioning – thought it was excessive.  So those are the type of funny things that occur when people bring their lives experience into this process.

Q: Idaho has, of course, been in budget cutting mode for the last couple of years.  Now there’s actually money to spend.  How does that change this process?

A: It’s been a bit of a challenge, because many of our committee members and our legislators have only been in the legislature during a time of austerity, when they’ve had to make very, very challenging cuts.  And they’ve done so because they had a strong sense of commitment and responsibility to do so.  Now they have to begin to spend, and it’s a different mindset.   Sometimes, some people will tell you it’s more difficult, because you have competing priorities.  The competition is really steep, and that changes the nature of the budgeting process.  Now we’re moving into a little bit different environment, and it’s not been as easy as some people thought it would be.

Q: How have you started to see that play out so far?

A: Right now you can see some tension building.  There are some priorities – and I’ll give you an example.  The governor has supported a tax cut, and then you have that competing with some interests.  People who want to put more money into public schools.  Then we have through Medicaid, we have providers and recipients who are saying, you know, “Please restore the funding you took out on the cuts for Medicaid.”  Yet, there’s not enough money to do it all, so the difficulty is – how much compromise can take place, how much can be changed in the short amount of time, and what the will of the legislature in total.  Because it’s not just what JFAC wants.  It’s also what the entire legislature wants.

Q: So JFAC develops appropriations bills.  Then what happens?

A:  Each appropriations bill has to go through the House and Senate.  And as long as they’re approved by both bodies, they’ll go to the governor, and he plays a role.  He has to weigh in.  He may be satisfied with the appropriations bills.  He may be thrilled.  Or he may be dissatisfied with them, and he may want to communicate back to the legislature.  He always has a choice to veto an appropriation bill, and we would begin our work again.  Once these appropriation bills begin flowing through the system we estimate that we need about two weeks to fully pass all the appropriations bills through.

Q: If you were to encourage people to say engaged in this process, what advice would you give them, if they’re trying to – stay into it, stay plugged in, follow what’s going on.

A: I think it depends on where you are.  If you’re a state agency right now, most likely, you have folks that are listening to JFAC constantly.  You’re trying to monitor the tone, you’re trying to see if there’s a theme of questioning, a theme of concerns.  I think for the general public, especially, if you do have the time to listen in, it really helps you appreciate everything that’s being considered.  We’re available.  We’re trying to be transparent.  The bills are all posted on the internet so you can read an appropriations bill.  They all have a contact number on them so you can call a staff member and ask questions.  We answer questions from the public.  We encourage those questions.

This interview has been edited and shortened.