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The Importance of Comprehensible Budgets

March 22, 2022

By John Hicks, State Budget Director of Kentucky

The breadth and depth of the state government enterprise is substantial, and the passage of appropriations bills and related revenue acts, which comprise the state budget, is one of the most consequential actions taken by a state legislature. States are primarily responsible for the provision of education, health care, criminal justice and public safety, transportation, the protection and safety of vulnerable children and adults, economic development, and many other services to its citizens. Completing a one-year, or a two-year budget depends on thousands of decisions.

Given the significance of this document in a state, it is important for the legislature to provide the public with a comprehensive summary of each version of the budget. Trying to read an appropriations bill and discern its full meaning is a near-impossible task for the public. The language and labels are arcane, based on constitutional and statutory requirements, and steeped in historical precedent. It is imponderable to most people.

There are some ways to help overcome this challenge, which follow. First, though here’s a little background about the process and the information provided along the way:

Every state Governor proposes a budget accompanied by very detailed set of documents posted on websites that enables the public to see the decisions that make up that recommended budget. Often, those documents serve as a primer on what each state agency does, provides historical revenue and spending information, and includes a great deal of explanation on proposed changes and initiatives. At that point, the budget goes into the legislative process.

There are many versions of the budget during the legislative process. Each chamber passes its own version. At the end, a conference committee made up of members from the House and Senate iron out their differences. Most states vary in the total number of bills that make up the entire budget. Few have a single omnibus appropriations bill. Arkansas had 187 bills in 2020. There are states that have separate, complementary budget implementation bills.

One way that the vital information developed through this process can be more accessible is through a budget summary, produced by executive and legislative budget staff. The most recent version of the National Association of State Budget Officers’ “Budget Processes in the States” publication has newly added information about which states produce a budget publication that discloses and interprets the final enacted budget. Thirty-eight states produce documents that memorialize the final budget, twelve do not. Of these thirty-eight states, ten are done by executive budget offices, eighteen by legislative budget offices, and ten are done by both.

Several audiences can benefit from this information. The media, for example, frequently cover the state budgets – and articles in newspapers, radio, television an social media are often the only way that the general public even know that a budget has been passed. They frequently are under great time pressure to understand the budget and to accurately get the information they’ve garnered out to the general public. As a result, any way to simplify the budget for their use benefits everyone concerned.

Then there are the state government agencies themselves. They are primarily interested in the details of their budgets, so tabular data on the various funding amounts and year-over-year change descriptions meet their needs.

There are also some in the general public who are brave enough to wade into the complexity of the budget, and they are also a priority audience. They are well served by documents that lay out the big budget picture: how much money is in the revenue stream, how much is being spent, the amount of change, and helpful descriptions of both what happened to the budget and descriptions of the various functions of state government.

Finally, history is an audience. These documents serve as a record of what happened in the budget process, how much, how different, how new, and when it happened.

The enacted budget documents prepared by the executive branch budget offices tend to provide more content and explanation than those prepared by the legislative branch staff.

Often the documents prepared by the legislative branches are links to the actual legislation and some tabular information. Some of the most common content of executive branch publications include an executive summary or highlights, arranged by major public policy areas: education, public safety, health and human services, higher education, transportation, with highlights of major initiatives. Tables and lists of information are included, often many pages down to the detailed budgets of individual programs with state agencies.

At minimum it includes a balance sheet of the “General Fund” or the “General Revenue Fund”, presentation of the revenue estimates compared against the current or prior fiscal year, and summaries of the areas of spending and the amount of change in spending. The most comprehensive publications provide as much narrative explanation as tabular, fiscal information, as well as information about the capital budget. A few of the states that produce final budget documents to meet the information needs of all audiences are: California, Kansas, Kentucky, and New York.

Congratulations to the citizens of states like those. The more people can understand the complexities of the budget, the more likely that legislators and executive branch budget officers can be held accountable, and not be able to hide behind a thicket of imponderable numbers.

The contents of this blog post reflect those of the author, and not necessarily those of the GFRC.