Families on a budget under-stand: spend more than you earn and you incur debt. Excessive debt is crippling, yet governments often struggle with that basic concept.
The federal government can tell you from experience. It’s easy to spend money, especially when you can put it on the credit card. And like some card hold-ers, governments are starting to realize they have racked up so much interest and debt they can no longer make their payments. The Kansas Senate has just enacted a rule that could help keep the state out of the spending mess that plagues other governments across the United States and the world.
On Jan. 16, the Kansas Senate passed a procedural rule called pay-go. The concept is simple, the short form of “pay-as-you-go,” first implemented by Congress in 1990. A package of tax increases and spending cuts to stabilize a growing debt problem led lawmakers to require that any new spending increases be accompanied either by an equal dollar value in spending cuts on other policy or new revenue. The analogy to family finances is simple: if your budget is maxed out and you want to take a $5,000 vacation, either find ways to economize or raise the extra money before you book the trip.
The model worked well in Congress through the 1990s, budgets boosted by increased revenues from the burgeoning Internet economy. By 1999, when a “surplus” budget was an-nounced, fiscal discipline was on the wane in Congress. By 2002 the law sunset, so congressional Republicans could push through President Bush’s new spending programs like No Child Left Behind and Medicare Part D.
President Obama got a revised pay-go law in 2010 packaged with a debt ceiling increase. Unlike the 1990 law, though, the 2010 pay-go law is riddled with exemptions for budget-expand-ing services like Social Security and Medicare.
The core pay-go model remains, and as Kansas appears to be shifting toward a biennial budget, pay-go makes sense. According to current budgeting practice, the Legislature could spend as much money as it wants, and if allocated spending exceeds revenues, the governor is simply empowered to demand cuts at specific agencies — or across-the-board -— to bring spending back down to levels of intake. The intent behind pay-go should keep rosy budget projections that sometimes fail to turn into real cash from causing mid-year reallocation crises in state administrative agencies.
The Kansas House’s new conservative power center instituted pay-go in 2011, but the Senate did not. Now that conservative allies of the governor have seized control of the upper chamber, they have built pay-go into their rules. Critics point to hypocrisy among Republicans: talking a good game about fiscal conservatism while needing rules to keep themselves from profligate spending. Those critics need to understand one basic tension all legislators struggle with: being a treasury watchdog while trying to provide as much revenue and benefits to their districts as possible. Pay-go rules make it harder for legislators to give in to those instincts to send monetary goodies back to the district, imposing discipline where it sometimes lags.
Another benefit of pay-go is that it discourages legislators from playing “gotcha” campaign games with others. For instance, lawmakers who want a ready-made comparative campaign ad could propose an amendment to existing legislation mandating that the Legislature spend $20 billion on education every year. While it sounds appealing, the addition would more than double the entire spending of the state, so it is infeasible. Anyone in their right mind would vote against it, which would lead to campaign ads claiming the representative voted against education funds for Kansas’ children. It’s a dirty trick, one that should not happen. Pay-go means the crafty writer would have to zero-out the entire rest of the budget and add almost $4 billion in new revenue before introducing the bill, eliminating the “gotcha” problem.
If the governor and his allies want Kansas to serve as a model for other states, the new pay-go rules are a good start.
Chapman Rackaway is an associate professor of political science at Fort Hays State University.