02/24/2009 - Form over substance (Fort Wayne Journal Gazette)

Form over substance

House Republicans' talking points on a proposed one-year budget suggest Democratic leadership is irresponsibly pushing a spending plan that will rewrite Indiana history.

Not quite. The "unprecedented change from the time-tested two-year plan" actually has a precedent. The General Assembly adopted one-year budgets for several years in the 1970s.

And there's certainly a precedent established by other states. Indiana is one of just 21 states that adopt biennial budgets, a throwback to days when lawmakers traveled by horseback to the state capital, only in odd-numbered years.

Dispensing with the notion that a two-year budget is the only acceptable approach should be the first order of business as the Senate begins its deliberations on a spending plan. The state faces much greater challenges than the issue of preserving tradition. The Democratic-controlled House passed a budget bill that falls almost $750 million short of revenues by tapping state reserves and Indiana's share of the federal stimulus package. Determining whether that is the proper course - while waiting for updated revenue figures - is a better approach.

The National Conference of State Legislatures has compiled a collection of research that finds no clear advantage to either one- or two-year budgets. "The success of a budget cycle seems to depend on the commitment of state officials to good implementation rather than on the method itself," the report concludes.

The House Republican caucus issued a news release claiming the one-year budget "encourages short-term fiscal decisions that hinder the development of a long-range fiscal policy." But the report from the national conference disputes that charge, noting there is no evidence that biennial budgeting favors long-term planning.

Nor does it find evidence that biennial-budget states spend more than annual-budget states, although a Michigan State University study suggested that states with annual budgets spend less than those with two-year budgets.

Indiana's dramatic property tax overhaul in last year's short session actually strengthens the argument for annual budgeting. When the state moved to end its reliance on relatively stable property tax revenues, it replaced those dollars with volatile income and sales taxes. Sooner than anyone expected, those revenue streams have dried up, and there's no assurance they will improve by next year.

In the end, the Democratic-controlled House and Republican-controlled Senate will come up with a compromise spending plan that melds the priorities of both. Democrats laid out a plan they believe places much-needed investment in education and infrastructure. Senate fiscal leaders likely will - and should - question the investment in university building projects.

By the time the General Assembly reaches its April 29 adjournment deadline, lawmakers will have better information on state revenues. But even then the full effects of the recession won't be clear.

Hoosiers need a spending plan that most responsibly prioritizes the allocation of sparse resources. If, by April, the responsible approach is a one-year budget, that's the one legislators should choose.

Biennial or annual?
Since 1940, the number of states adopting two-year budgets has declined, following the move to annual legislative sessions.

21: States with two-year budgets

16: States that have changed their budget cycles

5: States that switched from annual to biennial budgets