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A leading lawmaker has announced the state budget process will require every agency to utilize zero-based budgeting in the wake of a projected shortfall due to the Chinese coronavirus and government-ordered shutdowns that have devastated the Texas economy.

“As I meet with each agency to review their appropriation requests, I will begin at zero,” said State Sen. Jane Nelson (R–Denton), the head of the Senate Finance Committee which will prepare the state next budget.

Requiring zero-based budgeting—a powerful tool to rein in expanding bureaucracy and administrative bloat—for every agency in every budget has been a legislative priority of Texans for Fiscal Responsibility for years.

The following is a brief explanation of why:

“Traditionally, appropriators in the Texas Legislature utilize what’s commonly referred to as ‘incremental’ budgeting. Under that process, agencies begin at their previous appropriation amount and are provided increases to account for rising costs, population, etc.

 

“Such a practice is inherently flawed because it rests on the assumption that the particular agency is running efficiently and revenue is spent appropriately. In addition to enabling waste, fraud, and abuse, the process is also rigid and slow to adapt.

 

“Perhaps technological advancement has reduced the need for additional appropriations in a particular department, likewise changing demographics or other factors may require additional resources for another.

 

“The answer to this should be a zero-based budgeting system. Under that process, the state budget is wiped clean every time and is re-calculated as if starting from scratch. That way, departments, agencies, and other government entities find it much tougher to spend your tax dollars inefficiently because they cannot count on current levels of spending to be maintained.”

With Texas under heavy strain due to both the Chinese coronavirus and the economic effects of government-imposed shutdowns, zero-based budgeting is one strategy that could help ensure lawmakers are able to identify ways to cut costs and return money to taxpayers.

Nelson has been a leader on pushing for zero-based budgeting for years and has made substantial progress. However, efforts to require the reform every session have fallen short.