Keeping Track of Dollars and Cents in a Gubernatorial Transition, Amid Economic Uncertainty and Fiscal Cliffs
The governor’s office is on the ballot across 36 states next week, with at least 8 states being guaranteed a new top executive due to either term-limited or retiring governors. While candidates focus on winning votes, state governments have already been planning to navigate the transition process. Campaigns should seek guidance from state budget offices on pressing economic and fiscal concerns if they hope to successfully pivot from campaigning to governing.
Current administrations, especially in the 8 states that have an ensured transition, play a large role in getting new administrations up to speed by inauguration. This reliance can be challenging, as professionals who have been pivotal to achieving policy and programmatic goals may leave a governor’s office before the lights are fully turned off.
Fiscal sustainability is essential to effective policy. State budget offices, often more stable across administrations, are a critical store of institutional knowledge and insight into the state’s financial position. The National Governors Association highlights the crucial role of state budget offices in its transition guide, stating that “paramount in nearly everything you do during transition is the budget process.”
Incoming governors and their staff will in most states inherit a budget set by their predecessor, with the exception being states with a biennial budget that ends early in the new term. Revenue, expenditure, and economic forecasts are central components of any state budget, and provide crucial insight into the budget planning process and prospects for subsequent fiscal years. While each state’s forecasts may show a multitude of conditions, decisions to grow, cut, or otherwise modify budgets should be informed by a full understanding of the long-term trajectory of a state.
The trillions of dollars in federal COVID-19 aid flowing through states further heightens the need for new administrations to call on the expertise and knowledge of state budget offices, as aid set to expire in coming years might necessitate policy solutions to potential fiscal cliffs. As discussed in the Volcker Alliance issue paper, The $195 Billion Challenge, the use of one-time relief funds for ongoing programs may create structural imbalances down the road.
It would not be surprising if state budget offices are already aware of and prepared for these cliffs, given their role in allocating funds within current administrations. It is crucial that incoming governors avail themselves of the institutional knowledge of state budget staffers if they hope to avert fiscal stress and a hamstrung policy agenda.
The National Association of Budget Officers wastes no time in their transition guide for governors, opening the document by stating: “Top priority during transition should be understanding the budget”. This importance should not be lost on new administrations, as understanding budget fundamentals is crucial to not only having a successful transition to governance, but also achieving policy goals and keeping campaign promises.
