A liberal view on how Rhode Island should approach budgeting

The Center on Budget and Policy Priorities, a liberal think tank in Washington that makes sweet charts, is out with a recent report advising states on how they should approach budgeting in this age of austerity.

The center’s Nicholas Johnson summarized the group’s four main recommendations thusly:

  • Boost revenues and target investments to strengthen the economy.
  • Avoid ineffective strategies and gimmicks that weaken the economy.
  • Improve fiscal management.
  • Protect the purchasing power of struggling families and children.

Not all of the center’s suggestions involve higher taxes and more spending. “States can help avert unaffordable tax cuts or program increases by adopting a ‘pay-as-you-go’ (PAYGO) system that requires policymakers to fully offset the cost of proposed tax cuts or spending increases,” Johnson suggests.

With Rhode Island’s budget permanently out of balance, a five-year PAYGO rule – or some other change to emphasize budgeting over a longer time horizon – might be worth considering. It would also be interesting to see what those with different budget philosophies would propose doing now to permanently balance the budget.

On the other hand hand, some of CBPP’s ideas have already been considered and rejected here: There seems to be little appetite among legislative leaders for changing the income tax again to target high-earners. Combined reporting flopped last year. Amazon.com cut off its affiliates rather than pay sales taxes here.

For a different emphasis, try “Tools for Better Budgets” by Josh Barro (now at Forbes).

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