In the world of government budgeting and spending there is more than one type
of budgeting. A simplistic view would simply say a government budget counts up
how much money the government has and then determines how those funds are
spent. Unfortunately, our modern government system at the state and federal
level are not so simple. There are entitlements, technical adjustments, one-time
spending, policy decisions, and discretionary spending. If that's already starting
to make your head spin a little, welcome to the club. Government spending and
budgeting is not simplistic; it is fraught with politics and policies, some decades
old and institutionalized.
Baseline budgeting is one of the many types of accounting that government
uses. In a basic sense, a baseline budget represents the spending that stays
fairly the same from year to year to "keep the lights on" in a government
program. Assuming the program won't be cut, significantly reduced, or replaced, this spending amounts to what is
"under the line" or assumed recurring in terms of expenses. However, while many would agree a certain level of
maintenance is required to keep an agency operating, baseline budgeting can be anything but just that.
Baseline Budgeting Definition
In a one-sentence description, a baseline government budget involves carrying over the current spending level
from year to year and treating it as the floor on which to build additional spending changes. The major assumption
in this approach is that the existing spending level of the agency is correct and needs no adjustment. Any new
change should be on top of the existing level, not into it. Additionally, the baseline budget needs to be adjusted to
address common issues that devalue spending worth. These factors include inflation, cost of living increases, and
adjustment in supply and resource costs to maintain the same level of service.
The inherent issue with baseline budgeting is that it doesn't shrink if followed correctly. There are some exceptions
to this rule: caseload programs, for example, flow and ebb with the number of cases that
apply, if all else in the program is allowed to remain unchanged. Programs driven by
statutory formulas will also cause increases on the natural as the formula math results in
new costs. Social services and health services programs tend to be common examples of
this sort of situation.
The treatment of these baseline factors along with the existing spending then get accepted
as the "floor" for any new spending discussions in each new budget cycle. Many critics
argue that any real cuts in government spending needs to cut into such floors to score real
savings. However, government insiders also know how difficult such an approach can be.
Just trying to get a statutory change of an entitlement formula is like climbing Mt. Everest
in a partisan environment. Thus it's easier for politicians, who actually pass the legislative language of budgets, to
focus on policy issues above the baseline than the baseline costs themselves.
Baseline Budgeting - What it is, who uses it and why.