Legislators considering ‘pay as you go’ budgeting

Dawson Bell has an article in the Detroit Free Press about a group of Michigan legislators who argue that the state should budget based on a PAYGO, or pay-as-you-go, system. Such a system would require that each bill that authorizes spending identify the specific revenue source for that spending.

But in recent weeks, some lawmakers, notably House Appropriations Chairman George Cushingberry, D-Detroit, have talked about using PAYGO for popular programs like Promise college scholarships or aid to local government.

Cushingberry, who calls himself an “old-fashioned tax and spend Democrat,” has a list of new or higher taxes on everything from bottled water to satellite television that he said could pay for such services.

Other revenue-producing tactics — like using federal stimulus funds a year earlier than planned — also would qualify as pay-as-you-go.

How much budget discipline such an approach would produce is questionable. Congress dumped PAYGO in 2003 — unable to meet its demands.

But the problem is not an inability to meet those demands, it’s an unwillingness to do so. Politicians tend to be terrified of the results of their choices. It’s bad enough to have to take responsibility for spending when the sources of that spending are vague; if they have to specify the source of that funding by naming a particular tax or fee, they risk retaliation from those whose livelihoods might be affected in some way by that tax or fee.

But this is all the more reason for a PAYGO system. It gives the public the ability to weigh tradeoffs in a specific manner. Is funding the Michigan Promise scholarship, for example, worth a five cent tax on every bottle of water they buy? It also forces legislators to argue for a policy while being up front about the tradeoffs implicit in any policy option.