Senate Leadership
May 29, 2009
Senate President Wants to Take the Politics Out of Budget Forecasting
State Senate passes bill that would help resolve budget differences, lead to more accurate revenue projections, and save the state money
Senate President Donald E. Williams, Jr. (D-Brooklyn) has helped to pass a landmark good government bill that will help resolve budget differences between the legislative and executive branches of government and potentially save the state significant sums of money.
By a count of 23 — 12, the Senate endorsed consensus forecasting, a formal mechanism to forge agreement on revenue estimates. Consensus forecasting would require OPM (Office of Policy and Management) and OFA (Office of Fiscal Analysis) to work together to come up with an agreed upon revenue forecast. In the event that they fail to do so, the Comptroller would resolve the differences in their forecasts.
“This change can help us solve our current budget crisis and it can help us in the future, just as it has in 26 other states,” said Senator Williams. “We should all be able to agree that taking the politics out of the budget forecasting is a smart thing that can save time and money.”
Consensus forecasting is a widely used and well-respected method for resolving conflicts. Twenty-six have consensus forecasting, including NY, MA and RI. The National Advisory Council on State and Local Budgeting has recommended that states establish a consensus revenue forecasting system since the late 1990s.
Consensus forecasting not only removes politics from revenue projections, it helps the state by doing the following:
Improves accuracy of revenue projections:
- Accurate revenue projections are particularly difficult now given the volatile economic environment. For this reason, it is especially important for the executive and legislative fiscal offices to work together to better understand and promptly resolve differences in their forecasts.
- As the Federal Reserve Bank of Boston has stated, a sound revenue estimate is the basis of a successful budget.
Avoids increased borrowing costs by producing accurate forecasts:
- According to a 2003 Program Review & Investigations Committee report, sound forecasting is viewed favorably by bond rating agencies.
- A state’s use of consensus revenue forecasting is positively associated with a state’s bond rating. The adoption of consensus revenue forecasting is consistent with a political system that is capable of confronting a realistic picture of its budget situation.
Avoid budget uncertainty for municipalities:
- Differences over revenue projections can stall budget negotiations and therefore create uncertainty for municipalities, which rely on the state budget for significant amounts of revenue. Consensus forecasting would eliminate this type of inter-branch stalemate, and would help municipalities better predict the level of funding they will receive.
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Senator Williams’ Derek Slap |
Listing of Leadership’s recent press releases. |
Senator Looney’s Derek Slap |
