Sandoval seeks a higher level of Silver State performance

Geoffrey Lawrence

Every March, the excitement of sporting competitions captures the imagination of millions of Americans. Betwixt the NCAA basketball tournament and the genesis of a new season for professional baseball, it can be an exhilarating month for sports fans.

What garners less attention from the average American during this time is the launch of his state's budget hearings. And although last week's preliminary hearing on Nevada's 2013-15 state budget was called a "Budget Kick-Off" — a clear sports reference — it failed to draw out fans adorned in jerseys or face paint to cheer on their favorite budgeting approach.

However, Gov. Brian Sandoval and his staff did bring some new excitement to this year's kick-off event: They unveiled the work they have done incorporating the performance- and priority-based approach into what will eventually become Sandoval's 2013-15 Executive Budget proposal.

This new approach is a welcome departure from past budgeting practices, which have failed to give taxpayers any accountability over the tax dollars being spent. In the past, Executive Budgets have been created by asking the heads of each state office how much money they're spending currently, how much they plan to spend to give employees pay raises over the next two years, how much they anticipate their caseload to grow and whether they'd like to expand the scope of their activities.

Then, the answers to these questions would be summed into an official "agency request" and eventually folded into the Executive Budget proposal.

When the state budget office would add together all of these agency requests, staff would calculate a "baseline" spending figure that really represents a spending dream list for the state bureaucracy. Often, the baseline figure has been mistakenly portrayed as what it would cost to continue the same level of public services into a future budget cycle.

But this is untrue. The "baseline" actually includes things like across-the-board pay raises and requests for "enhancements" from bureaucrats who want to create new services and grow the size of their office. As a result, the projected baseline-spending amount frequently has grown by more than $1 billion from budget cycle to budget cycle.

Moreover, notably absent from this traditional process are any questions about what results each state office is trying to achieve and how effective it and other offices have been at achieving those results.

Even worse, the baseline figure that results from this process has repeatedly been used as an excuse for raising taxes on private citizens: If revenues from the existing glut of taxes are projected to be lower than the dream list of unaccountable government spending, then a "budget deficit" is proclaimed and taxpayers are asked to fill in the difference with even more taxes.

That's exactly why the Nevada Policy Research Institute, along with other notable groups, including Nevada's Spending and Government Efficiency (SAGE) Commission and the Nevada Taxpayers Association, have long advocated for a transition to the performance-based budgeting approach that demands quantifiable results for every dollar spent.

Building upon efforts begun by the Gibbons administration, Sandoval last year became the first governor in Nevada's history to present a performance-based budget document.

Now, it appears he's taking it to another level.

Sandoval and staff have identified eight core functions of government, encompassing 56 clear policy objectives that they intend for bureaucrats to achieve. Progress toward those objectives will be measured using 148 different performance metrics. Details regarding these goals and metrics are available at the state budget office's website.

State budget director Jeff Mohlenkamp was careful to emphasize during his presentation last week that state agencies will be judged by how well they accomplish the outcomes that policymakers hope to achieve — even if those outcomes aren't entirely under the control of government.

That's an important concept, because it can change the culture within the bureaucracy — away from a focus on strict adherence to process and instead toward results, useful innovation and productive outside-the-box thinking. Administrators — now sensitized to how the private sector responds to particular policies — should be fine-tuning their policies to minimize the adverse consequences that, before, were someone else's problem. If combined with a new incentive structure, this will be especially effective.

As much promise as Sandoval's performance-based budgeting approach offers, however, there remains a genuine danger: that when lawmakers gather for the 2013 legislative session, they'll again use the old, unaccountable, baseline-budgeting numbers to undermine his efforts to bring accountability.

In 2011, lawmakers only conditionally endorsed Sandoval's approach with the passage of AB 248. That bill required the creation of a performance-based budget but did not remove the old requirement of a baseline budget. Indeed, alternative bills that would have removed this antiquated requirement were not even granted committee votes.

That very attitude strongly suggests that lawmakers looking to grow the size of government while shielding it from transparency and accountability will again, in 2013, use baseline-budget numbers to stir up trouble. Disingenuously, they'll claim that the new budget is irresponsible and that massive new taxes are warranted to fund the bureaucracy's baseline fantasy figure.

NPRI disagrees with Sandoval's belief that an extension of $620 million worth of temporary taxes is necessary to obtain results in educational achievement. U.S. Census data shows that Nevada is already a high spender for the region and, besides, student achievement has far more to do with how the money is spent than with how much is spent. Moreover, NPRI's Solutions 2013 sourcebook identifies highly specific ways that hundreds of millions of dollars can be saved across state government — without sacrificing quality of services and while still meeting possible new state Medicaid obligations under ObamaCare.

The performance-based approach to budgeting, however, which Sandoval has whole-heartedly embraced, has been sorely needed for decades. Nevadans should not support any obstruction to this approach.

Bravo, governor.

Geoffrey Lawrence is deputy policy director at the Nevada Policy Research Institute. For more visit

Geoffrey Lawrence

Geoffrey Lawrence

Director of Research

Geoffrey Lawrence is director of research at Nevada Policy.

Lawrence has broad experience as a financial executive in the public and private sectors and as a think tank analyst. Lawrence has been Chief Financial Officer of several growth-stage and publicly traded manufacturing companies and managed all financial reporting, internal control, and external compliance efforts with regulatory agencies including the U.S. Securities and Exchange Commission.  Lawrence has also served as the senior appointee to the Nevada State Controller’s Office, where he oversaw the state’s external financial reporting, covering nearly $10 billion in annual transactions. During each year of Lawrence’s tenure, the state received the Certificate of Achievement for Excellence in Financial Reporting Award from the Government Finance Officers’ Association.

From 2008 to 2014, Lawrence was director of research and legislative affairs at Nevada Policy and helped the institute develop its platform of ideas to advance and defend a free society.  Lawrence has also written for the Cato Institute and the Heritage Foundation, with particular expertise in state budgets and labor economics.  He was delighted at the opportunity to return to Nevada Policy in 2022 while concurrently serving as research director at the Reason Foundation.

Lawrence holds an M.A. in international economics from American University in Washington, D.C., an M.S. and a B.S. in accounting from Western Governors University, and a B.A. in international relations from the University of North Carolina at Pembroke.  He lives in Las Vegas with his beautiful wife, Jenna, and their two kids, Carson Hayek and Sage Aynne.