Baltimore Children & Youth Fund.

I am sure that the members of the Baltimore City Council had the best of intentions when they voted to place a proposed amendment to the city charter on the ballot creating the Children and Youth Fund.  More than anything else, however, the proposal is a sad reflection of a city council adrift and grasping at straws on how to narrow the widening gulf between the city’s needs and its resources.  If the mayor’s veto is overturned and the amendment is approved by the voters of the city 3% of the city’s discretionary spending will be “earmarked” each year for programs for children and youth; the earmarked funds in effect will be exempt from the city’s normal budgetary process.

The regressive practice of binding a city by law to spend money for specific purposes other than through an annual budgetary process has largely been purged from modern municipal government, and the fact that the city council is attempting to resurrect it is a measure of its desperation.  There is a more reasonable way for the council to achieve the intended result that does not undermine the principles on which sound budgeting is based.

The theory embraced by the city charter, and by the charters of all home rule counties in Maryland, is that each year a budget is prepared and approved after a comprehensive review of all of the needs and demands for money, carefully balancing one priority against the other.  To do that the Baltimore city administration now employs a modern budgetary technique known as “outcome budgeting” that, in the words of the Bureau of the Budget & Management Research, “aligns resources with results that matter most to citizens.”  The results are organized around six “priority outcomes”:  Better schools, safer streets, stronger neighborhoods, a growing economy, innovative government, a cleaner city, and a healthier city.  The most important job that the Mayor and City Council do each year is to prepare and approve the budget of city government.

The practice of earmarking money for expenditure outside of the normal budgetary process fell into disfavor primarily because it removes the flexibility from budgeting and relieves certain expenditures from undergoing the same type of oversight and scrutiny given to other expenditures.  The city has many needs, and those needs may vary from year to year.  In the context of finite resources fencing off a certain amount of money for a particular need inevitably means that another need will go unmet.  If in a particular year a future mayor and city council determine that the need for spending on public safety, public health, or some other important purpose outweighs the need for spending 3% of the discretionary funds on programs for children and youth they nevertheless will be unable to move any of the earmarked money to the more pressing need, forcing the city to consider an increase in taxes instead.

As a guaranteed pot of money, earmarking also tends to reduce the rigor with which proposals for expenditure of the earmarked funds are reviewed:  The money in the Children and Youth Fund must be spent each year regardless of the merits of specific proposals for expenditure.  Supporters of the proposal anticipate that a board would be created to review applications from groups that want some of the money.  Is there any doubt that marginal applications will be approved simply because the money is there and must be spent?

Listening to the discussion by the council it is clear that some members are frustrated by the constraints of the city’s “executive budget system,” in which the council lacks the power under the current budgetary system to add or increase items of expenditures not recommended by the mayor and approved by the Board of Estimates in the annual budget submitted to the council for final approval.  In other words, the council cannot now take money from some other purpose in the budget submitted to them and use it to add or increase an item of expenditure for a program benefitting children and youth.

If that is the problem, then solve that problem without creating a worse one:  Propose a charter amendment that allows the council to “transfer” funds to a purpose that benefits children and youth from some other purpose even if it means adding or increasing an item of expenditure not recommended by the mayor and approved by the Board of Estimates.  Such a charter amendment would slightly modify the executive budget system without destroying the integrity of the entire budgetary process.

February 9, 2016

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