NJ Policy Lab: Promoting equity through state budgets

August 12, 2021

by Marilyn Rubin

One of the most powerful levers that governments have to advance equity for all residents is their budgets, “the medium through which [flows] the essential life of support systems of public policy” (Wildavsky & Caiden, 2001, xxvii). Acknowledging the importance of budgets in advancing equity, on his first day in office, President Biden issued Executive Order 13985 calling for the federal government to “allocate resources to address the historic failure to invest sufficiently, justly, and equally in underserved communities, as well as individuals from those communities.” This was the first time in US history that the federal government explicitly identified the budget as a tool to promote equity.

State and local governments, which together account for close to half of all domestic public spending in the US, are also becoming increasingly aware that budgets can help to promote opportunities and enhance equity for all residents and communities.  Local governments have taken a wide range of actions to incorporate equity into their budgets. In Fairfax County Virginia, for example, departments are required to consider equity when making their budget requests.  And in Austin, Texas, “Quality of Life Initiatives” that focus on improving conditions for African-American, Latinx and Asian-American communities are becoming an integral part of the city’s budget process.

States have focused their fiscal efforts to promote equity primarily through the revenue side of the budget.  For example, Washington State has established a 7 percent tax on capital gains above $250,000 annually to help support child care and public schools.  New Mexico increased the state’s Working Families Tax Credit from 17 to 25 percent of the federal EITC.  And Mississippi and West Virginia decided not to eliminate their income taxes, an action that could have created budgetary pressure in several areas including school aid and health care.

New Jersey has introduced several initiatives to advance equity such as the New Jersey Seed Fund that is intended to reduce income inequality and racial disparities in the State. New Jersey is also making efforts to track the operations and performance of all State government departments. However, thus far the focus in budgeting has been on “effectiveness, efficiency, timeliness and service quality with the goal of building a foundation for performance-based budgeting.”

This project will provide the State with information on how other US states are integrating equity into their assessment of agency and department performance and how they are using their budgets to advance equity for all residents and communities. This information can be used to help New Jersey adapt its agency performance assessment and its budget to more directly include a focus on the equity impact of its services and investments

The research team is being led by Dr. Marilyn Rubin, Distinguished Research Fellow at Rutgers’ School of Public Affairs and Administration (SPAA), who will be focusing on New Jersey’s performance assessment and budget.  Dr. Katherine Willoughby, a Professor at the University of Georgia will be analyzing how equity has/has not been integrated in US State performance budgeting efforts. Dr. John Bartle Professor at University of Nebraska at Omaha will be analyzing approaches to budgeting for equity in US cities.  It is being funded in part by the New Jersey Policy Lab.

References:

Wildavsky, Aaron, & Caiden, Naomi. (2001.) The New Politics of the Budgetary Process (4th ed.). Pearson.

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