Gov. Perdue On Why He Vetoed SB1

Governor Perdue has explained why he vetoed the Zero Based Budgeting Act (SB1). I’ve uploaded the entire letter which you can read here. Below are a portion of Perdue’s comments.

The problem with a pure zero-based budgeting philosophy is that it focuses on the wrong end of the budget process – the beginning. I can tell you after eight years of developing budgets, five of which have been smaller than the year before, that the starting point is not nearly as important as the finish line.

My administration has taken an approach that is similar to zero-based budgeting that I believe is even more in-depth. The state budget used to be almost like an Easter egg hunt. An agency would receive appropriations for administration, travel, technology and other broad spending categories. Looking at a budget like that, you could not see the programs an agency is providing, and how much each program receives. We have instead taken a programmatic approach to the budget. My first year in office, I asked each agency to list every program they provided in order of importance. Maybe it’s my small business background, but that seems like the first thing any business, government or family should do before even trying to put a budget together, asking themselves what kind of value they are receiving from the dollars they spend.

With that task accomplished, we spent literally hundreds of hours in budget meetings requiring agencies to justify each and every program and cost. Every year my budget team and I go through the exact same process and ask a couple of basic, core questions: Is this something government should be doing? Can someone else do this better and more efficiently than state government?

This is the process we have used to cut the budget by more than $3.5 billion. We have the same number of state employees as we did in 2000, even though there are 1.7 million more Georgians to serve. Our budget this year is comparable to what our budget was back in 2005. In fact, I invite you to follow this link — – where on page 4 you will see our per capita spending is ranked 49th in the nation.

While Senate Bill 1 would have implemented a process somewhat similar to true zero-based budgeting, it did not eliminate our current budget process. The result of this would have been the development of two budgets, taking double the time and using double the staff, actually increasing the size of government rather than decreasing it.


  1. B Balz says:

    I would encourage the new Governor to carefully review Dept. of Administrative Services budget.

  2. Bucky Plyler says:

    Although, a zero based budgt approach is hard to accomplish in a political atmosphere, SB 1 is a good idea. After reading this letter, I don’t understand why the Gov. thinks SB 1 works against a programic approach. The logic doesn’t compute.

  3. analogkid says:

    “you will see our per capita spending is ranked 49th in the nation.”

    I am absolutely outraged that we are not 50th. A true conservative would have gotten us there, along with our close-but-no-cigar education ranking of 49th. Our next governor needs to commit to across the board rankings of 50th.

      • analogkid says:

        Criticizing the state’s “leadership” doesn’t mean I hate Georgia, just like criticizing Obama doesn’t mean you hate America (unless you’re a McBerry supporter, in which case it does). 🙂

  4. I Am Jacks Post says:

    “Maybe it’s my small business background . . . ”

    Yeah, we know all too well about your small business background.

  5. B Balz says:

    While some are content to ‘hate on’ Governor Perdue, regardless of those pesky facts, I am not ready to jump into the fray over Zero Based Budgeting (ZBB)

    I would be very pleased if the next Governor could get the budget out a month or two sooner. This would allow the Legislature to review it in a more timely fashion. The college text, Principles of Accounting, states ZBB can be a “very time consuming and expensive to implement” process. (SEE BELOW)

    Getting the budget to the Legislature earlier is an idea Rep. Scott supported, and HE knows the process. Oh Austin, wherefore art thou?!

    ZBB was tried and failed on a Federal level about 15 years ago. I feel it is similar to FAIRtax, sounds good, but further review shows a specious paradigm. I am not an accountant, but I stayed in a Holiday Inn, once.

    Here is an except from: Principals of Accounting on ZBB

    ZERO-BASED BUDGETING: The problem of budgetary slack is particularly acute when the prior year’s budget is used as the starting point for preparing the current budget. This is called “incremental” budgeting. It is presumed that established levels from previous budgets are an acceptable baseline, and changes are made based on new information. This usually means that budgeted amounts are incrementally increased. The alternative to incremental budgeting is called “zero-based budgeting.”

    With zero-based budgeting, each expenditure item must be justified for the new budget period. No expenditure is presumed to be acceptable simply because it is reflective of the status quo. This approach may have its genesis in governmental units that struggle to control costs. Governmental units usually do not face a market test; they rarely fail to exist if they do not perform with optimum efficiency. Instead, governmental entities tend to sustain their existence by passing along costs in the form of mandatory taxes and fees. This gives rise to considerable frustration in trying to control spending. Some governmental leaders push for zero-based budgeting concepts in an attempt to filter necessary services from those that simply evolve under the incremental budgeting process.

    Business entities may also utilize zero-based budgeting concepts to reexamine each expenditure each budget cycle. While this is good in theory, zero-based budgeting can become very time consuming and expensive to implement. In business, the opportunity for gross inefficiency is kept in check by market forces, and there may not be sufficient savings to offset the cost of a serious zero-based budgeting exercise. Nevertheless, business managers should be familiar with zero-based budgeting concepts as one tool to identify and weed out budgetary slack. There is nothing to suggest that every unit must engage in zero-based budgeting every year. Instead, a rolling schedule that thoroughly reexamines each unit once every few years may provide a cost effective alternative.

    I think the ‘rolling schedule’ MAY have merit, but truly Georgia is run relatively efficiently compared to other States. Benchmarking toward ‘best practices’ seems a better method, as POA suggests.

  6. Jason says:

    I can tell you after eight years of developing budgets, five of which have been smaller than the year before, that the starting point is not nearly as important as the finish line.

    Too bad that’s not true. Using population growth plus inflation, you can see that the pace of spending remained the same from his first budget until FY 2009.

    Only recently has the Governor cut the budget, only because he was forced to by economic conditions. He did nothing but let it get out of control before, which is why the budget cuts were so difficult.

    • B Balz says:

      When things are booming, and revenues are flowing, most organizations are slow to conserve. May not be good planning, it just is.

    • mitchmartin says:

      Nope, that’s false. When you start in 2002 and use a population growth plus inflation line, the budget has been and continues to be under that line. The GPPF graph that you always point to starts in 1998, which means that the years under Governor Perdue are skewed by the Roy Barnes years.

      • Jason says:

        Ah, now I know who you are.

        No one, absolutely no one, looks at a budget through that sort of time-frame. The fact of the matter is that Gov. Perdue continued the status-quo when it came to the budget.

        It’s like saying we should only look at the Bush budgets from when he took over. Who looks at data that way?

    • Harry says:

      Sorry, I don’t buy the argument. Due to permanent demographic changes the US and Georgia economy is trending deflationary. You don’t solve deflation by inflating government revenues, i.e. taxes, nor by running bigger deficits. You stop the bleeding, i.e. cut spending, and live within your means.

  7. John Konop says:

    This is like being on a chocolate cake and cookie diet with no exercise and asking why you are gaining weight. Sonny, Georgia needs diet and exercise not more feel good excuses.

  8. kolt473 says:

    Gov’t state to federal isn’t serious about controlling spending. spend millions on convincing ads in the end deficit spending, taking away peoples basic services from libraries, to first responders proves JOHN Q. TAXPAYER comes in dead last.

  9. Doug Grammer says:

    I have two reasons the Governor didn’t want to sign SB1. The first reason is that he didn’t want to admit that there has been a better way to do the budget that what he has been doing for the last 6 years. The first year he was in office they could not have got the bill passed in time to write the following years budget.

    The second reason is that “go fish” and a few other pet projects might not pass muster. To be fair, I like the questions that were asked: “Is this something government should be doing? Can someone else do this better and more efficiently than state government?” I’m just not sure I always agreed with the answers. I don’t agree with anyone 100% and the Gov. is no exception. If his term ended today, I’d still give him a B to a B+ grade.

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