It’s time for states to give serious thought to fixing their budget processes. We could have said that 20 years ago. Or 10. Or five. But the cliché applies: A crisis is a terrible thing to waste. With anguishing strains on state and local budgets, tax collections still down from two years ago and receding federal stimulus money, the time couldn’t be better.

Numerous governments have turned to a process that was outlined in The Price of Government by David Osborne and Peter Hutchinson. The components of the process are common to many outcome, results-oriented, budget-reform efforts. If you can get people to look at funding outside of agency silos, they can then set and prioritize governmentwide goals and catalog and analyze the organization’s activities. The result is that internal and external groups prioritize and revamp the activities to accomplish the top goals. This all sounds rational. But the distance between a good idea and a happy outcome is in the implementation.

Back in 2005, The Price of Government ideas sounded great to the Michigan Chamber of Commerce, which joined with the Michigan Association of Realtors to pay for the Legislature to give it a try. The effort was a resounding failure, according to Mitchell Bean, director of the Michigan House Fiscal Agency. The Senate lost interest. Funders took a discussion of taxes and tax incentives off the table, which veered away from the vision of considering every aspect of the budget.

Prioritization was difficult to implement, given the number of constitutional and statutory requirements for funding. In a term-limited environment, inexperienced legislators also had trouble getting a grasp on the different budgetary trade-offs.

Another attempt had mixed results. In the last recession, the Washington state executive branch plunged into a process it called “Priorities of Government.” It was time consuming, and though there were positive aspects for the executive branch, it foundered when it hit the Legislature. The experience was sufficiently positive, however, for the executive branch to give it another shot. For its biennial budget that begins July 1, Washington faces about a $3 billion gap, which is plenty of impetus.

Many lessons were learned the first time around, and the process has been substantially redesigned. Methods for getting public input have been revamped, and the number of goals and activities have been pared down. Washington divvied up what it does into 1,000 activities that are being prioritized into six different goals -- called value areas -- compared with the old version’s 1,900 activities and 10 goals.

In the previous recession, the state set up an informal guidance group of half a dozen individuals. For the 2010 version (in preparation for the 2011-2013 biennium), the state established a 35-member committee consisting of business, labor and tribal representatives; police chiefs; a newspaper publisher; medical association members and the like.

An important change was to also include four legislators on the committee. Given the built-in strains of using a different budgeting framework for the Legislature, it just seems reasonable to ensure that some high-level legislators are familiar with the process -- and perhaps even buy into its conclusions. Meanwhile, four budget hearings, which drew at least 400 people a piece, were held across the state, with the governor attending all but one.

The jury is still out on the impact that this ultimately will have on Washington’s budget. But we’re encouraged by some evidence that it works rather well in smaller governments -- particularly city manager governments where the tensions between the legislative and executive branches are less pronounced.

Vancouver, Wash., designed a prioritization approach that it’s calling Horizons. The city of 165,000 has the advantage of having a strategic plan that was laid out by the City Council in 2008. Using that document, it outlined six areas of strategic commitment and divvied up what it does into 300 activities. The six areas have now been prioritized based on public input.

At press time, no budget had been approved yet, but the effort has dramatically changed the way the decision process has worked. Instead of fighting exclusively for funding of their own agencies, the directors are now part of a leadership team that’s responsible for the whole budget. With the knowledge that cutbacks are essential even in the top priority area of “a safe and prepared community,” the fire chief bought into the idea of closing a firehouse, and the police chief proposed a restructuring of the department to roll back ranks and create a flatter organization.

“A common approach to budgeting is an across-the-board reduction, but that doesn’t reflect a priority of programs,” says Lloyd Tyler, Vancouver’s chief financial officer. “It says all programs and services are identical in priority. Our process says there is a difference in programs and services. The budget process reflects that.”