President Donald Trump’s call to reduce bureaucratic bloat through the Department of Government Efficiency and his recent executive order to dissolve the Department of Education and return power to the states resonate deeply with millions of people tired of rampant waste in Washington. As the states capitalize on this magic moment to defend the taxpayer, DOGE should also look to the states for proven solutions.
The states are ripe with examples of successful cost-cutting measures. One difference between states and Washington, D.C., is that all 50 states, except Vermont, are required by law to balance their budgets. Some of these balanced budget rules are clearly better than others, but this mandate forces states to practice fiscal discipline, unlike the federal government, where the national debt has reached $36.6 trillion, or over $323,000 per taxpayer.
Over 20 years ago, Washington state, under Democratic Gov. Gary Locke, faced a $2.4 billion deficit. The state closed the gap without raising taxes by abandoning the traditional “cost-plus” approach to budgeting, which adds a set percentage to the previous year’s spending. Instead, Washington adopted priority-based budgeting on a bipartisan basis, where government programs were ranked based on their importance and how well they aligned with key goals. Before this process, state agencies didn’t have mission statements to outline objectives.
Priority-based budgeting asks fundamental questions about good government. What is the role of government? What are the essential services a government must provide to fulfill its purpose? How will we know if a government is doing a good job? What should this cost? When cuts must be made, how will they be properly prioritized?
This approach, outlined in the American Legislative Exchange Council’s State Budget Reform Toolkit, allowed the Evergreen State to balance its budget while focusing on essential government functions, offering a model for states and the federal government to emulate.
While priority-based budgeting tackles government spending from the top down, other initiatives ensure that established programs are necessary. A criticism of government is that once legislators create programs and agencies, they rarely face reevaluation. As economist Milton Friedman famously said, “Nothing is so permanent as a temporary government program.”
To address this problem, Texas created the Sunset Advisory Commission in 1977. The commission is tasked with reviewing government programs and eliminating those that are no longer effective or necessary. Under this system, agencies are automatically abolished unless the legislature passes a continuation bill, typically limited to 12 years.
The commission has saved Texas billions of dollars by eliminating or consolidating agencies. For every dollar spent on the commission, Texas has saved $27, demonstrating that evaluation is essential to keeping the government lean and efficient. ALEC’s model policy, the Regulatory Sunset Act, encourages states to follow in Texas’s footsteps and require rules and regulations to sunset automatically after five years.
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As DOGE gains momentum in the district, many states are pursuing their own government efficiency programs. ALEC, which brings together state legislators and private sector leaders, created the Government Efficiency Coalition to pair these principled state lawmakers with reform-minded members of Congress to exchange ideas and best practices.
By looking to the states for successful ideas on taxpayer savings, the federal government can adopt proven strategies to reduce waste, improve accountability, and ultimately save taxpayers money. Likewise, DOGE should inspire a wave of state-level innovation and ideas for budget reform. Commonsense solutions to overspending and waste are not only possible, they are already being implemented by the states. The federal government can greatly benefit from these tested solutions.
Jonathan Williams (@TaxEconomist) is president and chief economist at the American Legislative Exchange Council. Lee Schalk is senior vice president of policy at ALEC.