|
The
Governor has made his case:
Virginia faces a real “budget crisis”
that forces painful actions to begin the process of
balancing the books.
Governor Warner is cutting over $850 million
from the budget and firing some 1800 state employees
– as starters.
As
our elected officials struggle to balance the
current two-year budget, it becomes more and more
clear that it is long past time to bring real
business management practices to the state budget
process.
Three
years ago state agencies identified three 37,550
jobs that could be done in the private sector. The
projected savings are about $650 million over a
two-year period while the state employees would have
work in the private sector. Yet, not one of these
jobs has been privatized and none of the projected
savings has been realized.
About
10,000 people leave state government employment each
year. With proper management of the vacant jobs in
state government, few if any employees would need to
be fired. Why can’t the state do this? Why are the
employees’ heads on the block?
Accounts
receivable to our state more than 90 days old have
doubled over the past six years (to $1.1 billion)
and the percentage of collections is down 14 percent.
If the state’s collection process were as
efficient as six years ago, $500 million more would
be in the state’s bank account. No one is talking
about this. It is time to bring the private sector
to the table of collections in a reasonable and
profitable way for all of us.
The
state could sell excess property for tens of
millions of dollars. One underused state mental
hospital in Williamsburg has 900 acres of prime
land! Why not sell 850 of those acres? Surplus
property should be a prime target for relieving the
state’s budget difficulties.
And
Virginia’s ABC stores could be sold for what some
feel would be hundreds of millions of dollars while
maintaining oversight, enforcement and current
liquor distribution channels. A serious effort
should be made to get the state out of the liquor
business while protecting the public and the current
suppliers. Former Governor Wilder has
suggested this and the idea should be pursued.
Indeed,
the Wilder Commission (on budget reform) has
recommended that the state’s procurement system
can be reformed and centralized with a savings to
the state of something more than $500 million a
year. Hopefully, this important Commission
will make more concrete suggestions before the
Governor and our legislative leaders complete their
budget reduction suggestions.
Studies
show that when federal dollars go into a
transportation project, the total cost of that
project increases by at least 30 percent. So why
doesn’t Virginia use its federal transportation
dollars on a limited number of projects and take our
state and local money and pump those dollars into
all the other projects? By spreading our federal
transportation dollars across the board, we are
being most inefficient. It is past time to better
manage our transportation dollars in this way.
But,
if the Governor and the General Assembly are serious
about controlling state spending over the long haul,
the first step is limiting the growth of state
spending. Colorado and other states have spending
limitations. Still others are considering this
logical budget management reform that is key to
avoiding future budget crises.
Had
spending restraints (limiting the increase of state
spending to the rate of inflation and population
growth) been the law when George Allen passed the
baton of leadership to
Jim
Gilmore in 1998, the budget crisis we face today
would be dramatically less, and most likely
non-existent.
Allen
handed Gilmore a suggested two-year budget of $40
billion. A year later that budget was increased to
$42 billion and the very next year the Governor and
General Assembly passed a new two-year budget of
more than $48 billion. That is a 20 percent increase
in only two years!
And
the two-year budget passed by the General Assembly
in March of this year and signed into law by the
Governor totals $52.7 billion!
Had
the budget proposed by George Allen been followed,
and if future budgets had increased by 4 percent a
year (about the rate of inflation and population
growth), the last two-year budget would have been
$43.3 billion and not $48.7 billion. And the current
two-year budget would have been $46.8 billion not
$52.7 billion. That’s a savings of $5.9 billion
while the state budget would still have increased at
respectable 4 percent a year.
The
current budget crisis could have been avoided.
Best practices and better budget management are
needed now. We’ll soon see if we get either.
--
November 11, 2002
|
