Bacon's Rebellion

Democracy Thrives in Sunlight

Is This Any Way to Run a Government?

—

by

James A. Bacon
in

As I argued in my last post, fiscal crises call for emergency measures. Gov. Timothy M. Kaine has no choice to resort to whatever short-term expediency he can find to close a $2.5 billion revenue gap in the current biennial budget. But it would be nice if Virginia’s fiscal exertions resulted in some lasting gains in productivity.

Read the governor’s press release, and you’ll see that, at most, there are only $175 million in enduring efficiencies contained in the governor’s emergency financial plan. From the press release:

The Governor’s reduction strategies include

  • $100 million in improved business practices and efficiencies
  • nearly $32 million in the reduction or elimination of current services
  • over $27 million in reduced personnel costs
  • over $13 million in reduced discretionary expenses

For example, the Department of Forestry will save $50,000 by sharing the cost of a hydrologist with Virginia Tech; the Science Museum will save $100,000 by closing for an additional day each week; the Department of Taxation will save over $1.7 million by reducing technology costs; and the Department of Mental Health, Mental Retardation, and Substance Abuse services will save over $2 million by consolidating certain targeted administrative services regionally for their mental health treatment centers.

The other measures represent fiscal business as usual: withdrawing $400 million from the rainy day fund, borrowing $250 million for capital outlays, delaying pay raises for state employees, a hiring freeze and even 570 layoffs.

The layoffs sound like a real cut. But how lasting will they be? I went back to the Commonwealth of Virginia’s official employee count and deleted any line items pertaining to higher education in order to get pure numbers on state administration. Here’s the track record since 2001:

2001….. 66,927
2002….. 64,908
2003….. 64,044
2004….. 64,368
2005….. 63,099
2006….. 63,486
2007….. 65,309
2008….. 66,193

However, these numbers don’t tell the whole story. I suspect that the big drop from 2005 to 2006 represents the transfer of many state IT employees to Northrop Grumman — someone please correct me if I’m wrong. Also, I’m not clear about whether these numbers include “contract” employees. Whatever the details, after the temporary austerity budgets of the Warner administration shrunk state payroll, the numbers have crept back up to where they were at the peak of the dot.com prosperity (or even higher, depending on how the state counts IT and contract employees).

The moral of the story: Freezing positions and laying off employees without re-engineering government processes is a temporary expedient only. These moves will not create any lasting improvements to the cost of administering state government.

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11 responses to “Is This Any Way to Run a Government?”

  1. Larry G Avatar
    Larry G

    here’s the question that is not answered.

    What is the “right” amount of government?

    the current sentiment falls along the lines of “any number is too high…and any number of cuts surely is good.

    I call this a dumb approach.

    We need to agree on some metrics.

    One way is to look at the number of government employees and/or cost – per capita.

    No.. it still won’t tell us how much government is “enough” or “too much”, but it will establish a range – and Virginia’s position in that range.

    Why is this important?

    For two reasons:

    1. – Relative to other states are we doing a reasonably good job,.

    2. – If we ARE doing a reasonably good job then further cuts will clearly establish us as a leader – an firmly on territory where real cuts .. could have adverse impacts.

    At the least – we know we would be on ground not yet explored…

    That would not be a bad thing – to be among the best AND to be looking at even more ways for cost-effective government.

    But to approach this from the POV that the current level of government is “too much” without any context and without any suggestion of what the right amount ought to be – is, in IMHO not an honest effort at trying to get to a good answer.

    my 2 cents worth.. not a hit on Jim’s treatise…

  2. Larry G Avatar
    Larry G

    Here’s a good place to start:

    Table 1A: Own-Source General Revenue Per Capita by Funding Dimension and Level of Government, FY 2005–A 50 State Profile

    page 7
    http://www.dhcd.virginia.gov/CommissiononLocalGovernment/PDFs/stlfin05.pdf

    where you’ll find that at $2130 dollars per capita that Virginia ranks 27th.

    The most expensive state: Vermont

    The least expensive: South Dakota – at $1441 per capita – a full 30% less than Virginia.

    but then again… Vermont spends $3611 per capita – 30% higher than Virginia.

    Now – if we wanted to set our sights on South Dakota’s number, we’d have to normalize the services – i.e. compare the major expenditure categories to understand where we get more services… before we get to the point of how efficient/cost effective Virginia is (or is not).

    And this leads us to the reality that the budget has two components:

    1. services that we get that other states might not

    2. how cost effective are our services?

    So.. for example, it would make little sense for Virginia to cut a service that was cost-effective – unless we agreed that we are going to not provide that service as a government-provided service.

    This all goes back to those who claim to have fiscally conservative principles and who profess to want to cut – but cut intelligently with a scalpel vice a machete…

    we KNOW that those on the other side – the Dems don’t even claim to approach government in that fashion.. for the most part – that’s why you see Kaine cutting in the way he does…

    where is the competitive proposal from the other side?

    There is opportunity here for those of conservative credentials to weigh in with better ideas…

    but swinging a machete will not do the job….

    what we need is GOOD ideas for SMALLER Government – not an easy task but then again no free lunch for those who claim to know how to slim government down but keep it effective.

    You want to know why Virginia is turning BLUE?

    It’s because of this failure on the part of those who claim Conservative credentials.

    Their approach so far – is to swing a machete – in between rants about conservative social values – and folks are simply not buying it.

    Put forth a reasonable vision – and deliver on the goods – and you get to govern….

  3. rodger provo Avatar
    rodger provo

    I think to cite the totals of
    state employees from year to year
    without providing data about our
    population growth, traffic growth,
    criminal justice growth, park
    useage growth, health care growth,
    etc. misses an opportunity.

  4. Anonymous Avatar
    Anonymous

    Rodger – I'd agree with you if we were looking only at line employees. Government is notorious for adding staff. For example, what is the growth in employees at state universities and colleges versus growth in teaching positions? I suspect we've added many people who don't teach, but support and placate public sector unions & the professional caring class. This does not happen in the private sector.

    Fairfax County has more than 200 curriculum specialists, as it increases class size. Ask a Fairfax teacher what all the specialists do.

    What really happened was Mark Warner cut until he had his tax increase passed, then he let his foot back on the jobs accelerator ever so slightly. But he kept things under control. But then Tim Kaine stomped on it. No CEO of a private business would have allowed the payroll to grow as Kaine did. It just wouldn't have happened.

    Tim Kaine has done some things well, but managing state government is not one of them. (But I'll always sing his praises over the Chapter 527 traffic study requirement.)

    TMT

  5. Anonymous Avatar
    Anonymous

    “Put forth a reasonable vision – and deliver on the goods – and you get to govern….” Hear, hear, Larry.

    But all you get from the other side is – “Implement the Wilder Commission recommendations” and “There is this really detailed report by some conservative think-tank that would save us millions and millions if only someone would follow it.”

    Well, the true-red conservatives have been in control of the House of Delegates for some time and where is their plan? Show me! They submit millions in special grants for their hometown pet projects just like the RINOs and Dems, and say, shucks, we were just kidding and everyone else does it.

    Now is the time for them to step up and put forth and implement their plan!!! And if the Senate/governor won’t go along, then shut it down, baby.

    Bosun

  6. Waldo Avatar
    Waldo

    A lot of these temporary cuts will inevitably be made permanent, but it’s politically easier not to declare that up front. For instance, the cuts to state universities a year or two ago were declared temporary, but word came last week that they’d be permanent. No doubt the same will happen here. My department (I work for UVa, although I’m not a state employee, but an employee of the university) was told to prepare permanent budget cuts in response to Governor Kaine’s request. We’ve done exactly that.

  7. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    You guys need to have some faith. As soon as they get the results of that 250 million dollar payday loan even Tim Kaine will see the light.

    What’s scary are all the local governments. They are in more denial than Timmy is. No cuts, business as usual, taxes are just fine. Heck Wilder thinks he can use a HELOC to tide Richmond over the winter. Guess he hasn’t heard that lines of credit are being withdrawn, or the Easter bunny isn’t showing up next year.

  8. Larry G Avatar
    Larry G

    The two biggest groups of state employees are VDOT and the Department of Corrections – and yet all the fire and light are aimed at Universities…

    Let’s hear some ideas on how to cut the waste in VDOT land the Department of Corrections…

    how much of the Va budget is allocated to corrections in the first place?

    oh… gosh darn.. it turns out that part of Kaine’s plan is to cut corrections.

    well that leaves VDOT – with about 9000 employees.

    That amounts to about 90 employees per county – more than the total of county employees in some places.

    but the real point is that we’re at the point that real cuts have to be made…

    where are the Packyderm ideas for smaller, less expensive government?

    You know.. when your party is out of power – you have the opportunity to prove to voters that the next go-around -you deserve to be in charge – and implement the smaller government ideas that you espouse.

    I know.. this is such a radical concept … to actually put forth real proposals instead of banging on the other guys….

    sigh…..

  9. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    Right off the bat, if something involves selling bonds or other debt, it gets cut. The muni bond market is going to get worse, thanks to Calif. and tons of local governments that haven’t yet realized they are in trouble.

    Capital improvements are next on the hit list. Either they get slid, or dumped.

    Personnel cuts are illusionary, because they are offsets of demand by different agencies.

    The issue here is current cash flow, and you are going to need that money for real time demands on social programs instead of business as usual. To think that this is just another recessionary environment that can be overcome by a little cut and paste is a huge mistake.

  10. Anonymous Avatar
    Anonymous

    Larry G –

    You correctly cite the Republican mantra as

    “ideas for smaller, less expensive government..”

    They are awfully focused on the “smaller” part; however, the solutions are seldom “cheaper”. (and this comes from me – a card-carrying conservative)

    A few examples to note (and investigate for those so interested):

    – privatizations of interstate maintenance have significantly INCREASED costs at similar-to-lower levels of service
    – privatization of VITA has increased costs with noted downturns in service and reliability

    The popular notion is that savings of state-employee benefits and retirement costs over the long-haul are where the savings are realized. Beureacrats under pressure to privatize from politicians have publicly cited this mantra IN SPITE OF the actual figures demonstrating the exact opposite – that even with extended benefits factored in that the state employee workforce was offering a higher cost-benefit than the private sector (I know – hard to believe, but I’ve seen the data…..)

    Don’t take my word for it – it would be very interesting to see a follow up to see if “smaller” government” actually equates to “cheaper”.

  11. chluke Avatar
    chluke

    I worked for VDOT for 20 years and now work in private business. The difference is like night and day. Since the auditors took over at VDOT it has been all about rules and regulations and no innovations. VDOT needs need leadership and get the auditors out of decision making positions!

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