Published: Sunday, January 30, 2011
Guest commentary / Transforming state government
Private sector has experience-based ideas to consider
Given the severity of Washington's budget challenge, the old saying resonates with new urgency: Don't put off until tomorrow what you can do today. In Olympia, “today” is now. For almost all of us in business, “today” came three years ago when the Great Recession took hold.
Beginning in 2007, people running businesses were forced to make decisions that fundamentally transformed their companies. Those that survived did it by focusing on core activities. Many curtailed operations, reviewed staffing levels and managed employee compensation. It was difficult, but swift action positioned them for success as the economy returns to slow growth.
State government delayed reforms and bet on a quick recovery, which didn't come. Three years after the start of the Great Recession (and, if you believe some economists, a year after it ended), lawmakers face another multi-billion-dollar shortfall.
Transforming government and closing this budget gap won't be easy. Gov. Chris Gregoire understands the enormity of the challenge. She should be commended for the approach she has taken to address the problem.
The governor's budget proposal bends the long-term cost curve downward and lays a foundation for economic growth. It includes tough but unavoidable cuts. This fiscal crisis cannot be solved with short-term fixes, one-time monies, budget transfers or temporary spending reductions. Consequential program reductions and fundamental changes in the way government operates are inescapable.
The private sector has been down this path.
The Washington Roundtable, in tandem with the Washington Research Council, is sponsoring to advance the civic conversation on our common goal: Achieve economic vitality while sustaining essential public services. As members of our state's business community, we have a responsibility to engage constructively.
Through the Thrive Washington series, we present concrete recommendations for government transformation. The recommendations flow from best practices in other states and in the private sector.
For example:
Integrate priority-based budgeting with performance reviews. State officials have tools for managing the budget, from the priorities of government process to the Government Management, Accountability and Performance program. These systems must be integrated and agencies held accountable for performance, with full transparency. Reviews should encompass all revenues and expenditures, including a thorough assessment of commitments launched by citizen initiatives and legislative promises made without identified revenue sources.
Manage the size and compensation of the state workforce. Labor costs drive a substantial share of spending in any service industry. Any budget solution must entail workforce reductions and adjustments in employee compensation. There must also be a move toward achieving benefits parity with private and public sector norms. Currently, state workers pay an average of 12 percent of individual and family health insurance premiums. If approved by the Legislature, the governor's agreement with state unions will move that number to 15 percent in 2011-13. By comparison, private and other public sector employees pay 19 percent on average for individual coverage. Further, most private and public sector employees pay two to three times what Washington state employees pay for family health care premiums. Talk to private sector employees and you will find many pay half — or more — of their premiums for dependent coverage. Moving the Washington state employee contribution closer to the public and private sector norm will help reduce the state's structural deficit and the need to cut essential programs.
Inventory assets for possible sale. Holding onto underused or unnecessary assets increases state costs without contributing revenues. The state should inventory real property assets to see if they serve an essential purpose. If not, they should be sold and the revenues used to pay down long-term obligations. In doing so, Washington should avoid the sale-leaseback strategy used in other states. Incurring greater long-term costs in exchange for a short-term benefit would magnify the structural deficit.
Use competitive sourcing. Nearly a decade after passing legislation allowing state agencies to contract out for service delivery, there has been virtually no expansion in competitive sourcing. Significant savings and improved efficiencies can be realized by doing what many private sector employers do routinely, contract with firms with specialized expertise in activities from grounds maintenance to information technology. The state should move swiftly to identify activities that can be better handled by outside contractors.
No one should minimize the challenges ahead for state government. We don't. Roundtable members have experienced similar challenges. Those who adapt will survive.
Gov. Gregoire's approach to budget transformation acknowledges that the state must adapt. She makes difficult choices in the short-term and lays a foundation for long-term recovery. We urge the Legislature to follow her lead.
James Warjone is the chair of the Washington Roundtable and chairman of Port Blakely Companies. The Thrive Washington research series is available at www.waroundtable.com.
Beginning in 2007, people running businesses were forced to make decisions that fundamentally transformed their companies. Those that survived did it by focusing on core activities. Many curtailed operations, reviewed staffing levels and managed employee compensation. It was difficult, but swift action positioned them for success as the economy returns to slow growth.
State government delayed reforms and bet on a quick recovery, which didn't come. Three years after the start of the Great Recession (and, if you believe some economists, a year after it ended), lawmakers face another multi-billion-dollar shortfall.
Transforming government and closing this budget gap won't be easy. Gov. Chris Gregoire understands the enormity of the challenge. She should be commended for the approach she has taken to address the problem.
The governor's budget proposal bends the long-term cost curve downward and lays a foundation for economic growth. It includes tough but unavoidable cuts. This fiscal crisis cannot be solved with short-term fixes, one-time monies, budget transfers or temporary spending reductions. Consequential program reductions and fundamental changes in the way government operates are inescapable.
The private sector has been down this path.
The Washington Roundtable, in tandem with the Washington Research Council, is sponsoring to advance the civic conversation on our common goal: Achieve economic vitality while sustaining essential public services. As members of our state's business community, we have a responsibility to engage constructively.
Through the Thrive Washington series, we present concrete recommendations for government transformation. The recommendations flow from best practices in other states and in the private sector.
For example:
Integrate priority-based budgeting with performance reviews. State officials have tools for managing the budget, from the priorities of government process to the Government Management, Accountability and Performance program. These systems must be integrated and agencies held accountable for performance, with full transparency. Reviews should encompass all revenues and expenditures, including a thorough assessment of commitments launched by citizen initiatives and legislative promises made without identified revenue sources.
Manage the size and compensation of the state workforce. Labor costs drive a substantial share of spending in any service industry. Any budget solution must entail workforce reductions and adjustments in employee compensation. There must also be a move toward achieving benefits parity with private and public sector norms. Currently, state workers pay an average of 12 percent of individual and family health insurance premiums. If approved by the Legislature, the governor's agreement with state unions will move that number to 15 percent in 2011-13. By comparison, private and other public sector employees pay 19 percent on average for individual coverage. Further, most private and public sector employees pay two to three times what Washington state employees pay for family health care premiums. Talk to private sector employees and you will find many pay half — or more — of their premiums for dependent coverage. Moving the Washington state employee contribution closer to the public and private sector norm will help reduce the state's structural deficit and the need to cut essential programs.
Inventory assets for possible sale. Holding onto underused or unnecessary assets increases state costs without contributing revenues. The state should inventory real property assets to see if they serve an essential purpose. If not, they should be sold and the revenues used to pay down long-term obligations. In doing so, Washington should avoid the sale-leaseback strategy used in other states. Incurring greater long-term costs in exchange for a short-term benefit would magnify the structural deficit.
Use competitive sourcing. Nearly a decade after passing legislation allowing state agencies to contract out for service delivery, there has been virtually no expansion in competitive sourcing. Significant savings and improved efficiencies can be realized by doing what many private sector employers do routinely, contract with firms with specialized expertise in activities from grounds maintenance to information technology. The state should move swiftly to identify activities that can be better handled by outside contractors.
No one should minimize the challenges ahead for state government. We don't. Roundtable members have experienced similar challenges. Those who adapt will survive.
Gov. Gregoire's approach to budget transformation acknowledges that the state must adapt. She makes difficult choices in the short-term and lays a foundation for long-term recovery. We urge the Legislature to follow her lead.
James Warjone is the chair of the Washington Roundtable and chairman of Port Blakely Companies. The Thrive Washington research series is available at www.waroundtable.com.
Comments
(