D. Dowd Muska


Budget Commissions: An Autopsy

February 13, 2014

Restructuring. Streamlining. Eliminating waste, fraud, and abuse. A top-to-bottom review.

Over the last five years, we’re heard it all -- again and again and again.

The Great Recession induced the creation of dozens of blue-ribbon panels charged with making state governments leaner. The list included the Commission on Privatization and Efficiency (Arizona), the State Government Reorganization Commission (Iowa), the Senate Government Management and Cost Study Commission (Pennsylvania), the Commission on Streamlining Government (Louisiana), the Legislative Commission on Government Efficiency (Michigan), the Spending and Government Efficiency Commission (Nevada), the Budget Planning and Management Commission (Ohio), and the Government Reform and Restructuring Commission (Virginia).

At the hearings and press conferences, the talk was tough. Final reports were often voluminous, concluding with detailed recommendations.

It was good stuff. Hopeful, even. But it’s now clear that at the broadest level, as catalysts for meaningful, lasting corrections, the commissions were clunkers. Nothing much has changed. Data compiled by the National Association of State Budget Officers show that the “laboratories of democracy” did not reduce expenditures:

2008           $1.48 trillion

2009           $1.56 trillion

2010           $1.62 trillion

2011           $1.67 trillion

2012           $1.64 trillion

2013           $1.72 trillion (estimated)

Significant labor-productivity improvement has proved illusory, too. According to the U.S. Census Bureau, the number of full-time-equivalent state employees did not decline (estimates for 2012 and 2013 are not yet available):

2008           4.36 million

2009           4.41 million

2010           4.38 million

2011           4.36 million

It’s a grim postmortem. Most commissioners were sincere and diligent. They homed in on many promising reforms. But appointees, unlike legislators and governors, do not face voters. The Obama administration’s “stimulus” served as a conduit for federal revenue to flow to the states, and pols eschewed reelection-risky cuts. Washington’s largesse buttressed the spendaholic status quo until the economy reversed its freefall, and drifted up to a tepid expansion. The Wall Street Journal reports that “growing revenue and mounting surpluses have states putting the recession behind them.” Expenditures, particularly by the education monopoly (“universal preschool”) and welfare complex (Medicaid), are likely to return to their pre-Great Recession rate of growth.

The failure of budget-revamp commissions should teach the pro-taxpayer community a lesson: Making government -- at any level -- smaller, cheaper, and more accountable shouldn’t be confined to an occasional extravaganza. Pressure must be applied constantly, to every branch, by indefatigable elected officials, credible wonks, and politically savvy activists.

It’s not as if new material isn’t constantly generated by the people who scrutinize bureaucracies for a living. Ironically, the kind of digging done by “streamlining” commissions is already the job of the loneliest men and women on state-government payrolls: auditors. Some have stand-alone offices. Others are staffers for secretaries of state, legislative committees, or comptrollers. But capitols’ green-eyeshade warriors generate a monotonously reliable flow of disturbing findings. In recent months:

• New York auditors exposed what the (Albany) Times Union called “more than $1 million in questionable paid leave expenses” at the University at Albany. In addition, investigators disclosed that the “State University of New York system never implemented findings recommended 22 years ago to ensure paid leaves for faculty actually benefited the campus.”

• Excessive prize payouts were uncovered in a performance audit of Colorado’s lottery. In addition, The Denver Post noted, “as most state workers between 2009 and 2012 were enduring pay cuts or freezes, bonus payments to lottery employees ballooned nearly 500 percent.”

West Virginia legislative auditors found problems with their state’s “Rural Rehabilitation Loan Program,” including possible conflicts of interest, no formal approval policies, widespread borrower delinquencies, and inadequate collection efforts.

• In what the Deseret News reported was said to be its first performance audit “in its 92-year history,” internal controls were found to be poor at the Utah Division of Rehabilitation Services. The findings were “particularly concerning because the division expends millions of state and federal dollars annually.”

• Connecticut’s auditors issued a blistering examination of the Department of Public Health, revealing, among many other blunders, drugs for tuberculosis and STDs “expired or unaccounted for” and a contract-management process that “results in duplication of effort, delays in processing, disputes between operating units, and customer dissatisfaction.”

It’s natural, one of the Enlightenment’s brightest luminaries observed, for liberty to give ground to government. State budget commissions, however respected and high-profile, lack the authority to enact their prescriptions. The appointees go back to their regular jobs, while the world of policy and politics remains largely untouched.

Propitious in theory, impotent in practice. Establishing a commission isn’t the answer to right-sizing state government. We’ll have to do better.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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