VACostCutting

Monday, January 30, 2006

More on Road Maintenance Savings

Add Jim Bacon to the list of those who see a tremendous opportunity for savings if road maintenance is outsourced/competitively bid. Bacon has published a essay in his Bacon's Rebellion e-zine on the potential to save $200 million annually in road maintenance costs by using private contractors.

Bacon's well-researched piece follows posts by Geoff Segal and Norm Leahy on this blog that identified road maintenance as a significant savings opportunity.

Looks like HB667 is a "keeper."

Friday, January 27, 2006

Why do we assume government does it best?

Dr. Walter Williams (a member of Americans for Prosperity Foundation's National Board of Directors) has an editorial today entitled “In Government We (Continue, Foolishly, to) Trust.”

His article focuses on FEMA’s slow response to Hurricane Katrina, especially compared with the response provided by private businesses. Wal-Mart, Sam’s Club and Home Depot had trucks on the road almost immediately to deliver desperately needed food, water and supplies quickly and efficiently, while the government response took days and weeks. Though his example is federal, his point is perfectly applicable to state government as well.

Why do we continue to assume that government is often the best provider of services?

One poster on a previous thread suggested the Cost Cutting Caucus was merely a nickel and dime operation in comparison to the actual magnitude of the budget.

But the Caucus’s focus is on critical changes needed in the overall operations of government—changes that can save thousands to millions initially, and over time save a significant portion of the state’s budget. Do we want Virginia run more like FEMA or more like a business?

Are there private sector alternatives that can provide services in a more cost effective and efficient manner, better serving both the consumers of these services and the taxpayer?

Geoff and Norm have both pointed out examples in highway maintenance. Norm also mentioned ABC stores.

Geoff had a thorough post on key bills this year, but I think this warrants more discussion. From specific examples (ie privatization of prison food service) to overall evaluation and reform (ie HB1295 creating the Council on Government Accountability & Efficiency), we have a real opportunity to rethink the way government delivers services to Virginians.

Will we accept the status quo or challenge ourselves to do better?

~whitney

Thursday, January 26, 2006

Budget Amendments

At the risk of causing a ruckus, I've been looking at some of the member requests for amendments to HB 30, the 2006 appropriations bill.

It is to be expected that this bill would draw a lot of attention from individual members. But what is unexpected -- and even shocking, to this writer -- are the number of proposed amendments that would grant state monies to private, nonprofit organizations for general operating purposes, annual funds, construction, promotion, etc.

I've written about this on my own blog, and in one of the comments, there was this:

"Nor shall the General Assembly make any like appropriation to any charitable institution which is not owned or controlled by the Commonwealth; the General Assembly may, however, make appropriations to nonsectarian institutions for the reform of youthful criminals and may also authorize counties, cities, or towns to make such appropriations to any charitable institution or association."

Va. Constitution Va. Con. Art. 4 § 16 (1971)

Looking over some of these requests, it seems to me that many of them fly in the face of Art. 4, Section 16.

If the Legislature is genuinely serious about reducing costs, one of the first places to begin is with these amendments.

Wednesday, January 25, 2006

Medicaid and Home-Based Care

Dr. Joseph James has an op-ed in today's Richmond Times-Dispatch suggesting that increased use of home-based healthcare for senior citizens could reduce Medicaid costs. He argues that it is "both more humane and shrewd." Patients do better at home and costs are lower.

Current reimbursement rates for home-based care are apparently too low to adequately compensate nurse's aides, the primary practicioners of this type of home-based care, according to Dr. James. Increasing the rates might actually reduce expenses as fewer patients are consigned to more expensive institutional care.

I'm far from an expert on Medicaid, but the concept makes sense. I know, from my vantage point, that lots of individuals are interested in starting a home-health care business. Unfortunately, few have any business background. If the state ever tried to increse home care options, I'd like to see business assistance agencies involved in providing training and mentoring to fledgling home care providers. Too often the failures of home healthcare providers are business failures, not care failures.

Tuesday, January 24, 2006

Sometimes....

You just need comic relief. I think this picture is a great way to illustrate inefficiency in the workplace. We can only hope it doesn't apply to the Commonwealths government. How many departments deal with trees again?

Competition and Innovation in Education

Last week we commented on John Stossel's 20/20 piece on school choice. One of the points in Stossel's commentary was that innovation is essential to creating an academic environment that can foster learning and truly change students' lives. He notes that "You don't get innovation without competition."

Unfortunately, there are many who will continue to stand in the way of change and in the way of competition. Over at Americans for Prosperity's blog, we get this post from the Wall Street Journal pointing out how hard those forces will work to stop efforts to give students greater opportunities...

Teachers unions keep telling us they care deeply, profoundly, about poor children. But what they do, as opposed to what they say, is behave like the Borg, those destructive aliens in the Star Trek TV series who keep coming and coming until everyone is "assimilated."

We saw it in Florida this month when the state supreme court struck down a six-year-old voucher program after a union-led lawsuit. And now we're witnessing it in Milwaukee, where the nation's largest school choice program is under assault because Wisconsin Governor Jim Doyle refuses to lift the cap on the number of students who can participate.

...Mr. Doyle, a union-financed Democrat, has vetoed three attempts to loosen the state law that limits enrollment in the program to 15% of Milwaukee's public school enrollment. This cap, put in place in 1995 as part of a compromise with anti-choice lawmakers backed by the unions, wasn't an issue when only a handful of schools were participating. But the program has grown steadily to include 127 schools and more than 14,000 students today. Wisconsin officials expect the voucher program to exceed the 15% threshold next year, which means Mr. Doyle's schoolhouse-door act is about to have real consequences.

There's no question the program has been a boon to the city's underprivileged. A 2004 study of high school graduation rates by Jay Greene of the Manhattan Institute found that students using vouchers to attend Milwaukee's private schools had a graduation rate of 64%, versus 36% for their public school counterparts. Harvard's Caroline Hoxby has shown that Milwaukee public schools have raised their standards in the wake of voucher competition.


~whitney

Sunday, January 22, 2006

Freedom from Government Competition

Delegate Cline's HB1122 is simple, yet promising. It requires state agencies to provide written rationale for providing truly commercial activities in-house with state employees. Things like mowing lawns on state grounds, or changing oil in the state’s fleet of cars and trucks—these and more are found on the state’s “commercial activities list.”

While Del. Cline deserves the credit for bringing this to the Commonwealth, the real credit goes to President Eisenhower. In 1955 he issued Bureau of the Budget Bulletin 55-4 (the equilavent of the modern day OMB Circular) declaring that:

“(I)t is the policy of the Government of the United States to rely on commercial sources to supply the products and services the government needs. The Government shall not start or carry on any activity to provide a commercial product or service if the product or service can be procured more economically from a commercial source."

The 1999 inventory of government functions found more than 37,500 state employees performing services readily available in the private sector. A Feb 2005 Thomas Jefferson Institute study highlighted this and the potential savings - they're big (jump to page 10 and 11 for details). Its true, many of the things government does is also done in the private sector - many times in direct competition. If nothing else, contracting out basic commerical activities could be seen as a small and/or minority business growth opportunity.

Delegate Cline has submitted this bill several times - see my article in Bacon's Rebellion for a more detailed conversation.

Oh, and don't forget that private companies pay taxes on their income - so while savings are important, so would the enhanced economic activity and revenue.

Competing Highway Maintenance

The debate over transportation funding is reaching full gear. Surplus revenue will certainly go towards new projects - the only question is how much. A larger question remains though, will the General Assembly agree to other additional sources of new revenue.

But why not look at how the money currently dedicated to transportation is being spent. Let's see if there is another way to do the same thing. VDOT is slated to spend at least $9 billion over the next two years -- nearly $2 billion ($1.73 billion to be exact) of that is spent on maintenance of our interstate, primary, and secondary roads.

Delegate Wardrup has introduced HB667 that would require all maintenance to be carried out by competitive contract. The Commonwealth does have some experience here - a contract for 251 miles of maintenance saves us around $20m a year. A second contract was signed last year. But there remains so much more that can be done. About $159 million a year is spent on highway maintenance. Experience from around the country suggests that savings are at least 15 percent, and as high as 30 percent -- savings between $23.85 and $47.7 million. These savings could be moved into new construction (a small piece of should be retained to pay for maintaining those new roads).

However, HB667 could go much further. Virginia's road system is unique. The state is responsible for an exorbitant amount of roads. Seeking competitive solutions to Primary ($263m/year) and Secondary ($445m/year) roads can produce equally high savings. Contracting for just 25% of each of these could generate savings of $27-54m a year.

That's a $100 million that could be rededicated to new construction. And the numbers only go up as the state seeks more contracts.

There are some other business practices within VDOT that could be contracted out. The following is a snapshot of Florida's DOT - the number corresponding with each major service area is the percentage of operations currently contracted out.

Construction Engineering and Inspection - 85
Design - 83
Materials Testing/Research - 55
Planning - 57
Right-of-Way - 74
Maintenance - 74 (6 new contracts to be awarded in near future - will bring number above 85)
Toll Collection - 99

While VDOT may have moved somewhat in this direction, they don't come close to this.

Now More Than Ever

Two competing transportation plans for Virginia, each proposing a broad range of new taxes and fees, were introduced on Friday.

Whatever the merits and eventual outcome of these plans, a few implications for the Cost Cutting Caucus should be noted.

Whenever government raises taxes, cost cutting is imposed on families. Try as we might to claim that a tax increase is small or not noticeable, the fact remains that families often "stretch" to purchase necessary items. If new taxes add to the cost of a new car or a car repair, for example, the "stretch" might be too much and families will put off that purchase or expenditure. Alternatively, they will be forced to cut back on something else.

If elected leaders seek more money from families, they should be willing to tighten government's belt to ensure that any tax increase is really necessary or that it is as small as possible. Government should not be immune from the challenges it imposes on families.

The Cost Cutting Caucus can be a belt-tightening monitor.

The new transportation plans are being presented as responses to a "transportation crisis." If something is a "crisis," it presupposes that it has a higher priority. Prioritization shouldn't just be throwing more money at the "crisis" while keeping (or even increasing) spending on less pressing government activities.

The Cost Cutting Caucus can help shape priorities and apply savings to the "crisis" or to more pressing demands.

Although times are good, Virginia families face an array of increased expenses in 2006. Real estate assessments are up, car tax payments will be higher, energy prices are up, credit card minimum payments have increased ... the list goes on. Families will have to prioritize and cut costs. Government should, too.

Friday, January 20, 2006

Agency Consolidations Or Shared Services

One method of cutting costs and increasing efficiency is to wisely consolidate state agencies with similar functions.

One example that comes to mind is the Department of Minority Business Enterprise. Efforts have been made in the past to combine it with the Department of Business Assistance. Two recent items in the news might indicate that there might be room to move DMBE and potentially make it more efficient and effective.

Daily Press columnist Wil LaViest suggested that DMBE might move to the Administration Secretariat. It is currently under Commerce and Trade. Since the vast majority of DMBE's work is now related to state procurement for Small, Women and Minority-owned (SWAM) businessees, it would be sensible to consider just consolidating it into the Department of General Services, where procurement responsibility resides.

Pamela Stallsmith of the Richmond Times-Dispatch reported that the Legislative Black Caucus would like an office for small business advocacy established within the Department of Business Assistance (DBA). DBA could establish such an office with existing personnel. It's already something they do, but they do it tentatively because they have no clear legislative authorization.

Perhaps the previous resistance to consolidating DMBE into another agency could be overcome by the establishment of this advocacy office. I suspect it could both save money and improve services. There are probably other examples of agencies that could be consolidated if aspects of their mission are preserved.

If agencies aren't consolidated, an idea worth studying is the sharing of administrative services among smaller agencies--instead of each agency having an HR or accounting department, for example, those staff functions would be provided by a larger agency. Making administrative services departments of large agencies "entrepreneurial," allowing them to seek out additional opportunities, might be a cost saving measure. Perhaps this is happening somewhere, but I've not seen it and would be interested in any feedback on where it's been tried.

Wednesday, January 18, 2006

The 65% Solution

Delegate Frederick has offered HB481 that would require local school districts to allocate 65% of its operating budget to instructional spending. This bill follows a wave of states that have proposed similar measures - Gov. Rick Perry of Texas actually mandated it through an executive order.

The issue is simple. In many school districts between 40 and 50 percent of education funding never makes it into the classroom. It either goes to administration or into business operations like transportation, food services, building maintenance, or other support functions. While non-instructional services are vital to the success of American schools, they take money away from the ultimate goal—educating our children.

I was in Indiana today testifying to both the House and Senate Committee on Education on a bills (Indiana SB323) that would enable local school districts to enter into shared services agreements for everything from back office funcations to instructional opportunities. In addition, it encourages cooperative purchasing agreements for everything from pencils to buses.

A Reason Foundation study found numerous examples with tremendous savings. I'm sure that some Commonwealth districts may already be doing this - but have they exhausted the envelope? Is there more they can do?

We need to fully identify and implement tools to reduce operating expenses to deliver those savings into the classroom - including these and privatization.

DGIF Oversight

Today, the Agriculture Committee heard testimony from Colonel Massengill about the Department of Game and Inland Fisheries progress in dealing with the problems that had been previously brought to light in the press. We did hear some new bits of information that should be noted. If I get the facts of the testimony wrong I apologize. We will be reviewing the transcript of the court reporter in the next couple of days; however, these are some of the notes that I had.

430 state issued credit cards for purchases that included gun shells, turkey calls, camo gear, guns and gun safes, monogrammed shirts and self starters for cars.

Here is the internal audit of DGIF.

Clearly, we need more oversight of our government.

We should not take our displeasure out on the front line employees who are doing their jobs to the best of their ability.

We do need, however, to discuss the very large severance package that was given after these issues came to light.

Medicaid Reform Meeting....

We have a brief synopsis of the Medicaid Reform meeting hosted by Del. Hamilton on the AFP-VA Blog.

Five solid bills that would help begin the reform movement for Medicaid. Without a focused effort to reform the program now it will quickly eat up our state budget. Of course we at AFP have been saying the same thing about Social Security for months now.

Let's hope someone is listening this time.

-Rob

Tuesday, January 17, 2006

"Stupid in America: How Lack of Choice Cheats our Kids out of a Good Education"

Last Friday, John Stossel did an excellent piece on ABC's 20/20 entitled "Stupid in America," in which he broke down many of the myths and truths about public education and school choice.

The whole piece is worth a read, but Stossel really hits home with points about how more money is not the answer to improving education.

...without competition, parents don't know what their kids might have had.

And while many people say, "We need to spend more money on our schools," there actually isn't a link between spending and student achievement.

Jay Greene, author of "Education Myths," points out that "If money were the solution, the problem would already be solved … We've doubled per pupil spending, adjusting for inflation, over the last 30 years, and yet schools aren't better."

He's absolutely right. National graduation rates and achievement scores are flat, while spending on education has increased more than 100 percent since 1971. More money hasn't helped American kids.



~whitney

Saving on Paving

Since we're all a' twitter today over transportation, I thought it might be interesting to look at an example of how VDOT can increase savings on road maintenance using the private sector:

If VDOT were to allow the private sector to perform more of the approximately one billion dollars of maintenance work performed on Virginia’s roads each year, the savings could amount to $285 million. An added benefit may be that the quality of the Commonwealth’s roads might improve.

It's a change even the paving lobby might find acceptable.

RTD on Spending Issues

Good editorial this morning by the Richmond Times Dispatch on the minimum wage.

Barton Hinkle also has a good Op-Ed on federal earmarks for Virginia transportation(you may not believe this-- but DC can be worse than Richmond sometimes!)

Discussion going on in the blog world here and here.

Hope ya'll are having a great day!

-Rob

Monday, January 16, 2006

Drink Up!

Following up on Norm's post on the business of liquor from earlier today, James Atticus Brown has a great article today over at Bacon's Rebellion.

Check out his article on the Virginia Department of Education's alcohol expenditures. Seems the folks at the DOE have already spent $68k on alcohol in the first quarter of Fiscal Year 2006. I'm still trying to figure out what that has to do with educating Virginia's students...

While you're there, check out Mike Thompson's article on the Commonwealth's budget growth and some areas of "low hanging fruit."

~whitney

Bottoms Up

Where to look for cost savings in the Virginia budget? How about the Virginia Department of Alcoholic Beverage Control? According to the Virginia Piglet Book:

The Virginia Department of Alcohol Beverage Control operates approximately 300 retail liquor stores throughout the Commonwealth and is one of only 18 states that does not permit the private retail sale of alcoholic beverages within its borders. By getting out of the business of running its own retail establishments and opening the market up to private retailers, it has been estimated by the Wilder Commission and the Commonwealth Competition Council that taxpayers could realize savings of up to $700 million annually without giving up any of Virginia’s enforcement powers over alcoholic beverages and without sacrificing any revenues from licensing fees and violations.

Now that's a lot of money. But is it realistic to assume Virginia will get out of the business of selling liquor? Perhaps not in the near term. But if the Legislature is serious about streamlining government operations, and handing over responsibility -- where possible -- to the private sector, then this is an obvious place to start.

Daily Progress's Bob Gibson on Cost Cutting Caucus

Bob Gibson, over at the Charlottesville Daily Progress, gives a good re-cap of last week's Cost Cutting Caucus meeting in his weekly commentary.

In addition to including a link back to our VACostCutting blog, he highlights the fact that no one truly knows how many state employees are working for the Commonwealth of Virginia--one of many challenges faced as legislators try tp reform the scope and structure of state government.

~whitney

Thursday, January 12, 2006

Cost Cutting Caucus Kicks-off Session

Delegate Saxman held the first meeting of the Cost Cutting Caucus today.

In addition to several of the contributors here at the VACostCutting Blog (Saxman, Geoff Segal, and our team from AFPVA), more than a dozen legislators or representatives from their staff attended. The bipartisan group included several of the newly elected delegates, plus a number of executives from state agencies, as well as representatives from Attorney General-elect Bob McDonnell’s office and Speaker Bill Howell’s Virginia Reform Initiative.

The Caucus received a presentation from Bill Leighty, Chief of Staff to both outgoing Governor Mark Warner and Governor-elect Tim Kaine, focusing on changes that have been initiated over the past few years.

The focus of Mr. Leighty’s talk with was the new budget framework that Delegate Saxman discussed in his first post.

This is a key issue for the Caucus and for the taxpayers. The state budget has previously been what can only be described as an unreadable mess. Information was virtually unusable for legislators trying to prepare the budget, let alone for the average taxpayer trying to see where their money was being spent.

The short version is that we’ve made a lot of progress. Thanks to consistent constructive pressure from the Caucus, as publicly acknowledged by Mr. Leighty, the new budget—while not perfect—is significantly improved, including far more detail regarding exactly where and how money is being spent, as well as listing specific performance measures for state agencies and programs. There is still much work to be done, and the Caucus is ready to continue pushing for further reform and further. In order to have the accountability we should expect from our state government, we must first have transparency.

So, to re-iterate what Delegate Saxman said earlier, take a look at the new budget. Check out areas of interest to you, and share your thoughts. What changes would you make to make the document even more user-friendly?
~whitney

Efficiency and Educational Opportunity

Thanks to James Young for this post over at Skeptical Observor this morning. Mr. Young brings up some very good points on the issue of school choice as a cost-savings measure.

This is an issue that we at AFPVA are following very closely this legislative session as well. Our leader here at VACostCutting, Delegate Saxman, has introduced a fairly comprehensive measure, HB1294, the Education Investment Act, which is modeled in part after the successful Educational Improvement Tax Credit (EITC) program in Pennsylvania.

School choice programs should be examined as an opportunity to save taxpayer dollars and improve the quality and efficiency of public education. This can be a win-win for parents, for students, for teachers and for taxpayers, as it provides increased educational opportunities, while also reducing the burden on public schools.

It is interesting that a couple of years ago Governor Warner was promoting an increase in funding for the Tuition Assistance Grant (TAG) for Virginia students who choose to attend non-state-funded colleges and universities in the Commonwealth. His main argument was this was a cost-savings measure, because when students who decided to go to private colleges or universities rather than state-funded schools it saved the state money on the costs associated with educating those students.

If it makes sense for college/university students, shouldn’t we also look at this type of program as an option for K-12 students as well?
~whitney

Wednesday, January 11, 2006

Zero-Based Budgeting

One of the ideas that's been kicked around in the Virginia blog world is the concept of zero-based budgeting.

At first blush, and particularly to folks like me, it sounds like a grand idea -- manna from heaven. And in some ways, it might be. But there are pitfalls, too.

Michael LaFaive, the Director of Fiscal Policy at Michigan's Mackinac Center, ran through some of the pros and cons of zero-based budgeting in testimony before Michigan's legislature. In it, I learned one startling thing:

...the first use of zero-based budgeting in government has been tracked back to Gov. Jimmy Carter’s use of it in Georgia in the early 1970s.

Which is enough for some to abandon the concept entirely.

LaFaive also notes that applying a ZBB system to every state agency and department may fail. Time to strike the tent? Not just yet. Rather than a blanket approach, he suggested a modified system that would tackle agencies one, two or more at a time:

...don’t attempt to do zero-based budgeting for every department, every year. Such a move may prove impossible to manage. Instead, choose several departments and/or agencies, and rotate through every facet of state government over time. In Oklahoma, which has recently adopted zero-based budgeting, officials are applying the method to two departments and several agencies each year. Once those reviews are complete, the same departments and agencies will not see another zero-based review for eight years.

While the application of even a limited ZBB in Virginia would prove traumatic for those involved, it may yield results that justify the pain:

*Increase restraint in developing budgets;

*Reduce the entitlement mentality with respect to cost increases; and

*Make budget discussions more meaningful during review sessions.


Needless to say, this approach hasn't exactly taken the states by storm, at least according to this chart from the National Council of State Legislatures. In Virginia's case, the NCSL notes:

Program budgets organize the Appropriation Act, and performance measures are coming into use as a way to examine agency activities. Most executive budgets, however, begin with some calculation of a base, i.e., the approximate amounts required to continue current activities and caseloads.

"Performance measures" are fine and good. But if we're going to be serious about reducing costs and increasing efficiency, then perhaps it's time for Virginia to give zero-based budgeting a closer look.

What's Worth Watching

Day 1 is over. Leg Services seems to have most, if not all bills posted. There are a lot of the same - a lot of action on drunk driving penalities. Based on shear number alone, eminent domain and transportation will dominate the debate over the next 2 months. Here's a rundown on some promising pieces of legislation -- not all of them are affiliated by the Cost Cutting Caucus. I'm sure my fellow bloggers will offer up others...

Our humble leader, Delegate Saxman, offered up a number of gems. However, these two stick out:

HB1295 - creates the Council on Government Accountability and Efficiency. Made up entirely of private sector folks, using private money will have full access to state operations and identify waste, abuse, and ways to do things better and cheaper. Does anyone remember Reagan's Grace Commission? Sound familiar?

HB1297 - Commonwealth Realignment Committee (leg services has a different title, but rumor has it that this has been changed). Similar to 1295, only this is an 'in-house' effort that will evaluate every government agency, activity, and function on the basis of relevancy, performance, and efficiency. Two key pieces of the bill: any recommendations for elimination or reduction shall be sent to the floor, and voted on and the bill cannot be amended.

There were several privatization bills:
HB667, from Del. Wardrup calls for the "competitive bidding" of all highway maintenance.
HB1255, from Del. Hugo calls for a gradual increase in the privatization of corrections food services.
HB1122 was reintroduced by Del. Cline - this would require "commercial activities" produced by the government to be contracted out, unless there was a pressing need to keep them in house.

A few others worth noting:

HB55 - Del. Marshall - would call for the continuation of the budget, prior year levels, for a failure to act. This would prevent a government shut down in the event of say, a fight over a tax increase?

HB106 - Del. Purkey - calls for an auto reduction in spending by the Governor if revenues are at least 1 percent below forcasts. Brilliant.

Redefining "Public Use" - I counted at least 4 different bills in the House (94, 190, 902, and 924) - these will likely be merged into one some how.

House Majority Leader and Delegate Cline have offered a bill (HB 544) to generate more transparency in the budget process - requiring the Department of Budget and Planning to give the General Assembly more information, up front. Along the same vein, HB837 would create a Virginia Budget Office in the General Assembly.

Del. Lingamfelter has once again offered HB16, require a new administration to undertake a financial and management review of government functions and activities.

There are a few stinkers too...but in an effort to stay positive I'll keep those to myself...unless asked.

p/s - feel free to email me at any time with questions or comments at geoffrey.segal@reason.org

Work of Caucus Supported

Respected VCU Professor Robert Holsworth had this to say about the Cost Cutting Caucus today in a Washington Post online chat:
It is not so easy for cost-cutting to prevail when the Governor may be adding 15 billion dollars to the biennial budget.

But I hope that the cost-cutting caucus continues to be aggressive- it is critical for public trust in government that citizens believe their elected officials are spending taxpayer money wisely- and government, like any large organization, has to be carefully monitored, especially at a time when it is easy to spend and spend.

Keep Your Eyes Peeled

Legislative services is working hard to get all of today's bills and resolutions posted on-line. I'm sure there will be some dandies! Del. Cline has offered one bill (HB 850) that would give every individual an automatic tax credit in the event of a surplus in the prior year.

AFP-VA

We wanted to take a moment to introduce ourselves as we move forward with this blog.

Americans for Prosperity is an organized and dedicated group of grassroots citizen leaders who mobilize to spread the pro-market, pro-entrepreneurship, and pro-liberty message to policymakers. AFP members are committed to countering the powerful special interest groups that push relentlessly for bigger government at the local, state, and federal levels.

We opened our doors in Virginia this past Augst and since then have identified and educated over 500 Virginians at one of our many Grassroots Schools. In this short time we've also developed an 'action alert' network of over 10,000 people.

Our two contributors on this blog with be Rob Whitney, our State Director, and Whitney Duff, our Deputy Director. Rob brings a grassroots/poltical mindset to our organization while Whitney brings a solid background in public policy.

We can be contacted anytime at (804) 622-2578 or by e-mail at info@afpva.org. Also visit our website to sign up for our e-mails at http://www.afpva.org.

Let the Haggling Begin

It’s that time again. Time to haggle over a few billion here and a few billion there in the state budget. This year seems to be heading down the path of yet another tedious debate about the role of government and how our money should be spent.

Like many past Governors, Mark Warner has appeared to take the “break the bank” mentality in his final budget. The 2006-2008 budget represents a 14% increase over the previous budget, which included the largest tax increase in the history of our state. The Governor labels this budgetary growth as “investment” in our future—I’m almost certain we can “invest in the future” at a slower increase rate than 14% biennium and 109% in a decade.

But, what can be done differently? Plenty.

Currently, almost 18% of Virginia’s budget is spent on public K-12 education, totaling more than $6.6 billion per year. Funding growth has far outpaced the increases in student enrollment, with per pupil inflation-adjusted spending increasing more than 70% since 1975.

Do you feel your children are receiving a better education than you did?

Two solutions exist in order to improve our education system. First, we as citizens should expect that 65% of all education funds be spent in the classroom. By transferring funds from administration and support to actual teaching and classroom funding, we would be better utilizing education funds for what they are meant to be spent on—educating our children. Reattribution of just 3.5% of educational operating expenditures could generate almost $300 million for Virginia’s classrooms. Such funds could provide smaller class sizes, higher teacher pay and better infrastructure for educating our children.

Second, we as Virginians must take a serious look at school choice. The current system of public education allows parents few options when it comes to the educational needs of their children, one of the few monopolies existing in our country. As taxpayers continue to pay an ever-growing bill for public schools, those public schools face little accountability to parents who have no real choices should the schools not meet students’ needs.

School choice can save taxpayer dollars and push public schools to operate more efficiently. Families who choose to send their children to non-public schools save the state money (the current savings from students not enrolled in public schools totals more than $1 billion annually). In addition, when students opt out of enrollment in public schools, this reduces class size and the need for new school construction—an increasingly expensive burden on local governments. Returning a small portion of the cost to educate a child in non-public school would bring benefits to the public school system, families and children.

In the area of transportation we must effectively manage road construction and maintenance. We should encourage the strengthening of the Public Private Transportation Act (PPTA) to advance innovative approaches to reduce the time and cost of new road construction. We should also put a Constitutional lock on the “Transportation Trust Fund” to ensure that tax dollars taken from citizens for transportation actually fund transportation projects. Before this simple reform takes place lawmakers should not even debate new revenue sources for transportation. Citizens made their feelings clear by defeating the 2002 tax referendums in Northern Virginia and Tidewater.

Finally, Virginia needs to reform entitlement spending. For too long government has taken the approach that to make life better for those who rely on Medicaid we should simply pour more money into the program. Money is not the answer. Instead we must focus on ensuring our tax dollars are spent properly, that recipients have more choices in how they will be cared for, that there are incentives for individuals to save for health care through Healthcare Savings Accounts (HSA), and that mechanisms are in place to aggressively combat fraud and misappropriations of funds. All of these reforms will slow the growth of Medicaid spending while providing a better product to those most in need.

A colleague once told me that the General Assembly session reminded him of pigs running to a trough—everyone wants to eat. This mentality must end if we are to continue to be one of the best run states in the country. We as Virginians must stand up and demand real reform. And we must expect our tax dollars be spent in the most efficient manner. Government is here to encourage private sector growth and the freedom of choice, not to straddle taxpayers with an ineffective bureaucracy.

Rob Whitney

Tuesday, January 10, 2006

A Contributor's Full Disclosure & First Cost Cutting

Little did I know yesterday that my invitation to join this blog was "in the mail." I am very honored to have been asked by Del. Saxman to contribute my thoughts to this potentially exciting project.

I thought it would be a good idea if I made full disclosure of my status and my general philosophy for those who are not familiar with my writings, although I think Del. Saxman summarized them well in his introduction.

In July I will have been a state employee for ten years. I work in economic development and the nature of my job offers me two valuable perspectives: I am closely in touch with citizens who are trying to navigate state requirements and I have the opportunity to observe the workings of many state agencies insofar as they serve the public.

Despite what I believe is a broad vista onto state government, it is still like looking at the Shenandoah Valley through a keyhole. I am passionate, but persuadable.

I generally believe that state government does not hold reducing expenses in high enough regard. State government generally focuses inwardly, on the needs of the bureaucratic machinery, as opposed to the needs of taxpayers. This frequently makes administrative expenses higher than they need to be, so expense reduction potential exists at almost every agency. Some might scoff at this "nickel and dime" savings, but until a climate is created that values all cost reductions, it is difficult to get any cost reductions. "Small" costs across 100 agencies add up to "real money."

I had an epiphany shortly after Gov. Warner cut expenses in 2002. I saw that it was possible to actually provide more services for less money and I have aggressively incorporated that thinking into everything I have done since. I invite anyone who is interested in my approach or who wonders if I really live what I preach to contact me by phone, email, or live chat at the Virginia Business Information Center.

My interest is in making government more efficient. Every dollar wasted on a non-essential or inefficient activity is a dollar that could be going to something government must do--provide for public safety, public education, and public assistance for the truly needy, to name three of the most important. Efficient government-cost cutting shouldn't be a partisan issue. It should be something we routinely do because it's the right thing to do for our real bosses, the taxpayers.

Not Larry Sabato has already asked that the cost-cutting begin. Let me suggest two quick areas where I believe, from my experience, state agencies spend too much:

1. Printing. State agencies print tons of material and pass it out reflexively. Much of it just PR pulp. If we are a state committed to technology, we should be driving citizens to the internet. It's always there, as opposed to the brochure that is thrown away.

2. Travel. State employees, notably highly compensated employees, travel too much, especially to expensive conferences, and they share too little information when they return. I know "networking" is a valuable tool, but let's be honest here. A lot of the "networking" at these conferences is personal, unrelated to finding new and better ways to do their state job.

If state agencies were able to identify how much they spend in these areas, I would say the legislature could cut at least 25% of printing and travel expense from every agency budget and it would have no impact on the services the agency provides.

There--a small start.

Introducing our new line-up...

I’d like to take a moment to welcome and introduce our new contributors here at the VACostCutting Blog. As I said in my first post, we want this blog to be a forum for discussion about ways that we can improve state government, and I am confident that these contributors will help to initiate those discussions and will be active participants as we analyze ideas and suggestions for how we can best accomplish our goals.

We have invited Norm Leahy, who’s blog, One Man’s Trash, has been a staple in the blog-world for some time now. Norm has consistently offered a solid understanding of state government and insightful commentary when he sees something that can be done better.

Also added is Geoff Segal from the Reason Foundation. Geoff has worked closely with the Cost Cutting Caucus for several sessions, providing us with ideas and research in the areas of competition and free market principles. He has worked with state and local governments across the country to help reform government at all levels, and we’re looking forward to his insight here.

We are also pleased to be joined by Americans for Prosperity-Virginia, as AFPVA. AFP is a proactive, good government group that started in Virginia this past summer. The Cost Cutting Caucus is very excited to be working with them in our efforts to make government less expensive while providing better services, and we appreciate their contributions here on our blog as well as their own blog through AFP.

Additionally, we are excited that Will Vehrs has also agreed to participate in our blog. Many folks may know Will already from his writings over at Bacon’s Rebellion and the Bacon’s Rebellion Blog. He has always been a vocal advocate of small and effective government, and he will be a strong voice for these issues.

A couple other participants have been invited to join, and I will introduce them as they join up. I look forward to the dialogue and appreciate the participation from all of these individuals and organizations.

Sunday, January 08, 2006

Welcome!

As this is the introductory post of the Virginia Cost Cutting Caucus blog, I would like to first explain what the Cost Cutting Caucus is and how you can participate in creating a more productive government here in the Commonwealth. We believe that a more transparent, accountable and competitive government will yield better services at a lower cost to the taxpayers.

The Cost Cutting Caucus (CCC) was created in 2001 by soon to be former Delegate Allen Louderback. Allen, I think, worked for the GAO and had a real nose for wasteful spending practices in government operations. I called Allen and asked if I could join the CCC. He replied that it would probably be a good idea if I won my election first. Right. First things first.

In 2002, Del. Louderback began a very meaningful dialogue within the House of Delegates that was solely based upon spending practices and substantive reform. One of the first things that the members of the CCC, primarily freshman delegates, realized was that the actual budget document was unreadable. Yes, it is printed in English and uses arabic numerals but it really told you absolutely zero about HOW the money was being spent and if it was being spent well. Since those early days, transparency became one of our major themes.

We worked with the Warner Administration to try to understand what they were trying to accomplish so that we could assist them in creating legislation that not only made sense but would be carried out. Remember, just because the legislative branch passes a law, the executive still has to carry it out.

An example of this is HB1838. This bill authored and carried by Del. Gary Reese stated that the budget document had to be printed in an easily understood format. This was a tremendous victory for fiscal conservatism in the Commonwealth as the bill passed unanimously in both chambers and was signed into law by Governor Warner. Sensing little was being done, the leadership of the CCC asked for a meeting with high ranking members of the administration to see where they were and to offer a template of a transparent budget cobbled together with the best of the other states. We actually paid for this research on our own. At that meeting, we were told, reading between the lines,that the law would not be followed. Did we rant and rave, call a press conference and demand action? No, we kept up a proactive dialogue and in December of 2005, we have realized the fruits of our labor. The new document is available on line and linked on this blog.

We have had other successful legislative intiatives that we will detail later, but I want to focus on the basics at this point of who we are, what we do and what we will try to do.

Some ground rules on this blog. Since we are bipartisan and bicameral, we welcome ideas from anyone. We believe that a healthy discussion of these ideas needs the following 1) constructive and engaging criticism 2) thorough analysis 3) the acceptance of the fact that we will be wrong from time to time 4) positive interaction with state employees and lastly 5) zero negativity and acrimony - there are plenty of places in this world to rant and vent and this blog is not among them. We also reserve the right to have disagreements within the CCC.

With that, I turn it over to you. We have invited several people to blog and I am certain that the list will grow over time. My email is listed as saxman@vacostcutting.com but my delegate address is also DelCSaxman@house.state.va.us .

As Chairman of the Cost Cutting Caucus, I would like to thank several people who have allowed us to be where we are today. Delegate Allen Louderback - you will be missed but your legacy will continue. Delegate Michele McQuigg who has had a real interest in this effort and we will talk about her legislation later. Delegate Gary Reese who left a legacy of a real transparent budget. If I had to give an award for courage and valor it would be to Gary for his efforts in the new budget. And of course, Speaker Bill Howell who continues to not only share our vision, but also leads by example in so many ways. He is the true reformer in Virginia state politics.