A Policy Guide for Budget Reform
Strategies for Improving State Government Services and Reducing the Deficit
2003-01
State legislators face a serious budget deficit for the biennium starting in 2003. Unlike last year, however, this year’s deficit is not a surprise. A faltering economy, coupled with band-aide solutions enacted in the last session, leave the state with a biennial budget shortfall projected to reach $2.4 billion.
The deficit is not the result of lower tax revenues. Revenues are projected to increase by $1.5 billion, or 7.6%, in the next biennium. Similarly, spending is projected to rise from $22.5 billion in 2001-03, to $24.7 billion in 2003-05. Rather, the deficit is the result of revenues not growing as fast as officials had predicted, creating a shortfall in the level of planned spending increase.
Controlling government spending is essential to eliminating recurring deficits. A new Policy Brief from Washington Policy Center presents practical policy changes that will reap immediate savings, improve the quality of public services, and reduce long-term structural costs.
The full study is available at www.washingtonpolicy.org. Below are some of the main findings.
• Restore Limits on Spending Growth: The legislature ended spending controls enacted by the people under Initiative 601, thus contributing to the deficit. Returning to effective spending limits would bring greater discipline to public finances and help restore trust in government.
• Eliminate Positions Vacant More than Six Months: Hundreds of state government positions exist only on paper. If a staff slot has been vacant six months, it’s fairly clear the agency can do its work without an employee in that position.
• Adopt a Five-Year Sunset Review for all Boards and Commissions: Many of the 406 state boards and commissions have outlived their original purpose and should be allowed to expire. A regular five-year review would allow the legislature to renew those that are still needed.
• Implement “Gainsharing” Employee Incentive Program: Gainsharing allows agencies to share with employees 50% of the savings from efficiency improvements, thus lowering costs and rewarding good ideas from front-line workers.
• Use Performance-Based Contracting: Performance-based contracting has proven successful in other states, including Tennessee, which saved $10 million through new consulting contracts.
• Sell Non-Essential Real Estate Holdings: State government owns 9% of the land in Washington and can generate additional revenue by selling non-essential properties.
• Allow the State Auditor to Conduct Performance Audits: Performance audits in other states have saved billions of dollars, and have helped to restore taxpayer confidence in government.
• Eliminate Costly Prevailing Wage Regulations: Normally market forces determine the prevailing price of labor, not a pre-determined, government-fixed price. By interfering in the natural movements of the market the government artificially drives up its own costs.
• Competitively Contract Highway Maintenance: An independent study estimates the state could save $25 million by competitively contracting for highway maintenance.
• Legalize Private Passenger Ferries: The state plans to cancel passenger ferry service on June 15th. If the state won’t do it, it should at least allow private companies to offer the service.
• Allow Private Firms or Non-Profits to Manage State Parks: Allowing competition for contracts to manage state parks would improve efficiency for an agency that is closing parks and is increasingly constrained by budget pressures.
• Competitively Contract for Prison Health Care Services: In 24 states inmate health care is provided by private contractors, generally with lower costs and improved quality of care.
• Allow Private Companies to Build and Manage >State Prisons: The experience of other states shows private contractors can build and operate a prison for 10% to 25% less, with no reduction in the quality of corrections services.
• Privatize State Liquor Stores: Private sector sales would bring better service and wider choice for consumers, freeing the Liquor Control Board to focus on public health and safety.
• Rescind the Governor’s New Ergonomics Rules: The new rules are the most restrictive in the nation, requiring employers to count, for example, how often employees lift ten pounds, or bend their necks forty-five degrees. Penalties on employers reach $70,000 per infraction.
• Open a Government Services Contribution Fund: Citizens who feel the government needs more revenue could first pay voluntarily into a public fund before advocating higher taxes on their neighbors.
• Eliminate the Presidential Primary: In 2000 the state spent $5.2 million on the presidential primary, although neither party used the results to select most of its delegates.
• Adopt a Constitutionally-Protected Emergency Reserve Fund: A tightly-controlled reserve fund, protected by constitutional safeguards, will shield state services against unexpected shortfalls.
If adopted, these budget reforms will promote government efficiency, improve services to the public, and limit the high tax burden shouldered by citizens and businesses. They will also help ensure future economic downturns do not force our state into yet another budget crisis, and will build public trust by demonstrating the government’s ability to live within its means.