Open Government

WPC's Center for Government Reform's mission is to partner with stakeholders and citizens to work toward a government focused on its core functions while improving its transparency, accountability, performance, and effectiveness for taxpayers.

Open Government Blog

Has state economy hit bottom?

June 18, 2009 in Blog

Despite a drop in projected revenue, the state's top economist Dr. Arun Raha believes the worst is over. According to Raha the "free fall in the economy is behind us . .. decline in revenue is moderating."

That said, today's news creates additional pressure on the state budget. For the first time since the 2001-03 biennium (impacted by the 9/11 terrorist attack), traditional General Fund revenue collections are projected to be negative biennium over biennium as shown here:

  • 2001-03: $21,141 million (0.6% decrease)
  • 2003-05: $23,389 million (10.6% increase)
  • 2005-07: $27,772 million (18.7% increase)
  • 2007-09: $27,706 million (0.2% decrease)
  • 2009-11: $27,692 million (0.1% decrease)

The impact of this is a reduction in the amount of reserves available for the state to weather any unforeseen bad news. 2007-09 reserves are reduced to $218 million. 2009-11 reserves are reduced to a paltry $53 million, Both reserves are well below one percent of expenditures (a 10 percent reserve is recommended).This includes the constitutional rainy day account.

This past session the legislature changed the definition of the General Fund to include additional accounts. By adding those new accounts the revenue forecast is essentially flat as shown here:

  • 2005-07: $29,785 million (17.3% increase)
  • 2007-09: $29,812 million (0.1% increase)
  • 2009-11: $29,834 million (0.1% increase)

Meanwhile, the Chair and ranking member of the House Ways and Means Committee told the Association of Washington Business (AWB) they see no reason for a special session. As reported by Jason Hagey:

"State Reps. Gary Alexander, R-Olympia, and Kelli Linville, D-Bellingham, agree that Washington legislators should not convene for a special session this year, despite growing budget woes.

Linville told a meeting of the AWB’s Governmental Affairs Council that Gov. Chris Gregoire should use her limited authority to trim the budget enough to get through until January when the Legislature meets again for a regular session."

One of the options for the Governor is found in RCW 43.88.110:

"blockquote" style="margin-left: 40px;">"If at any time during the fiscal period the governor projects a cash deficit in a particular fund or account as defined by RCW 43.88.050, the governor shall make across-the-board reductions in allotments for that particular fund or account so as to prevent a cash deficit, unless the legislature has directed the liquidation of the cash deficit over one or more fiscal periods . . ."

Whether or not the Governor takes this action it is clear that additional reforms to the state budget will be needed to help put the state back on a sustainable spending path.

Louisiana tries to tax Internet access even if the Feds prohibit it. How? Through a "fee"

June 18, 2009 in Blog

For the last decade, the United States Congress has wisely chosen to prohibit states and local governments from imposing taxes on Internet access. As the Internet developed during the 1990s, one of the chief worries at the time, as established non-tech businesses integrated the world wide web into their daily activities was, "will we have to start paying for each email?"

Obama directs agencies to focus on performance

June 16, 2009 in Blog

With the threat from federal budget deficits growing each day, it appears the President is turning to the promise of performance-based budgeting as a solution.

Consider this June 11 memo to agency and department heads issued by President Obama's budget director Peter Orszag:

"Our goal is to build a transparent, high-performance government capable of addressing the challenges of the 21st century. The American people deserve a government that works, where the public interest is prioritized, where the impact of government spending is transparent and held to high, objective standards, and where results and good management matter . . . To be successful, we must focus resources on our highest national priorities, including investments in health reform!
, clean energy, and education. At the same time, we must enforce fiscal discipline, making sure that we invest in what works, do not waste taxpayer dollars on programs that do not work or are duplicative, and improve performance across the board."

One of the ways Orszag hopes to accomplish this is to focus agency attention on high-priority performance goals:

"Identification of agency high-priority performance goals is a first step toward developing the President’s agenda for building a high-performing government. There will be regular reviews of the progress agencies are making to improve performance in priority areas including problems they encountered and plans to address those problems. To prepare for these reviews, each agency is asked to identify a limited a number of high-priority goals and begin to define the strategies and means to achieve them . . . The agency goals identified for this !
purpose should generally have:
  • High direct value to the public or reflect achievement of key agency missions, as opposed to being focused on internal agency management or other administrative priorities.
  • Congressional authorization and appropriations required for successful implementation; though additional legislative changes may also be identified to contribute to success.
  • Coordination, operational, or other implementation challenges including across multiple agencies that once resolved, will likely lead to improved effectiveness or efficiency.
  • Performance outcomes which can be clearly evaluated, and are quantifiable and measureable in a timely fashion.
  • Significant challenges unlikely to be overcome without a concerted focus of agency resources."

Perhaps with an eye towards the spending problem in D.C., the memo goes on to direct agencies to prepare two alternative budget requests based on a freeze in spending and a five percent reduction.

Whether or not the President's proposed budget next year actually reflects this process, the information provided by agencies in response could prove to be invaluable for Congressional budget writers --- should they take the initiative to review it.

As we've previously recommended, Washington state lawmakers should also focus on agency performance when making budget decisions. Providing those who control the purse strings with this type of information allows them to make informed decisions on which purchases will deliver the highest results for taxpayers and those who rely on essential services.

Supreme Court orders Federal Way investigative report released

June 12, 2009 in Blog

So much for the wheels of justice turning slowly. Less than a week after hearing oral arguments, the State Supreme Court today ordered release of the findings of an investigation of Federal Way Municipal Court Judge Michael Morgan. The News Tribune (party in the case) explains the controversy in this editorial:

The fight over an investigation into the Federal Way Municipal Court could have broad implications for the public’s right to know everywhere in Washington.

Judge Michael Morgan is suing his own city and The News Tribune in an effort to keep a potentially embarrassing report under wraps.

The report, written by a Seattle attorney hired by the city, followed an allegation that the municipal court was a hostile workplace. The city was planning to release the document last year to The News Tribune m>, until Morgan intervened.

On Tuesday, he pleaded his case to the state Supreme Court, where it became evident that he is willing to try any legal theory to keep the report out of the public eye.

Morgan argues first that the record belongs to municipal court and therefore is not subject to the Public Records Act that governs executive-branch agencies.

He then goes on to assert that even if the record were subject to the public disclosure law, that the city has several excuses at its disposal for denying public access, among them attorney client privilege and employee privacy.

Judge Morgan is up for re-election in the August 18 primary. As a result The News Tribune asked the Court to expedite its ruling.

Obliging, the Court said today in its order:

"On June 9, 2!
009, this Court . . . heard oral arguments on whether the City!
of Federal Way should be restrained from releasing the Stephson Report --- a report written by Amy Stephson on her investigation into a Federal Way Municipal Court employee's hostile work environment claim --- in response to a public records request from The News Tribune. Because of the nature of this action, the Court has unanimously determined that the report be released immediately, with an opinion addressing this issue and other issues in the case to follow. Now, therefore, IT IS ORDERED that the stay issued by the Court of Appeals on April 15, 2008, preventing the City of Federal Way from releasing the Stephson Report is vacated. This is an interlocutory order which is not subject to a motion for reconsideration."

Pending the full ruling by the Court, this is a great development for open government.

State Auditor launches new website

June 11, 2009 in Blog

The State Auditor's Office launched a redesigned website today with many new features for citizens to stay informed on government accountability issues. As a frequent user of the past site, I'd like to congratulate the staff that worked on creating this vastly improved citizen resource!

According to the Auditor's press release:

“The redesigned site is another effort by our Office to promote government transparency and accountability,” Sonntag said. “The best way we can be accountable to citizens is to provide the results of our work in an easy-to-read and easy-to-find format.”

The site has new features for citizens, including electronic public records requests and a resource guide to help people find information they need from local, state and federal government agencies.

The site incorporat!
es RSS feeds so citizens can find out instantly when the Office posts reports or news to the site.

Governments and auditing professionals also have a new resource – an interactive best practices knowledge base through which auditors all over the world can share and search the best practices identified through audits.

Check out the Auditor's new and improved website here.

Could ARRA push inflation?

June 4, 2009 in Blog

Fallingdollar Dr. John Rutledge, chairman of Rutledge Capital and international business consultant extraordinaire, chimed in on a Congressional Budget Office PowerPoint entitled "Implementation Lags of Fiscal Policy."

In it, the CBO outlines the timing of implementation of the American Recovery and Reinvestment Act, ARRA (or just "stimulus package"). It gives a bullet-point outline of some of the thinking behind the stimulus package (e.g., "The Federal Reserve cut the funds rate essentially to zero in December, and thus was out of ammunition for its prin!
ciple policy weapon.")

But more importantly what the CBO highlights, and what Dr. Rutledge has concerns with, is that discretionary spending -- such as infrastructure improvements, education, broadband, state aid, etc. -- is going to take at least three years to spend barely 75% of the allotted money. $308 billion was set aside in ARRA for the discretionary spending and by the end of 2011, only 72% of it will be in the economy.

In fact, only 11% of discretionary spending will be spent by the end of 2009. But the stimulus package was largely based upon the premise that the money had to be infused into the economy very quickly. This isn't exactly moving forward as fast as it probably should.

But there's another concern as Dr. Rutledge points out. Many economists, even our state's own chief economist Dr. Arun Raha, are ex!
pecting the economy to begin rebounding in the third quarter o!
f 2009, with weak growth in 2010 and 2011 (see Dr. Raha's forecast presentation).

So, how does a stimulus package (i.e. higher government spending) affect an economy that is on its way to a slow recovery? It could have a potentially adverse inflationary effect. This is not what policymakers were expecting I'm sure.

Nevertheless, Dr. Rutledge concludes:

Why is this [stimulus roll out] a problem? Because there are early signs of recovery coming
in now every day. By the end of this year the recovery will be
undeniably underway. That means next year (2010) and the year after
will be periods of rapid growth and rising inflationary worries. That’s
why bond yields have increased by more than a full percentage point in
recent weeks with more to come over the coming months. And that’s one
of the reasons why commodity prices have been rising so fast.

The rising skyrocketing federal debt (approximately $1 trillion a year before the new health care initiative) could lead to Congress once again raising taxes but more importantly firing up those monetary printing presses or issuing more Treasury Bills (by the way, China has more than $2 TRILLION in tbills). We are seeing the beginnings of this with the dollar dropping off against the Euro and the British pound. In fact, Bloomberg is reporting that more and more developing countries are selling off their dollar reserves.

Web voters support 72 hour budget timeout

June 2, 2009 in Blog

Requiring a 72 hour budget timeout received the most votes by advocates of open government taking advantage of President Obama's interactive website focused on improving federal government transparency. According to Roll Call:

DSHS hit with 7 audit findings

June 1, 2009 in Blog

The Department of Social and Health Services (DSHS) received seven findings in an audit released this morning by the State Auditor's office. Here are details on the audit findings:

  1. DSHS, Children’s Administration and Economic Services Administration paid an adoptive parent, foster care providers and child care providers who had not cleared background checks.
  2. DSHS did not have controls in place to prevent misappropriation and ensure payroll accuracy.
  3. DSHS internal controls over provider payments are not adequate, resulting in misappropriations totaling approximately $230,000.
  4. DSHS does not ensure all payments made through its Social Services Payment System are supported and approved.
  5. DSHS’ Economic Services Administration systems are vulnerable to misappropriation and inappropriate data changes.
  6. DSHS does not adequately monitor access to critical systems.
  7. DSHS does not adequately monitor contracts with Crisis Residential Centers to ensure compliance with state law and contract requirements.

These audit findings may provide new ammunition to lawmakers hoping to reform DSHS. This past session the House State Government and Tribal Affairs Committee unanimously approved HB 2197 which would eliminate DSHS, replacing the agency with four smaller agencies. The full House, however, did not take action on the proposal.

Rep. Mike Armstrong, prime sponsor of HB 2197, said this about his proposal:

"This agency has simply become too big and unresponsive to the public's needs. The state has tried to put too many governmental functions into one super agency, and it has not worked. It's difficult to administer, costly, and it's very hard to measure whether the agency is actually meeting its goals and responsibilities . . . There are 16 Democrats and 17!
Republicans who have signed onto this bill. That tells me they are as frustrated as I am with the bureaucratic arrogance of DSHS."

What have you done for me lately?

June 1, 2009 in Blog

Thanks to new policies on government transparency, members of congress who request an earmark in the upcoming surface transportation reauthorization bill (the federal transportation budget) must now list the requests on their official government website. So citizens can now find exactly what transportation projects each member of congress has requested.

Here is a preview with links to each member's full earmark request:

Congressman Jay Inslee                                                $207
million       List
of Projects

Congressman Rick Larsen                                             $103
million       List
of Projects

Congressman Brian Baird                                              $283
million       List
of Projects

Congressman Doc Hastings                                          $51
million         List
of Projects

Congresswoman Cathy McMorris Rodgers                      Unknown           List
of Projects

Congressman Norm Dicks                                            $42
million          List
of Projects

Congressman Jim McDermott                                       $199
million        List of Projects

Congressman Dave Reichert                                         $309
million        List of Projects

Congressman Adam Smith                                           $377.2
million     List of

Budget Tamiflu

May 21, 2009 in Blog

Interesting column today in the Seattle Times by Joni Balter on taxes and state budget problems. The focus of the article is how politicians in Washington claim if only the state had an income tax there wouldn't be any budget problems and how politicians in Oregon claim the same if only their state had a sales tax. Of course, as Balter points out, California has both and look at where that's left the state.

Here is the conclusion of the column:

"Washington and Oregon can trade a sales tax for an income tax or vice versa. But either way, both states will get sick in a down economy. There is no immunization from these tax systems for economic flu."

There is one way to avoid catching the budget flu, however: spend !
healthier (more responsibly) and not stay up all night binging away your savings.

Regardless of how you slice up the tax structure, states need to use a “three-legged stool” of sound budgeting:

  • Meaningful spending limit;
  • Protected 10% reserve account (so you don’t have to resort to tax increases or deep spending cuts in the bad times); and
  • Limiting base expenditures to core functions within the revenue forecast.

Here are the types of questions that should be asked before any activity receives taxpayer money:

  • Is the activity a core function of government or commercial in nature?
  • If it is a core function, can the service be provided more efficiently and effectively through competitive contracting?
  • Does it provide a broad public benefit or only serve a special interest?
  • Does it duplicate the activities of non-profits or other private initiatives?
  • Does it duplicate the efforts of other state agencies or programs?
  • Does the activity demonstrate quantifiable performance?

In fact, you could say that asking and answering these questions combined with utilizing sound budgeting tools is the equivalent of taking budget Tamiflu to head off the cyclical "economic flu" season.