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GOVERNMENT-
October 2003 by Ed Ford Fiscal Fitness
Waste, inefficiency and lack of accountability were all identified as key problem areas. The abuses take on many forms: patronage, abuse of public service contracts, memorandums of agreement, publication excesses and the state’s ownership of too many vehicles were all mentioned. In this second segment, we examine their suggested solutions. Presented here are 10 possible ways to improve government. Many of the ideas have been suggested before. What makes them worth mentioning again is the marked contrast in the methods proposed to accomplish the stated goals. Remarkably, the suggestions all show a welcome change from old attitudes toward state spending. All the suggestions provided seem to adhere to good business principles, beginning with the first: Develop a strategic
plan “What we’ve seen in the past are investments made many times just on the basis of political paybacks. We need a business plan backing an investment, whether it’s for roads or projects to be accomplished.” Organization
review “We have to review 100 percent of state government,” he stated, “and take a new look at how we do business. Essentially, this will be a top-to-bottom examination and possible reorganization.” Fletcher suggests something similar.
Centralize debt
collection Consolidate,
reprioritize
Lowell Reese believes every state agency has waste, as does every business. “The question is, what percent can you go in and cut (or consolidate) and still provide the services necessary? Every agency probably is going to be a little different, but every one can be trimmed. The political reaction is strong, of course, when you’re taking things away from people, but it can be done if those in charge have the resolve.” Chandler points out that his proposed review of state government “absolutely would consolidate some things and modernize our structure of government.”
Relmond Von Daniker believes things can sometimes be consolidated, but it’s not as easy as it may sound. Constituencies, lobbyists, business people, suppliers and legislators can be affected by cutting back, eliminating or consolidating. The cry, he says, is always “Why don’t you cut some other program instead of mine?” Closer budget
examination “It’s not easy,” Richards continued, pointing out that “about 61 percent of the budget is education, about 19 percent is human services, 10 percent is corrections and the other 10 percent is all the rest of state government.”
“Education is the most important function of state government,” the House speaker said. “The issue is, do we continue to make progress and fund education not only at the present level, but at a higher one? You’re won’t be able to cut significantly there. “And, nearly all of the human services budget is matched by federal money. If you cut a dollar there, you lose three more.” That means new revenue is needed, but how do you raise the funds? Here is the heart of the matter. Raise taxes? Well, maybe not. Tax reform Fletcher takes it a step further: “I believe we can balance the budget without raising taxes. We can attract businesses to grow the economy and revenues by improving income, not by raising taxes.” When Richards made his primary run for governor, he laid out several methods during the campaign of what he would have done if elected, and they didn’t include a tax increase. “First,” he said, “I’d continue to look at waste reduction, and second, I’d reprioritize.” Richards’ approach to tax reform targets loopholes in the tax laws. “If one uses the Dr. William Fox Report – the University of Tennessee economist who made a report to the General Assembly – there are several areas where taxes would not be increased, but loopholes could be closed to increase fairness. This is revenue neutral, but is keyed to the economy today so that our tax base and revenue grows with the economy. “Our tax system was created 100 years ago when we were an agrarian society. Today, we’re manufacturing and technology. Also, we need to help the so-called working poor. We start our income tax at $4,600, and that’s too low. I would gradually increase brackets to where they reached a level of $17,000-$18,000 per year.” Fletcher’s approach to tax reform includes modernization with business growth in mind. “Making government more efficient includes modernizing the tax system so we can keep and attract more businesses,” he said. “It also enables us to focus on creating jobs and opportunities.” Chandler said he has great hope for tax reform and modernization in that both he and Fletcher are talking about it. “We might actually be moving toward bi-partisan support and nothing is going to be accomplished in this area without it.” The attorney general agrees that tax modernization is needed to make the system “more business friendly” and encourage business development and growth. This sounds great, but now we need to examine how tax reform could be accomplished. Lowell Reese suggests we start with an amendment to the Kentucky Constitution. Constitutional
amendment Reese cites the wave of activity in various states to pass such an amendment in the late ‘70s and mid-1980s. A handful of states actually passed the amendment, he said, including South Carolina, where he resided at the time. “The language for such an amendment has to be carefully crafted,” the editor/publisher continued, “because you can create a gap between the percent you’re allowing government to grow as tied to the growth of the economy.” He said an emergency clause to exceed constitutional limits also might be needed to cover the unexpected. “But, clearly, it’s a restraint and a way to harness taxes and spending.” Checks and balances “Most of the people I see government serving don’t always know where to file a complaint,” she observed. “I think we need a system to determine when things are not working, to be able to say ‘we’ve cut this enough, we can’t cut anymore.’ “We need to have cooperation among the governor, the legislature, and the cabinets. Cabinet secretaries, for example, are ones who know what’s going on down the chain of command. I also would add a group that does the actual work, plus individuals the government serves. “We need a way (for feedback) so government can know what’s not working and why. We need to keep an open mind when we look at streamlining government.” Prisons, healthcare
and gaming Then there’s healthcare. “One of the major cost-drivers in state government is health insurance,” Richards added. “I believe we need to establish a self-insurance program for state government and teachers to hold down costs. Many states are doing this and we need to examine programs in other states and emulate the most successful.” Another Richards suggestion concerns gaming. “I believe people in Kentucky want to vote on expanded gaming,” he said. “That’s a change in position for me over the last several years. But as I’ve talked with people around the state, I’m convinced they want to vote on it. My view would be to expand gaming at race tracks and add two or three more areas where there’s major competition from out-of-state gambling sources.” Lieutenant governor Reese, however, is adamant that “the office is totally unnecessary and should be eliminated.” “The lieutenant governor has no meaningful purpose; he or she is just there in case the governor happens to die,” he explained. “There are other constitutional people in line to succeed in that situation without having to waste taxpayer dollars.” As the 2003 race
for governor nears its conclusion, Reese points out that state government
improvement will be realized if the voters demand it. But that will
mean a cry for accountability instead of “a desire for a share
of the gold.” He believes improvements in state government have
the best opportunities to reach fruition from the top down. “At
some point, it boils down to leadership elected by the people that is
enlightened and recognizes what needs to be done.” |
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Copyright 1996-2003, by Kentucky Business Online. All rights reserved. Editorial content
is copyright 2003, Lane Communications Group The Lane Report is a trademark of Lane Communications Group. All other trademarks are the property of their respective owners. |
In
part one of this two-part series on streamlining state government, the
focus was on what’s wrong with state government. Gubernatorial
candidates Ben Chandler and Ernie Fletcher offered their views along
with Speaker of the House Jody Richards; Lowell Reese, editor/publisher
of The Kentucky Gazette; Moretta Bosley, interim chair of the Kentucky
Democratic Party, and Dr. Relmond Von Daniker, executive director of
the National Association of State Auditors, Comptrollers and Treasurers
(NASACT). 
“It’s
extremely important when you invest or spend tax dollars that you have
some sort of plan as to what that’s going to accomplish,”
Fletcher said. “You need to know such things as the number of people
it’s going to help, the number of jobs it will help create and
what kind of return is expected in improving the quality of life and
in further developing the infrastructure.
“We’re
putting together a policy group to look through each department,”
he explained. “We want to study each one, evaluate its efficiency,
its positions and what its people are doing. I get the sense —
and we want to quantify it — there may be a number of political
appointees employed who are not always necessary. I think it’s
important to identify any waste . . . and root it out.”
“I
believe we have fewer state employees now (approximately 36,000) than
we had some 12 years ago, but we constantly need to look for consolidation
and streamlining,” Richards commented. “I think the General
Assembly always will consider possibilities to reduce government’s
size and make it accountable and efficient. But, part of the problem
is that so many of the jobs with high turnover rates are absolutely
essential positions. Things like prison guards and social workers are
high-stress, low-paying positions. So you can’t not fill such jobs.
However, there can be reprioritizations in some areas and some money
can be saved and shifted to other parts of government.” 
Fletcher
said he’d compare and get ideas from looking at what some surrounding
states are doing. “Tennessee, for example, taxes less than we do
– about 1.5 to 2 percent less per individual – and delivers
services, maintains roads and does the other things required of state
government, but does it without spending as much as Kentucky.”
However,
there’s not enough to establish new programs, Richards explained.