Competitive Instinct

Indianapolis Mayor Stephen Goldsmith is serious about cutting back city hall.

The Indianapolis Department of Parks and Recreation had a problem. The end of the 1992 fiscal year was fast approaching and the department still had money in its budget. Rather than return the "extra" money to the general fund and risk having next year's budget cut by at least that amount, the department decided to buy a few supplies for a rainy day. The end result: It's a chilly day in February and sitting in the department's warehouse is a towering 40-ton mountain of chalk. The four-year supply of chalk—enough to line a baseball field with 101 miles between the bases—is now useless. To save money, the department recently switched to spray paint for lining ball fields.

When the heap of chalk was brought to his attention, Indianapolis Mayor Stephen Goldsmith didn't dress down park officials for wasting taxpayer money. He issued a press release. Calling attention to the perverse incentives that make it rational for bureaucrats to purchase 1,600 50-pound bags of chalk, the 46-year-old Republican mayor said, "The problem is they are trapped in a system that punishes initiative, ignores efficiency, and rewards big spenders."

Changing that system is what Indianapolis's mayor of 18 months is all about. Goldsmith is trying to do for big-city government what Wal-Mart's Sam Walton did for retail—revolutionize it. To survive in the 21st century, he believes Indianapolis and other big-city governments must become smaller and more efficient and foster an environment of "chaos." Job classifications, descriptions, and hiring forms will have to be tossed. " All city government really ought to be is a series of 100 projects around different clusters. We finish a project and we move on to the next one," declares Goldsmith in a statement that would be considered radical even in the private sector.

In most of America's big cities, the need for change is not too tough a sell. The signs of crisis are everywhere—decayed infrastructure, rampant crime, poor-quality basic services, fleeing businesses, and soaring taxes and spending. Philadelphia almost went bankrupt in 1991; Detroit has lost more than 40 percent of its population since World War II—most of those who remain are city employees; and a year after experiencing the country's second-worst riots, Los Angeles faces a $500-million budget shortfall.

For Goldsmith, getting people to "buy in" to radical change is more difficult. His problem: Indianapolis is an honor student in the classroom of big cities. It is not facing a fiscal crisis or any other kind of crisis. Taxes aren't as high as in other big cities, the bond rating is triple A, the streets are clean, and it's among the safest of all large cities.

Goldsmith's predecessors, Sen. Richard Lugar and William Hudnut, both moderate-to-conservative Republicans, made national names for themselves while mayor. Lugar annexed the city's suburban townships (all of Marion County), bringing local services under city control and making it possible to have a Republican mayor in the nation's 12th largest city. Hudnut put Indianapolis on the map as the amateur sports capital of America by leveraging public money with private dollars and erecting a slew of fancy stadiums, domes, and arenas.

When Goldsmith—Marion County's former high-profile prosecuting attorney—was elected mayor in 1991, few really expected much change. "I thought that by voting for Goldsmith we would be getting the status quo. I voted for more of the same. Now I feel betrayed," says a former campaign volunteer and longtime suburban Republican. Why fix what ain't broke? If we wait, says the mayor, Indianapolis will suffer the same fate as Philadelphia, Detroit, and other troubled big cities.

Those who followed the young mayor's previous career more closely haven't been as surprised by the radical change he is bringing about. He has always been somewhat of a visionary—doing preventive maintenance on organizations most people view as working just fine. Despite no experience in criminal law, he was elected district attorney at the ripe age of 31. In his 12 years as prosecutor, Goldsmith earned a reputation not only for being tough on corruption and crime—he prosecuted more people than ever before in Indianapolis—but also for being innovative.

When he became chief prosecutor, the child-support office was collecting only $900,000 a year from deadbeat fathers. He turned the office around. Goldsmith established bonuses and productivity raises for the staff, upgraded the computer system, and contracted with a private collection agency to locate hard to-find fathers. After 12 years, collections jumped to $36 million a year.

Since his inauguration in January 1992, the workaholic mayor has put his ideas into practice at a blistering pace that has left little time for building consensus or indulgences like sleep (though when he fell to below five hours of sleep a night he found it to be "counterproductive"). "We have only four years of our lives to make the city better for everyone in Indianapolis," says Goldsmith, who is unable to sit through an hour-long interview without frequently sneaking impatient peeks at the e-mail messages coming across his lap-top computer screen.

Mayor Stephen Goldsmith is working hard to do for big-city government in America what Wal-Mart's Sam Walton did for retailing revolutionize it. Goldsmith is gaining a national reputation for having the most ambitious privatization program in any large city in the United States. But he says he doesn't have a privatization program; he has a competition program. His goal is not to privatize for its own sake but to break up the government monopoly. As long as there's competition, he doesn't care whether a private firm or a city department delivers the service.

"There is no great value in and of itself for privatization, as contrasted to the competitive process," says the mayor. And that process must be

approached "as the fundamental aspect of change in order for a city that is successful to stay successful."

To drive that change, Goldsmith created a private-sector advisory group called SELTIC (Service, Efficiency, and Lower Taxes for Indianapolis Commission). SELTIC is not your typical task force of corporate government-relations types who produce reports that end up unread and forgotten. Comprising nine of the city's leading entrepreneurs and more than 100 volunteers, SELTIC has not produced a single report—nor will it in the future. It is looking for results.

SELTIC's chairman, former Reagan White House political director Mitch Daniels, describes the commission's work as "antitrust for government." It is examining everything the city does and asking two questions: First, should government even be involved? If the answer is no, SELTIC recommends that the city get out of the service. If the answer is yes, SELTIC asks a second question: How can we make the service subject to competition from the private sector? More than 150 competition opportunities have been identified; more than 40 government services have already been opened to competition.

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