Reason Writers Around Town: Make State Programs Compete for Funds

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David Osborne, who helped lead the Clinton administration's "reinventing government task force," is author of the book Reinventing Government and a new Reason Foundation study on how to fix the California budget. Osborne pulls from that study in this Sacramento Bee column on how to rebuild California's deficit-riddled budget from scratch:

Californians are sick of watching their leaders kick the state's fiscal problems into the future. They are also tired of sterile debates about how much to spend on X vs. Y, with no attention to the results these expenditures produce or the long-term liabilities they create for the state.

One big factor contributing to fiscal paralysis has been the two-thirds requirement, in both houses of the Legislature, to approve a budget. Yet without some other form of fiscal discipline, citizens are not likely to consider repeal. To create that discipline, California's elected leaders might consider a new approach, called "Budgeting for Outcomes." It helps leaders rank programs according to how cost-effective they are at achieving the results citizens want, then eliminate the low-ranked activities.

The Public Strategies Group developed this approach to help Washington Gov. Gary Locke close a nearly 15 percent budget gap in 2003. Since then, it has spread to more than 20 other states, cities, counties and school districts.

As with other reforms, its success depends on leaders' courage to make hard choices. But it can help them make those decisions in a more rational and transparent way.

It starts where most budget processes end: Elected leaders decide how much they want to spend next year. They make a policy decision, up front, whether to raise or cut taxes and fees. (They can revisit this decision at the end of the process, of course.) Then they work with citizens to define the eight to 10 results most important to them – a better economy, better schools, better health, better safety, better mobility, a cleaner environment, and so on. They decide how much each of these outcomes is worth and divide the money among them.

This creates eight to 10 finite pots of money, for which programs must compete based on their value, the results they produce per dollar. This is the real magic: Competition for scarce resources forces creativity.

For each pot of money, leaders assign a team of experts with no ax to grind or budget to protect. These "results teams" act as buyers for the citizens. Their task is to produce the outcome, not to fund programs.

Read the rest here.

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  1. assign a team of experts with no ax to grind or budget to protect

    Anyone stupid enough to believe this?

    1. Yep, that’s where I fell off the train, also.

      Although I was barely clinging on at this point:

      Then they work with citizens to define the eight to 10 results most important to them

      Fundamental flaw, to my mind: this approach apparently assumes that there is no goal that the government should not, in principle, extract money from taxpayers to pursue.

      If you don’t start with limited government as your baseline principle, you’re certainly going to end with limited government.

      1. Exactly.

        I’m reading that study and am hard-pressed to find anything different from the way governments have traditionally worked – it’s little more than spin.

        Take this boneheaded statement:

        “And like it or not, increased personal spending creates increased demands on government. The more residents drive, the more they demand good roads in good repair.”

        Yes. AND THE MORE THEY PAY IN ROAD-USE TAXES!! Roads are the area that has the smallest “free rider” problem. And he uses THAT as his example??

        In fact, there are just as many examples of people demanding more government services BECAUSE they have less disposable income. For example, they send their kid to public school because they can’t afford the tuition at a private school anymore.

        I’m so glad I never gave a dime to Reason other than buying the occasional magazine. If the money is going to be wasted on horrible research like this, it’s an outcome I certainly don’t want to budget for anymore.

        1. In regard to roads, road use taxes only cover federal and some state highways. Everything else comes from other taxes.

    2. Replace “team of experts” with citizens chosen by lot. Any better?

      1. Take a look at the criteria and process for selecting commissioners for California’s new “Citizens Redistricting Commission,” to see what a circus coming up with a panel of people who have “no ax to grind” can be. http://www.wedrawthelines.org.

        The game described in the sounds like another of the many “market-like” schemes that pols have put forth to make our government work “more like business” or to bring “free market discipline” to it. Another was the regime for faux-electricity deregulation that caused price spikes, shortages, and electricity-grid gridlock in the Golden State a few years ago. The rules were so ill-conceived and easily gamed, and the results so universally reviled, that the legislature — which had endorsed the “deregulation” scheme unanimously! — axed the program and scurried back to the regulated-utility scheme that had existed before the reform.

        My point is that if you want to inject free market discipline into a situation, you must establish a free market, not a gelded, ersatz game that pretends to free-market status. I doubt very much that the scheme described by Osborne incorporates true understanding of, or properly harnesses, the “magic” of competition, upon which he says it depends.

    3. I bailed here:

      Then they work with citizens to define the eight to 10 results most important to them…. They decide how much each of these outcomes is worth and divide the money among them.

      A rather huge assumption that the government spending money on a problem will alleviate that problem.

    4. I agree, but it’s certainly an improvement from the status quo. Apparantly it has helped to reduce spending, and it would blend nicely in with a privatization program.

  2. Yeah that’ll work just as about as well as the Democrat’s so-called “paygo” scheme at the federal level that supposedly forces spending increases to be paid for with tax increases or other spending cuts – except of course for all sorts of loophole categories big enough to sail the entire U.S. Pacific fleet through.

  3. The Public Strategies Group developed this approach to help Washington Gov. Gary Locke close a nearly 15 percent budget gap in 2003. Since then, it has spread to more than 20 other states, cities, counties and school districts.

    One should note that Washington State is having its own budget problems today. I think the results of this type of policy might be over sold.

    Locke, if i recall, got out of most of his deficit short falls by a strong surge in the economy and corresponding increases in tax revenues, and had very little to do with him making the tough choices.

    Also note that Washington State gets most of its revenues from property taxes and sales taxes…both of which seem to be lagging any potential recovery we may be experiencing. Which is very unlike the 2003 recovery which saw housing prices spike. Of course we all know the end to that story. Rising property values are not going to save our budget anytime soon.

  4. You guys really loathe the idea that just desserts could be based on need…

    1. The white devils are getting what they deserve.

      1. Racist.

        1. You’re a goddamn racist for trying to call me, a champion of brown people against the white devil, racist. It just shows how racist you really are. Racist white devil.

    2. You guys really loathe the idea that just desserts could be based on need…

      Honestly that would be cool if it worked.

      The problem is that those that “need” tend to be very bad stewards of resources. The expansive wealth generated by free markets and well defined property rights not only fills the needs of those who need it but preserves resources efficiently. Just handing out resources to who ever puts their hands up with out any market incentives to preserve that resource just makes every one poor and destroys resources.

    1. Sex with animals? There’s no time!

      1. “Search for Super Crime, girls in trouble, and press release out 2.”

    2. That’s so weird. Spink apparently got caught because he was complaining to a Tennessee public defender about the guy that got arrested for filming Mr. Hands…

  5. The Public Strategies Group developed this approach to help Washington Gov. Gary Locke close a nearly 15 percent budget gap in 2003.

    And Washington is running an almost $3 billion deficit on a massively inflated budget right now. Let’s aim a “results team” at that.

    But hey. That Clinton state-oil salesman has charts and shit, so the Drink! Foundation was wise to give him money to put its name on his resume.

    :-\

  6. Ya know that actually sounds like a pretty good idea dude.

    Lou
    http://www.vpn-privacy.us.tc

    1. Way to modem it in.

  7. Happy 4/20! Everybody, enjoy and partake!

    1. The “celebration” of 4/20 is probably the worst thing for the legalization movement.

  8. What is it with this? Politicians get elected, then they bring in so-called experts to do the heavy lifting–limiting taxes and cutting spending. What’s next? Five year plans?

    1. Plans? We don’t need no stinking plans.

  9. The movie Wanted, scientology, and the Adam West Batman series.

    Three things that are more realistic than this plan.

  10. I have an idea for reform — if the people do not feel the proposed outcome of a program closely matches the way it is sold, they tar and feather the ones that sold it.

  11. Elected leaders decide how much they want to spend next year

    So, they’ll just “decide” to spend more than they did last year and it’s all good.

    at achieving the results citizens want

    Acheiving the results citizens want? You don’t know much about California. Citizens Unions want it all and they want the taxpayers to kick down. Those are the results.

    Elect officials who are not puppets for the unions. That’s really the place to start.

  12. This creates eight to 10 finite pots of money, for which programs must compete based on their value, the results they produce per dollar.

    Don’t see this working. I’ve lived in California my whole life, so I don’t know if it’s like this in other places:

    Almost every election registered voters get a ballot guide with a shitload of initiatives to on which to vote yes or no. I suspect most voters make their decision solely by the titles, which are usually something like “Keep Our Water Clean Act” or “Get Tough on Crime Act”.

    So, what’s your typical voter’s goals? They’re very vague. Keep our water clean. Educate our children. Keep the criminals locked up. What, we’re going to measure progress against slogans?

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