Searching for Savings: A Survival Guide
By Tim Maniccia
With warning lights of an upcoming recession flashing like a Christmas tree, state and local officials will be devoting more time and energy trying to identify savings.
It’s not easy, though. In July, for example, the Tax Policy Center estimated that between 25-50 percent (on the low end of the range) and 70-90 percent (on the upper end of the range) of state spending is on ‘autopilot’, and largely out of control of budgeters. The New York State Association of Counties estimates that four out of every five dollars in its budget goes to pay for state and federal mandates.
What’s more, state constitutions may restrict how much revenue can be raised from specific taxes. On August 20, the New York State Comptroller identified twenty counties, cities and village that are at or very near their constitutional tax limit. Statutes, as well, may place caps on how much the state, or its local governments, may levy in taxes, how much that levy may increase from year to year or how much can be spent.
As a result, one crucial element on the path toward identifying savings is to reduce reliance on the most restricted (often the most politically sensitive) tax paid by the people served by that state or local government. In the case of local government, this is often the real property tax. At the state level, it might be the personal income tax.
In lieu of finding more flexible, politically acceptable revenue sources, governments try to figure out how to reduce one or more of the dozens/hundreds/thousands of programs or services they finance. But how?
First, it’s useful to gain a good understanding of the quantity of each program or service your government is providing. But while that’s a good plan, leaders of many state and local programs and services have less than an adequate idea of what kind of outputs they’re actually getting for their cash. For them, it is difficult to decide to just do less when they cannot confidently say how much they are currently doing. It also goes without saying that the choice to do less will need to be accompanied by a political game plan as just about every program or service has a constituency.
An unfortunate adjunct to this shortcoming is the loss of faith in government from many residents who do not know what programs or services their state and local governments provide, unless they are direct beneficiaries of those programs or services. Telling the local chamber of commerce or community based organizations how many center lane miles of highway your entity paves and/or plows or how many emergency calls it responds to in a given year will make more tangible the important role your government entity plays in their lives.
Second piece of advice: curiosity may have killed the cat, but it will not kill you. Most state and local government employees do not interact with their leaders on a regular basis. Get out of your office and start asking questions. If not you personally, then a senior member of your team who you trust and who program leaders respect.
Third piece of advice: start looking for water before you are thirsty. Stated differently, don’t wait until the projected deficit is upon you to follow the second piece of advice. If you do, the people you are meeting with are going to suspect your questions are just a means to wielding the budget ax. Solicit their counsel early and often.
In times of stress, we often slash first and ask questions later. Ban the across the board cut as it says to your colleagues and the public that each program or service is equally important. We know that is not true. It also states that you do not care enough or have the capacity to go through a more thoughtful exercise. I hope that is not true.
You can find savings if you spend time and energy getting better data and asking thoughtful questions of the right people in your organization about how and why services are delivered as they are. Not only will you stay away from your third rail of raising politically sensitive taxes, you will develop better relationships with the people you lead and serve.
Tim Maniccia, founder of Policy Innovation, Inc., is former chief of staff in the office of the county chair for the Albany, NY, County Legislature.