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In the June issue of Government Finance Review, we have a column titled “Are Tax Incentives Good for Cities and States?” Though the headline, which we wrote, leaves the question pretty much open, readers of the piece will discover that based on a number of interviews, we discovered that the answer is pretty much “no.” To sum up, in the words of Shayne Kavanagh, senior manager of research at GFOA’s Research and Consulting Center, “There is compelling evidence that these things are often not effective.” With that in mind, we were intrigued to read an excellent report that came out last week from the Citizen’s Budget Commission, a nonprofit civic organization that focuses on the finance and services of New York City and New York state government. It was titled 11 Billion Reasons to Rethink New York’s Increasing Economic Development Spending. The 11 billion in the title referred to the total dollars spent on economic development in New York’s state and local governments – a number that the report indicates “likely will increase more in the coming years, potentially exceeding $13 billion in 2025.” Though the report focuses on New York, we know that its basic conclusion is true in many other places: There’s insufficient evidence that this spending is effective. As the report states, “Despite improved disclosure about individual projects, state and local economic development spending continues to increase without sufficient evidence that these programs cost-effectively create jobs or are more beneficial than alternative uses of the funds.” The report calls for data-driven evaluations about the effectiveness of incentives and grant programs and we agree entirely. But there may well be political reasons why such research isn’t done, not the least of which is that elected officials can get lots of mileage out of announcing major economic development initiatives, and they may not want to know exactly how well they’ve panned out. As we wrote in Government Finance Review, “It’s difficult for elected officials to take credit for many of the things that genuinely attract new businesses, like good education systems, a willing workforce, local amenities like golf courses and, naturally the weather. Even the most hyperbolically inclined politician in the world can’t take credit for blue skies and a temperate climate.” It feels like this may be a good time for greater demand for accountability when it comes to economic development spending. Increasingly, governments – both in legislative and executive branches – are demanding evidence that new programs work before they fund them. Indeed, the federal government has been pushing for evidence. According to a White House statement, “Since its first week in office, the Biden-Harris Administration has prioritized evidence-based decisions rooted in the best available science and data.” Getting back to the CBC report, three of its recommendations for New York State and its localities are that they “Rigorously evaluate existing incentives and programs to determine their effectiveness; Narrow, shrink, or eliminate programs that are not proven effective; and Adopt performance-based incentives whenever possible.” Sure make sense to us. #StateandLocalGovernment #StateandLocalManagement #StateanLocalGovernmentData #Data #GovernmentFinanceOfficersAssociation #EconomicDevelopment #CBC #NewYorkState #NewYorkCity

by Dr. Carolyn Bourdeaux, Senior Visiting Scholar, University of Georgia; Board Member of the Concord Coalition; Former Member of Congress from Georgia’s 7th District ​ ​ Now that we’ve come through the debt ceiling drama, most of us who want to see more fiscal responsibility at the federal level can agree that we got to a reasonable result, but the process was - to put it mildly - a problem. ​ We cannot use the full faith and credit of the nation and the economic health of the global economy as a bargaining chip to restore fiscal responsibility. There has to be a better way. In fact, many of us who study state budgeting annually observe budget processes that lead to (largely) fiscally responsible decision-making and do not require high stakes hostage taking to get there. ​ As someone who has worked at both the state and federal level, the differences are striking and suggest that some serious thought should be given to translating some valuable lessons of state budget processes and policies to the federal level. ​ The most obvious place to begin is that almost all states have some sort of statutory or constitutional balanced budget requirement. The objection to this at the national level is that the federal government may need to run deficits to reboot the economy or respond to emergencies – but we are now running nearly $2 trillion-dollar annual deficits when times are good. And without any procedural restraint to invoke, it is very hard for policymakers to temper expectations and build a culture of fiscal discipline consistently over time. ​ While balanced budget requirements at the state level are often perceived as strictly binding, state budgeters can deploy any number of tricks to circumvent these requirements. States can short their pension obligations, issue debt to cover operating expenses, create off-the-books entities to issue debt, pass the buck to local governments, and game the revenue estimate - just to name a few gimmicks. Yet, by and large, year after year, most states pass fiscally constrained budgets. Balanced budget requirements are as much about perception than about a hard and fast rule. ​ The balanced budget expectations also set the groundwork for everything that follows. If everyone believes you have to have a balanced budget on an annual basis, then the revenue estimates at the beginning of the year need to be conservative and binding so that the state doesn’t run over budget by the end of the year. Cuts in taxes or increases in spending have much more tangible consequences because there are clear and transparent tradeoffs experienced within a single fiscal year – the fiscal pain typically cannot be pushed to amorphous future years as so often happens at the federal level. ​ The state experience suggests that balanced budget requirements don’t have to be airtight. They can accommodate emergencies, but they need to be credible enough to create an expectation around fiscal restraint that a broad swath of the population accepts. ​ During the Great Recession, I was director of Georgia’s Senate Budget and Evaluation Office. The legislators I worked with, most of whom were Republicans, hated making budget cuts and certainly hated increasing taxes to balance the budget. Many feared that balancing the budget would end their political careers, but they grit their teeth and did it, cutting billions out of a $20 billion state budget, eliminating programs, raising taxes, and imposing a two-week furlough on all state employees. ​ The budgets passed by broad and bipartisan majorities, and despite their fears, no one that I’m aware of ever paid an electoral penalty for these actions. A legislator could stand in front of constituents and show a graph of the revenue shortfall and explain that the budget had to be cut and taxes raised because the state was required to balance its budget. Interest groups and advocacy organizations certainly resisted the cuts or tax increases, but the debate centered more around the fairness of shared fiscal pain rather than whether cuts or tax increases should be made at all. ​ At the federal level, this dialogue has completely broken down. Money is no object. And while I applaud the effort to impose spending caps, legislators are going to find it very hard to enforce them when it comes to the actual appropriations and revenue bills. You can’t ask one group to accept fiscal pain if it is not perceived as necessary in the first place – after all the federal government can run deficits. It has before, why not again? A budget process needs to accommodate the very human dimension of cutback budgeting, which is that it is very hard to tell someone that they are going to have to sustain a loss. And how people perceive a loss is heavily influenced by context. ​ Public sector budgeting, state or federal, does not resemble the textbook “rational allocation of priorities.” Fiscal decisions are deeply affected by an interaction of political forces with culture, community expectations, and common human cognitive errors such as loss aversion. Fiscal discipline is as much about the habits of the heart and mind than about any process or rule. However, the process and rules do matter and inform the presentation of tradeoffs as well as help establish the expectations around a budget. ​ With deficits projected to average roughly $2 trillion over the next 10 years, balancing the federal budget in a single year or even over ten years is likely more than our political system or even economy can sustain. One way or another, however, the federal government needs a comprehensive statutory change that sets realistic, enforceable deficit and debt targets. We need to radically upend the expectations around the budget so that the effort to restore fiscal restraint becomes a systemic part of the debate year after year – as opposed to requiring one-off moments of heroic political sacrifice or crazy political maneuvers such as hijacking the national debt limit. And while it is not entirely clear what form this should take; it’s time to start the debate. ​ The contents of this guest column reflect those of the author and not necessarily those of Barrett and Greene, Inc. #StateandLocalGovernmentBudgeting #StateandLocalGovernmentManagement #StateBalancedBudgets #IntergovernmentalRelations #StateBalancedBudgetRequirements #FederalDeficitSolutions #StateFiscalDiscipline #StateandLocalBudgetingGimmicks #StateandLocalRevenueEstimating #StateofGeorgia #GeorgiaSenateBudgetandEvaluationOffice #StateandLocalGovernmentPerformance #PublicSectorBudgeting #StateBudgetingLessonsfortheFederalGovernment #RestoringFederalFiscalRestraint #CarolynBourdeaux #BudgetLessonsfromtheStates

Leaders in state and local governments persistently claim that they want to be more transparent, and we believe that this is a sincere goal. That’s why we’re frustrated about a troubling phenomenon that we encounter with increasing frequency; their phone numbers and e-mail addresses – and sometimes even their names -- are no place to be found. The following is going to be a combination of an observation and a rant. When we begin work on a column or a report, we start to seek out the people in positions that we think will make them well equipped to answer our questions and help us get things right. If we’re smart, our first step is to write a simple note asking for time to chat. Or, alternatively, we make a phone call (and leave a message, as nobody seems to answer their phones). But we can’t do either one without an e-mail address or a phone number. You’d think that this would be basic information, provided on a government’s website, but often it’s not. It’s our guess that in these troublesome times that’s because people are concerned about security. But if security gets in the way of transparency, that’s an unfortunate tradeoff. The next step for us is to work through a public information officer. But, with growing frequency, their contact information isn’t available either. We don’t get this at all, because if a public information officer can’t be reached by the public (including the press) then they’re not really able to do the jobs they’re paid for. More and more, when we can’t find a direct route to communications offices, we’re guided to an online auto messaging system. That technology could work well, but only if someone actually responds to the message in a reasonably timely way. But at a rough estimate at least half the time, leaving an online message in this way is as effective as trying to communicate through smoke signals. This scenario in which we leave the message but don’t get response to the message reminds us of a scene in Seinfeld, in which Jerry is trying to pick up a reserved rental car, only to discover that it’s not available. He says, “the car should be there, that’s why you have the reservation.” When the clerk rebuffs his complaints saying that she knows why they have the reservations, he snidely responds that he doesn’t think she does, saying” You know how to take the reservation, you just don’t know how to hold the reservation and that’s really the most important part of the reservation.” Fortunately for us, we have contacts of some sort in many of the states and localities about which we’re writing, and we can turn to them to help. But it’s our sense that many others don’t have that advantage and so wind up giving up altogether and simply quote directly from the website without being able to get background from a source who can explain things. The result: People in the public sector often complain that researchers and writers don’t get things right. That may be true, but we think that wouldn’t be the case as frequently if there was a human being who could be reached. #StateandLocalGovernment #Transparency #StateandLocalManagement #StateandLocalGovernmentManagement #StateandLocalGovernmentHumanResources #Seinfeld #StateandLocalTransparencyChallenge #PublicSectorTransparencyChallenge #TheTransparencySecurityTradeoff #ContactInformationSecrecy #DisappearingStateandLocalContactInformation #StateandLocalGovernmentTransparency

by Craig S Maher, Director School of Public Administration, University of Nebraska, Omaha and co-editor of the Public Finance Journal There’s a great deal of valuable academic work being churned out every day in order to help practitioners deal with real world questions. How can we help governments be more efficient and effective? What are the implications of policy changes? How can we better insulate government programs from economic shocks? What is a sound fiscal policy? What are the impacts of certain taxes and the combination of tax systems? What does a fiscally healthy state and local government look like? The list goes on and on ​ The primary organization that supports budgeting and finance professionals is the Government Finance Officers Association. GFOA’s mission is, “... advancing excellence in government finances.” A quick glance at GFOA’s website reveals that budgeting and finance professionals are interested in many of the same topics researched by scholars. Much of the GFOA training focuses on best practices, financial reporting, intergovernmental relations, etc. I serve on a regional GFOA board – the Great Plains GFOA – and can attest that these same issues are at the core of our annual conferences. ​ I attend most of the academic conferences geared toward public budgeting and finance (including Association for Budgeting and Financial Management, and the budgeting and finance section of the World Social Science Association). I also frequently attend professional development conferences such as GFOA and ICMA. It is clear that despite these shared interests – academics are always looking for research ideas and professionals are always interested in best practices – there remains a divide between academic research and professional needs. ​ One of the barriers to connecting professional research needs and academic research interests is the approach many academics traditionally take to publishing their research. Dr. Phil Joyce, the well-known professor of public finance at the University of Maryland, wrote a great piece explaining this phenomenon a few years back in Governing magazine. In essence, he explained, for academics to succeed they need to publish in top-tiered academic journals. Publishing quite often requires building large historical datasets and conducting complicated statistical data analysis. Furthermore, the publication process – writing, submitting to journal, waiting for reviews, responding to reviewers’ comments (if it gets that far), revising the manuscript, and publishing – can take well over a year. Then once published, only those who pay a subscription fee have access to most professional journals. ​ Meanwhile, state and local government officials typically have immediate needs and limited turn-around time and aren’t well served when potentially helpful ideas are stewing in the broth of a protracted process. ​ Enter the Public Finance Journal (PF). This new journal is the brainchild of the GFOA and several prominent public budgeting and finance scholars (see the journal’s editorial team). Unique features of the journal include free access, shorter article length, focus on current public budgeting and finance issues in the U.S. and Canada and the inclusion of reviewers, and board members, who serve in state and local government. ​ PF journal is a biannual journal publishing peer-reviewed research that examines and analyzes contemporary issues in budgeting and finance and explores the applicability of solution sets. The journal is published by the Government Finance Officers Association and serves as a forum for discussion on significant issues related to the advancement of our scientific understanding. Articles go through a rigorous peer-review process and are chosen for publication based on their originality, importance, interdisciplinary interest, timeliness, and accessibility. As a journal focused on connecting science with the practice in public budgeting and finance, all manuscripts must connect the study with the needs and interests of both the scientific and practitioner communities for the field. ​ The mission of Public Finance Journal is to serve those engaged in public budgeting and finance through the publication of significant advances in the science of the discipline that conveys both theoretical importance and timely application. Aims & Objectives ​ The journal has four guiding principles. These are: Public Finance Journal is an open-access journal that is committed to the community of practice; All articles published adhere to the standards of peer review and the ethical standards of the Committee on Publication Ethics; We encourage posting open data and methods for all published articles to our Dataverse; and, Both replications and manuscripts with null results are important to the scientific process. If you are interested in writing for PF, or want to serve as a reviewer, please reach out to me at . csmaher@unomaha.edu. ​ The contents of this guest column reflect those of the author and not necessarily those of Barrett and Greene, Inc #StateandLocalGovernmentManagement #StateandLocalGovernmentBudgeting #StateandLocalGovernmentPerformance #AcademicPolicyImpact #AcademicPractitionerConnection #AcademicPractitionerCollaboration #PublicFinanceJournal #OpenAccessforAcademicResearch #GovernmentFinanceOfficersAssociation #PhilJoyce #CraigSMaher #PublicFinance

by Dawa Hitch, Communication and Public Engagement Director, Asheville, North Carolina. In historically disenfranchised communities, trust in government is low and there needs to be an emphasis on empowered decision making. Historically that has been the case in Asheville, and so when a former City Manager said to me “we’ve got to do something to improve community trust,” about eight years ago, I responded with a resounding “yes.” But then came the critical question: How? This is the story of our journey, and though we haven’t completely reached the desired destination, we’ve worked long and hard on the road map to get there. This is our story. We began with an internal team to explore the meaning of that precious and fragile commodity: trust. We acknowledged trust in our government had been eroded through a history of systemic racism and broken promises. From there it became clear that building and sustaining trust takes both intention and connection. We agreed there are many practices and actions that contribute to trust and we agreed that actions speak louder than words. Figuring out where to start felt overwhelming at times, but we discussed actions the organization could take to build and sustain community trust. This process helped us to hone in on communication and public engagement. Three critical components of trust were identified through the team’s discussions and subsequent conversations with community members. Improving community trust would require applying these practices: ​ intention listening for understanding commitment. ​ In our organization the actions would be applied through: ​ Improving internal communication Communicating through multiple channels Supporting best practices in community engagement across the organization ​ The team jumped into the work of improving internal communication and communicating through multiple channels. Simultaneously we worked to integrate a standard for engagement across all departments through the use of communication and engagement plans for all projects and initiatives. ​ Utilizing the resources of the International Association of Public Participation, much time was spent communicating how input for each project would be used in decision-making, who was responsible for making the final decision and then reporting the final decision back to those who had initially engaged with us. ​ Then, in 2020, in the middle of a global pandemic, we were faced with the community outrage surrounding the death of another Black man, George Floyd, dying at the hands of law enforcement. That tragic event served as a further catalyst for change in Asheville and it was clear that engagement with the public needed to be improved – and quickly. One of the channels created to affect change was a public engagement effort to Reimagine Public Safety. ​ Staff worked hard to make sure engagement with our residents about public safety was inclusive. Further, we needed to develop clear expectations for how the input would be used. Since it was probable there would be budget implications, we knew we couldn’t promise all ideas would be acted upon. We made it clear to all concerned that the input we’d be receiving would be used to guide operational changes and budget priorities. ​ Input poured in through an online survey and focus groups. Survey questions were answered, and comments were submitted. Then, something happened in a focus group conversation that remains an inspiration. A young man who is African American made this point: If the government wants people to provide input that will then only be considered and possibly integrated into final decisions, the government must first find ways to commit to and then implement ideas from people who have been historically disenfranchised. ​ Empowered decision making isn’t an easy task in a representative democracy. There are many needs and often not enough resources. However, with intention and deep listening there are opportunities to embrace. Whether it's a Neighborhood Matching Grants program, building a database that memorializes neighborhood needs and finding ways to address them, or paying community members to design and lead input sessions with demographic groups with whom they identify, there are ways to give people the chance to have the final say. ​ We have to push ourselves further. If improved trust in government is on the other end, I’d say it’s worth it. ​ The contents of this guest column reflect those of the author and not necessarily those of Barrett and Greene, Inc. #StateandLocalGovernmentManagement #TrustinGovernment #CommunityEngagement #CommunityOutrach #StateandLocalGovernmentCommunications #InternationalAssociationofPublicParticipation #ReimaginingPublicSafety #StateandLocalGovernmentBudgeting #PublicSafetyBudgetingPriorities #AshvilleNC #DawaHitch #CitizenInput

We’ve just been reading a splendid book by Erik Larson, titled “The Splendid and the Vile,” that tells the tale of Winston Churchill in the early years of World War II. At one point, Larson writes about the Marshall Plan which was designed to restore postwar Europe in the wake of the war. We had always been under the impression that the credit for this effort belonged to Secretary of State George Marshall. After all, the plan was named for him. But the book points to Averell Harriman, the Secretary of Commerce at the time, as the individual who coordinated the implementation of the plan. We should have known better. Over the course of years, we’ve been aware that the people who generate new policies -- often elected officials – get much of the credit, or blame, for major projects and programs. But in the months or years that follow, it’s the implementers of the world who are the most vital players. These are the folks who labor long days and nights to turn visions into reality and the people we turn to when we’re writing about government policies. Unsurprisingly, when we have these conversations, these individuals frequently talk about how important gubernatorial or mayoral missions have been in getting them started. There’s some sense in that because without a broad goal, no one would be empowered to try to accomplish it. But it’s also smart, when talking to the press, to give credit to their bosses if they want to get ahead. With this in mind, we were impressed by Governor Ned Lamont of Connecticut when he was talking about the state’s efforts to deal with the pandemic. For many months he gave a regular series of speeches about the state’s progress, but he almost always turned the microphone over to someone else who was central to making things happen. For example, when the state established the Connecticut Future Fund, he called on David Lehman, then commissioner of the Department of Economic and Community Development to deliver the message. One state over, by contrast, New York’s then-governor Andrew Cuomo (who later resigned from office after scandals uprooted his term), was also giving speeches that catapulted him to national popularity as the hero of the calamity. It was very much a one-man show, which may have enhanced his fame (at least for a while) but didn’t give credit where it was due. We can’t say that many of the men and women who labor in the trenches of implementation are particularly troubled by this kind of thing, though perhaps some are. Few people go into public service to get airtime on the nightly news. But there is a deeper problem here. With much emphasis going to the grand new ideas of the world, we’ve seen any number of policy makers, as well as organizations that help to create new policies, ignore the second part of the equation, and that is a problem. When policies are developed without regard for the ways in which they are going to be successfully developed, it’s entirely too easy for the people who create them to gloss over the critical next steps to fruition. Sometimes the problem can be as simple as a lack of plans for funding, which can leave new policy ideas as little more than paperwork exercises. Other times, the necessary technology just isn’t in place. In still other instances, there’s a lack of the necessary workforce to make things happen. The list goes on and on. All of this can easily leave the unfortunate people given the task of implementing policy struggling as they try to figure out how to make something happen, when the original concept had flaws that would only be discovered as it was implemented. At the end of the day, we believe that policy makers and implementers must work hand in hand before the ribbon cuttings and grand announcements. There are certainly some places in which that’s the way things work, but it’s our impression that there are far too few. There need to be more. #StateandLocalGovernmentManagement #StateandLocalGovernmentPerformance #PolicyImplementation #ConnecticutGovernorNedLamont #StateandLocalPandemicResponse #Pandemic #DedicatedtoStateandLocalGovernment #NewYorkGovernorAndrewCuomo #AverellHarriman #TheSplendidandTheVile #ImportanceofPolicyImplementation #StateandLocalImplementation #StateofConnecticut #StateofNewYork

Several years ago – right before the start of the pandemic -- our book, The Promises and Pitfalls of Performance-Informed Management was published by Rowman & Littlefield. This past weekend, we had a somewhat jarring reminder of the pitfall aspect of that title in a recently-released City of Austin performance audit: The audit, titled Strategic Direction 2023: Progress on Economic Opportunity and Affordability Outcome, takes issue with the timeliness and quality of the performance measures used to measure strategic outcomes in the Texas state capital. The subhead of the audit, was sobering: “Issues With Performance Measures, Monitoring and Delays Affected the City’s Ability to Measure and Report Progress Towards a Key Strategic Outcome.” While the audit noted that its exploration of the use of performance measurement only concerned one of six strategic objectives, it noted that the conclusions drawn likely applied “to the other five outcome areas as well.” Here are a handful of problems cited that underscore fairly typical challenges with state and local government performance measurement: · There were issues with the timeliness of reported data. In fact, only 23% of measures covered the most recently completed fiscal year. The audit labeled 46% of data as “old data.” · While the goal was to measure equity, too few measures examined progress with an equity lens. While the five-year strategic planning document stated that “Race is the primary predictor of outcomes,” only 23% of economic opportunity/affordability measures could be disaggregated by race/ ethnicity, · When surveyed by the auditor, department teams raised concerns about data quality. According to the audit, of 24 comments received, “the majority (67%) expressed negative opinions about the data quality of performance measures.” Problems focused on data sources that were difficult to update in a timely way; dependence on unreliable third-party data, and a lack of connection between the measures used and the work of their own departments. · The performance measures lacked targets. “The lack of targets makes it very difficult to determine where the City has been successful or where more effort is needed,” auditors wrote. · Over half the measures focused on “community indicators”, in which results depend on a wide variety of external factors with potential results difficult to connect with government funding, management or policy choices. There’s a clear silver lining around the storm clouds that these problems represent. Left unexamined and unaddressed, the “promises” part of our book’s title can be little more than the clichéd “best laid plans,” that often go awry. In fact, we want to give credit to the City of Austin Audit Office for following up on how the performance measurement effort is working. The problems cited just go to echo a message that we have delivered over time (and in our book) that performance measurement is hard to do, and that it heavily depends on timely and high-quality data. This kind of audit should not discourage the effort, which is very necessary, but help to improve performance measurement in this and other cities, counties and states. #StateandLocalGovernmentManagement #StateandLocalPerformanceAudit #StateandLocalGovernmentPerformanceMeasurement #StateandLocalPerformanceManagement #StateandLocalPerformance #StateandLocalGovernmentData #PublicSectorDataQuality #CityofAustin #AustinAuditOffice #PerformanceMeasurementPitfalls #PerformanceMeasurementChallenges #DataTimeliness #DataQuality #EconomicOpportunity #StateandLocalStrategicOutcomes #ThirdPartyDataReliability #PerformanceMeasurementTargets #PromisesandPitfallsofPerformanceInformedManagement #BarrettandGreene #CityPerformanceMeasurement #CommunityIndicators

This male-dominated 1953 photo of a National Association of State Budget Officers (NASBO) annual meeting would not have been a surprise to public sector leaders of the time. Not many people would have expected back in Eisenhower’s first term that women would be in important budgetary leadership positions in the states. But 70 years later, a lot has changed, as evidenced by the recent NASBO webinar that featured three of NASBO’s current leaders: Oregon’s Kate Nass, who served as NASBO president from 2020 to 2022; Colorado’s Lauren Larson (2022-2023) and Ohio’s Kimberly Murnieks, who starts her term as president in July. Also participating in the webinar was Moody’s Analytics economist Emily Mandel, and the current NASBO executive director, Shelby Kerns. This is the first time that all three top executive officers of the membership association are held by women, and Kerns notes that it is reflective of a demographic shift in membership that has occurred over many years. “I’m glad this resonates with women who are looking for models of strong, smart women leaders,” she says. “Lauren, Kim and Kate were elected by their peers – women and men – because they stand out as leaders in their states and in their profession.” Demographic shifts occur slowly over time. In the 1990s, when we were first researching and reporting about state government management, NASBO saw the first woman elected to the role of president – Nevada’s Judy Matteucci. That was followed by two budget directors we knew well -- Kansas’s Gloria Timmer in 1996-1997 and Utah’s Lynne Koga the following year. In 1998, Timmer was appointed the first female NASBO executive director. (We remember fondly the tour she gave us of the Topeka Capitol in the late 1990s, and were saddened, as were so many people, by her untimely death in October 2000.) The percentage of women in NASBO’s membership, which is typically made up of the top three budgetary positions as reported by states and territories, has more than doubled since the time when Matteucci took the role of president. In 1992-1993, there were 26 females out of 147 listed or 18%. By 2023, females held 68 positions out of 178 listed or 38%. Below is a photo from the 2019 annual membership meeting in Seattle, which provides a powerful visual picture of the shift that has occurred over the years. On the left side from front to back are Beth Ashcroft, state budget officer, Maine, and Bran Shim, Finance Director, Massachusetts. On the right side from front to back are Bakia Parrish, budget administrator, Georgia; Chris Wells, division director, Georgia, and Melissa Moats, division director, Georgia. (Note that titles and positions are from 2019.) “The change does stand out when you see it in pictures,” Kerns says. (This blog post was originally published in a slightly different form on March 14, 2023. The original on our website was accidentally overwritten and we’re re-publishing it now.) #StateandLocalGovernmentBudgeting #StateandLocalGovernmentManagement #WomeninGovernment #WomenBudgetDirectors #NationalAssociationofStateBudgetOfficers #NASBO #NASBODirectorShelbyKerns #StateandLocalGovernmentLeadership #NASBOLeadership #ChangingTimes

by Greg LeRoy Executive Director, Good Jobs First, a nonprofit watchdog group on economic development incentives. Public officials, groomed for decades to “give away the store” to attract businesses, are misreading the new CHIPS and Science Act. Contrary to what some are telling taxpayers, the Act, which includes $39 billion for new semiconductor factories—does not require massive or matching subsidies from states or localities. Still, microchip manufacturers — all too glad to double dip — aren’t correcting the record. That may come as harsh news to some residents of New York and Ohio, which have recently committed two of the biggest subsidy “megadeals” in U.S. history to microchip makers. The Empire State committed at least $6.1 billion to Micron and the Buckeye State’s total for Intel is $2.1 billion and counting. In fact, those states and others who are playing the same game, do not have to spend huge sums to qualify for the federal incentives, even though that’s a generally held impression. Read the federal CHIPS Act closely and you’ll see that states or localities seeking to win a “chip fab” need to offer “incentives.” But it then immediately defines such incentives as including a number of things other than direct-to-company aid, including investments in workforce development or other public goods. Indeed, the CHIPS Act anticipates that states will reflexively try to subsidize companies directly, but advice about its use from the Commerce Department says direct corporate subsidies, such as tax abatements, are less beneficial and thus less competitive. Yes, an applicant company “must be offered a state or local government incentive,” however: The [U.S. Commerce] Department encourages projects that include state and local incentive packages capable of creating spillover benefits that improve regional economic resilience and support a robust semiconductor ecosystem, beyond assisting a single company. Such incentives might include investments in workforce, education, site preparation, or infrastructure (including transit or utilities) that are not limited to the applicant, but designed to benefit both the applicant and the broader community. Likewise, the Department will place less weight on incentives (such as direct tax abatements) with less potential for spillover benefits. Translation: states and localities should focus on making themselves “sticky” for tech employers by investing in cost-effective public goods and services that generate the biggest payoffs. That’s the opposite of risky “megadeals” and a smart way to ensure the broadest possible community benefits. The CHIPS Act guidance is the latest evidence that Uncle Sam, thanks to the Biden administration, is finally over the reflexive American fear of Industrial Policy. Combined with elements of the Inflation Reduction Act that augur in favor of domestic manufacturing, the two laws are signaling that the “economic war among the states” or “race to the bottom” is a losers’ game. The real competition is overseas, not the state next door. That’s great news from Washington, but the early microchip deals reveal that the 80-plus years of indoctrination by our tax break-industrial complex has created a belief system among states and cities that will not fade away easily. We at Good Jobs First call upon President Biden and Commerce Secretary Gina Raimondo to get louder on this crucial message. The CHIPS and Science Act is not intended to drain state or local coffers by bankrolling subsidy megadeals, but rather to help build more resilient economies. More resilience means wider broadband access, better access to public health services, catch-up help for students after Covid, cheaper access to community colleges and state universities, modernized infrastructure — and other public investments that benefit all working families and employers both incumbent and prospective. The contents of this guest column reflect those of the author and not necessarily those of Barrett and Greene, Inc

by Hala Altamimi Assistant Professor, School of Public Affairs and Administration, University of Kansas In the public administration literature, it is generally expected that city managers are likely to support practices that improve government performance. There’s little question that’s true for a variety of reasons. For one thing, unlike elected officials who can retain their jobs based on simple popularity or name recognition, city managers are evaluated based on their ability to achieve policy goals and improve the quality of life for residents. This creates an incentive to encourage practices such as performance measurement, auditing, and evaluation that help them achieve these goals, building a strong reputation and career as qualified professionals. All of this means that they tend to take a long-term view in managing their cities. But, at least in one field of endeavor these expectations, surprisingly, do not seem to hold true as I discovered in my recent research on performance auditing in 110 local governments. One of the questions I tried to answer was whether performance auditors are more effective in council-manager or mayor-council governments. My unexpected conclusion: Performance auditors may not be as successful in council-manager governments. This finding contradicts previous public administration literature but is consistent with research done by former Kansas City Mayor and Auditor Mark Funkhouser in 2000. He also found that municipal governments with a council-manager form are less likely to have an audit function. The research that led to this conclusion didn’t delve into the reasons for this startling finding, but I have a few possible explanations. First, elected officials – and those who seek to obtain those positions – may use audit findings as a political tool to suggest problems in government management and policy implementation, which can create tension between auditors and managers. Audit findings can be weaponized to advance political goals and agendas, and media coverage of audit reports can make this strategy more effective. This can hurt the relationship between auditors and managers. Actions that blame managers for performance problems can potentially breed antagonism and reduce managers' acceptance of audit recommendations. ​ Second, local government managers may feel like they are competing with performance auditors for professional recognition. Both managers and auditors play important roles in policymaking, and they both see themselves as stewards of effective governance, organizational learning, and accountability. As such, they may end up competing to achieve these shared goals. This competition may become more visible when auditors are independent of the manager's office. Additionally, managers and auditors both want to influence the governing body, which can create tension between them. Managers may prefer to be the only ones influencing that body. ​ Finally, managers and auditors have different kinds of institutional logic that shape their perspectives and behavior. Auditors see their role as one of control and oversight, while managers see their role as one of professional judgment and discretion. As a result, managers may see auditors as a threat to their professional judgment and discretion. ​ To address this potential tension in the manager-auditor relationship, many auditors adopt a collaborative approach that focuses on building trust with managers to facilitate information sharing and problem-solving. This approach involves using a less confrontational tone, involving managers in discussions, and suggesting appropriate actions to address identified problems. Research has shown that auditors who follow this approach are more successful in getting managers to listen to them. ​ Life isn’t as simple as total collaboration, however. Though it’s in the auditors’ best interest to work smoothly and well with city managers, they must do so without risking their independence or creating any biases – implicit or explicit -- by getting too close to managers. ​ The contents of this guest column reflect those of the author and not necessarily those of Barrett and Greene, Inc

Last night, the Iowa Senate quickly passed a bill that effectively limits the State Auditor’s independent oversight by restricting his access to records. The National State Auditors Association (NSAA) President and Connecticut State Auditor John C. Geragosian wrote the following letter in response. It was signed onto by a number of other state auditors. Here is the bulk of his letter: March 8, 2023 To Whom It May Concern: As President of the National State Auditors Association, I, and other independent state auditors from around the country are writing to express our concerns with Iowa Senate File 478. This bill will negatively impact Auditor Sand’s ability to independently and sufficiently perform his audit work. State auditors should have unfettered access to confidential records to ensure that state agencies are following their policies and procedures and state and federal law. This is also necessary to ensure that we prevent waste, fraud, and abuse of state programs and funds. State auditors also have the immense responsibility to guard against disclosure of any confidential information. It is a responsibility we take seriously. We are concerned that this bill will negatively impact the auditor’s ability to independently and sufficiently perform his audit work. According to professional auditing standards from the U.S. Government Accountability Office and the American Institute of Certified Public Accountants, auditors must be independent and have the ability to obtain sufficient, appropriate audit evidence to achieve audit objectives. Independence is a foundational requirement and is embedded in professional auditing standards. In addition, Uniform Guidance (2 CFR Part 200) requirements prescribed by the U.S. Office of Management and Budget require that auditors adhere to Government Auditing Standards, including those standards pertaining to independence. The audit requirements in the Uniform Guidance that are used to conduct audits of federal grant funds include the issuance of an opinion on compliance with the laws and regulations of major federal grant programs. If the auditor cannot obtain sufficient, appropriate evidence due to externally imposed limitations such as those outlined in this bill, they may disclaim an opinion on the state’s financial statements and its compliance with the laws and regulations of major federal grant programs. This means that these limitations are so severe that the auditor is unable to issue an opinion. This should not be the desired outcome of any audit and would lead to significant concerns for the federal grant-awarding agencies and could result in a loss of federal funds. A disclaimer on the financial statements could also negatively impact the state’s bond rating. Auditor independence is an essential element for the proper oversight of public funds. Therefore, we respectfully request that you eliminate the limitations in Iowa Senate File 478. Respectfully, John C. Geragosian, President Connecticut State Auditor Other State and Territorial Auditors in support of this letter: Kris Curtis, Alaska Legislative Auditor Roger Norman, Arkansas Legislative Auditor Grant Parks, California State Auditor Clark J. Chapin, Connecticut State Auditor Greg Griffin, Georgia State Auditor April Renfro, Idaho Legislative Auditor Frank Mautino, Illinois Auditor General Matt Dunlap, Maine State Auditor Judy Randall, Minnesota Legislative Auditor Angus Maciver, Montana Legislative Auditor Daniel Crossman, Nevada Legislative Auditor David J. Kaschak, New Jersey State Auditor Tina Kim, New York Deputy Comptroller for State Government Accountability Beth A. Wood, North Carolina State Auditor Kip Memmott, Oregon Director of Audits Yesmin M. Valdivieso, Puerto Rico Comptroller of the Commonwealth David Bergantino, Rhode Island Interim Auditor General K. Earle Powell, South Carolina Director of Legislative Audit Council John Dougall, Utah State Auditor Pat McCarthy, Washington State Auditor #StateandLocalPerformanceAudit #AuditorIndependence #StateandLocalGovernmentManagement #StateandLocalPerformanceManagement #StateofIowa #StateandLocalGovernmentPerformance #NASACTPresidentJohnGeragosian #AuditWatch #NationalStateAuditorsAssociation #NSAA #NationalAssociationofStateAuditorsComptrollersandTreasurers #NASACT #IowaStateSenateFile478 #IowaAuditorofState #ProfessionalAuditingStandards #GovernmentOversight #GovernmentAccountability #StateandLocalGovernmentAccountability #IowaSenate

by Dr. Ellen Harpel, Founder of Smart Incentives and Randall Bauer, Director, PFM Group Consulting ​ Randall Bauer Ellen Harpel As management guru Peter Drucker said – and as has been repeated by many others over the years – “what gets measured gets managed.” In thinking about the issue of tax incentives offered by cities and states to attract and retain businesses, we think that a variation on Drucker’s maxim is equally true: “That which is managed can be more effectively measured.” And, in turn, better measurement generally leads to more effective use of tax dollars. ​ In our work at Smart Incentives and PFM Group Consulting we’re often called upon to advise economic development organizations and evaluate incentive programs. In these efforts, we have identified two key questions: How will the incentive be managed? What data is necessary to determine if it is working? ​ Considering the first question, it’s become clear to us that incentive program management is underappreciated but critical to their use For example, we’ve consistently found that incentives with a designated lead organization and key management elements, including application forms, review procedures, and required reporting, generate better data and yield better performance outcomes. Among the elements of good incentive program management are: Clear guidance to program users Appropriate applicant eligibility requirements Specific compliance procedures Accountability through public reporting. Putting these program management processes in place requires sufficient staffing – not an easy task in this day of workforce shortages -- as well as sufficient resources. But their value is clear as they create multiple points of accountability and open more windows for leaders to gain insights into how incentives are performing, both individually and collectively. The second question of course, goes beyond data lists. It is also necessary to create systems that collect, manage, and report data across the incentive portfolio. While many programs collect data, it often suffers from the ‘garbage in, garbage out’ syndrome. ‘Active management’ is necessary here as well, and data collection activities (and the actual data collected) should focus on several key strategic elements: ​ What data is necessary to determine performance related to the incentive’s policy goals? How will data be collected and integrated, and by whom? How will data be shared with other state/local agency partners and policymakers to enable an understanding of how well programs are performing? ​ Data. Consider both requirements (such as contractual obligations that the company must meet) and requests (information that would be helpful to have but may not be contractually required). Data typically comes from three sources: the incentive recipient, state administrative records, and other third-party data sources. ​ Procedures. What is the process for obtaining and managing data? How can the steps be implemented to ease the administrative burden for both companies and compliance staff? Good practices include outreach and training for recipients, so they know what they need to provide and when they need to provide it, developing procedure manuals for staff, providing reminders and guidelines for incentive recipients, and making it easy to submit data electronically. ​ Progress. Data should allow tracking of milestones to show outcomes achieved and incentive payments made. Data insights can also be used to address projects that are not in compliance. ​ Results. Compliance data is valuable for both internal and external use. Internally, mangers can see how well programs are performing and which programs are most effective at generating the outcomes the government cares about. Externally, organizations can be confident that they have good quality data that can be shared with elected officials, other policy leaders, and the public. Transparency and accountability. Aggregated information can be used to tell the story of how the economic development organization is utilizing incentives to support the location’s economic development priorities. This moves beyond spreadsheets and dashboards to communicate with a wider audience in a user-friendly, informative, and positive manner about how and why incentives are being used on the community’s behalf. ​ Ultimately, business incentives are an investment with an expected pay-off for state and local taxpayers. Many of the active management and data collection and analysis tools we cite are used by smart investors for their personal investment portfolios every day. It is worth keeping in mind that the whole reason that we are engaged in economic development is because we believe these activities are beneficial for our locations and our residents. Active program and information management allows agencies to make their case – and provide the data to back it up. The contents of this guest column reflect those of the authors and not necessarily those of Barrett and Greene, Inc #StateandLocalGovernmentPerformanceMeasurement #StateandLocalPerformanceManagement #StateandLocalGovernmentTaxIncentives #PublicSectorTaxIncentives #StateandLocalGovernmentData #PeterDrucker #WhatGetsMeasuredGetsManaged #SmartIncentives #PFMGroupConsulting #StateandLocalGovernmentEconomicDevelopment #EconomicDevelopment #PerformanceMeasurement #TaxIncentiveAccountability #ManagingTaxIncentives #GovernmentAccountability #StateandLocalGovernmentManagement #StateandLocalWorkforceShortages #StateandLocalHumanResources #MeasuringTaxIncentivePerformance #StateandLocalGovernmentDataQuality #DataQuality #StateandLocalGovernmentTransparency #TaxIncentiveOutcomes #StateandLocalGovernmentPublicReporting #RandallBauer #EllenHarpel #BarrettandGreeneGuestColumn ​