Out of Control Policy Blog

New at Reason: Illinois Government Should Shop Around

My new column on Illinois' proposed government competition and efficiency board, co-authored with Kate Campaigne at the Illinois Policy Institute, is available here. Here's the intro:

Joe and Kathy Ray are trying to stretch the value of their dollars in these tight times. They have four kids in grade school, and saving for college sits at the top of their priority list. As two frugal parents, they routinely shop around for the best deal–clipping coupons, bidding on new and used products at eBay, using online services to do comparative shopping for car insurance, getting competitive bids from kitchen contractors in the Yellow Pages, or scouting out the most affordable family cell phone plan from the Sunday ads. Joe and Kathy take responsibility for their spending decisions. Their livelihood and their kids' futures depend on it.

Unfortunately, government tends to operate differently. For the most part, it routinely fails to perform one important budgeting task: regularly examining its activities and services to ensure they're provided in the most effective and cost-efficient way. After all, if families have to become smart shoppers when budgets get tight, why shouldn't government?

The column goes on to examine the proposed House Bill 4161, which would replicate and expand upon the model embodied in Florida's Council on Efficient Government. Likewise, Arizona's Senate Bill 1466 performs a similar function.

In the 2008 legislative session, Utah revamped its Privatization Policy Board along similar lines. In case you missed it, be sure to read my interview with Utah State Sen. Howard Stephenson and State Rep. Craig Frank in Reason's Innovators in Action 2008

For more on Florida's Council on Efficient Government and Utah's Privatization Policy Board, see the "State and Local Update" section of Reason's Annual Privatization Report 2008.

» Reason's Privatization Research and Commentary

UPDATE: Illinois' current budget problems haven't gone unnoticed by Moody's, which downgraded the state's credit rating from A1 to Aa3 last week. According to the Chicago Tribune:

[W]ith tax revenues dropping, the state faces "revenue shortfalls and expenditure pressures," which are squeezing operating fund liqudity. That's reflected, the rating company observed, in the delays in payments to Medicaid providers and others. And, Moody's added, the state has a "history of political unwillingness to provide sufficient funding to structurally balance the budget."

The state's difficulties are underscored by the state's plan, unveiled March 27, to borrow $2.3 billion by issuing short-term certificates. The state is pursuing a variety of new revenue posposals, including a planned major tax increase, but Moody's said those efforts face "significant execution risk."

Meanwhile, Indiana is moving in the other direction. Last year, Standard & Poor's cited the state's wise fiscal stewardship—which includes its major privatization and streamlining initiatives—as a key factor in its decision to award the state its first-ever AAA bond rating.

With its gaping budget shortfall, Illinois needs to get a grip on spending, and fast. The Florida-style Council on Efficient Government that HB 4161 would create would be a timely and powerful tool to help get the state back on the fiscal responsibility track.

Leonard Gilroy is Director of Government Reform


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