Budget Doom Highlights Need to Right-Size Illinois Government

Per the Chicago Tribune, a new report by the Civic Committee of The Commercial Club of Chicago finds that Illinois “is on the verge of a financial meltdown, and hard choices will be necessary to contain the economic damage”:

According to the report, there is no longer any pretense that the state’s budget is balanced. The anticipated revenue shortfall, the increasing pension and retiree health-care costs, unpaid Medicaid bills and failed commitments to aid public schools add up to a fiscal 2009 budget gap of $9.6 billion.

The hard choices reiterated by the committee are similar to those taken by the private sector and involve cutting costs, particularly in the areas of employee pensions and retiree health-care benefits. The committee also restated its position that a tax increase is inevitable but should not be considered until the state’s expenses are reduced.

“We need someone to take action, and that action has to be reform [and] cut costs—what responsible people do when they can’t live within their means,” said committee chairman W. James Farrell. “You really can’t tax your way out of this problem. If you tax your way out of this, businesses would be leaving the state in droves.”

Luckily, Governor Quinn and the Illinois General Assembly have an opportunity to create a powerful, new tool to right-size government. State Rep. Mike Connelly’s newly introduced House Bill 4161 (“Illinois Efficient Government Act”)—like the similar SB 1466 in Arizona—would put Illinois at the cutting edge of government reform.

How? By creating a Florida-style Council on Efficient Government that would look at everything government agencies do and determine whether private firms could do the same things more efficiently and effectively. From our decades of research on best practices in privatization, we’ve learned a few key lessons:

  • To foster competitive service delivery, a sound process is essential to ensure a transparent, accountable, ethical, performance-based and competitive environment.
  • A standard procedure ought to be developed with a dedicated team or ‘unit’ tasked with managing the process to ensure that the benefits of sharing lessons learned and best practices among agencies is not lost.
  • To date only a few states (e.g., Florida, Virginia, and Utah) have created commissions or administrative centers to address competitive sourcing. In each case, there is an establishment of an independent decision making body. Each organization created a uniform cost accounting model and recognized the importance of a standardized process for identifying and implementing competitive sourcing.

In both Illinois and Arizona, the Councils established by their respective bills would fulfill these very functions (among others). We know that it’s worked well in Florida, as I recently explained here. With no other choice but to cut spending and do more with much less, these bills could not have come into the public policy discussion at a more critical time.