Virginia’s Billion Dollar Budget Deficit

Reason’s Leonard Gilroy’s new column:

As the Commonwealth grapples with a $1-billion-plus budget shortfall ââ?¬â?? and the inevitable calls by some to “solve” it through tax hikes ââ?¬â?? policymakers seek every opportunity to tap the demonstrated cost savings possible through privatization to help close the gap. Ad hoc approaches won’t cut it. Virginia must develop more effective tools to systematically evaluate competition and efficiency opportunities across state government. One logical place to start is with the Commonwealth Competition Council (CCC). An independent advisory body in state government since 1995, the CCC is a bipartisan council charged with providing long-term strategic direction for privatization and competition initiatives. Over the last dozen years the CCC has done excellent work on privatization, identifying and researching a plethora of opportunities to achieve cost savings, service quality improvements, and higher customer satisfaction. Unfortunately, the CCC lacks a mandate to ensure follow-through on its recommendations. Its role as an advisory body, its lack of a clear statutory mandate drive statewide privatization initiatives, and its lack of integration into the executive branch have constrained its effectiveness at limiting the size and scope of government. Until 2008, the state of Utah was in the same boat. For two decades, Utah has had its Privatization Policy Board (PPB), which has a similar mission to Virginia’s CCC. But with its membership heavily tilted towards public sector representation, the lack of clearly defined duties in its statutory mandate and no dedicated staff, the PPB’s efforts have been piecemeal at best. Only two of its major outsourcing recommendations have been implemented. In 2008, the Utah state legislature overwhelmingly passed two bills designed to give the PPB more teeth. First, lawmakers adjusted the membership of the Board so it had a nearly equal split between the public and private sector. Also, the PPB is now required to develop a biannual inventory of “inherently governmental” and “commercial” activities performed by state agencies, with commercial activities being those widely performed in the private sector and prospects for privatization. The Secretary of Administration prepares a similar inventory in Virginia. However, Utah went a step further by requiring most Utah cities and counties to prepare similar commercial activity inventories for the PPB. The underlying premise is that taxpayers deserve transparency in how their state and local tax dollars are spent.

Full Column