MEMORANDUM
To: Governor Sonny Perdue, Georgia General Assembly Members, Constitutional Elected Officers, and Other Interested Parties
From: Political Vine
Re: Ideas To Help Out The State Budget (That Don't Involve Fancy Accounting Tricks)
-------------------------------------------------------
So, it looks like you folks are having a bit of a problem balancing the state's revenues with expenditures. We have a few ideas for you to (seriously) consider.
Revenue Raising Idea:
When times are tight in the private industry world, CEOs react by cutting labor and tightening spending budgets. They also re-examine their corporate portfolios and, more often than not, decide that they can sell-off assets to raise cash.
State government, if it was run like private enterprise, could make budget cuts by laying-off personnel, cutting programs or changing the way they operate. But, the budget revenue shortfall is so tremendous this year that cutting expenses will likely not be enough to solve the problem by itself. Revenue must be raised.
And, the best way to raise money would be to sell-off assets. How do you do that in government? Sell-off real estate assets (i.e., government buildings) to private enterprises who in turn grant state government non-cancellable* 25- or 50-year leases to occupy the buildings for office staffing purposes.
Is there anything in either the Georgia Consitution or Georgia State Law that prevents state government from selling government buildings? We don't know, but we doubt it is in the Constitution to prevent this. And if there is a state law, we know how easily THAT can be changed.
But, here's the benefit to both sides of the deal. If the state sells the buildings to private enterprises, the state 1) reaps instant revenue from the sale of the buildings, and, 2) is able to turn over maintenance and operation of those buildings to private enterprise (thus enabling expense cuts in the state building maintenance departments)
The benefit to private enterprise buying these assets is that 1) they will jump at the chance to acquire the property and take advantage of the depreciation tax write-offs for the next 25 or 50 years, and, 2) be able to negotiate a reliable, long-term leasing deal from state government.
Plus, if the buildings are sold to private enterprise, additional revenue will be generated from the property taxes paid on the new valuations.
*non-cancellable as long as the state pays its monthly lease payment to occupy the building.
Cost-Cutting Idea #1:
Through July 2003, these were the Top 5 organizations to spend money lobbying the Legislature for budget money:
1) $42,900-Georgia Power
2) $38,170-Georgia World Congress Center Authority
3) $31,961-Georgia Soft Drink Association
4) $16,807-Georgia University System Board of Regents
5) $15,792-Home Builders Association of Georgia
You know there's something amiss when you find out that, of the Top 5 lobbyist expenditures for 2003, two state government entitites are responsible for two of those positions. Both the World Congress Center Authority and the Board of Regents are public tax-dollar supported entities, and what do they do with their money? Pay to schmooze legislators for favorable treatment in the budget. And, this is not even counting the fees paid to the lobbyists themselves which, very likely, is quite exorbitant.
Sorry, but we think it is a reckless management of tax dollars to pay lobbyists to influence the legislature into giving your already bloated government budgets more money to waste.
We didn't have time for a full-blown analysis of the lobbyists' expenditures, but we observed a significant number of municipalities within Georgia who hired outside "guns" to lobby for them; one special example will be covered later in this issue.
Cost-Cutting Idea #2:
Contrary to the popular misconception going around state government, (and out of the mouth of such illustrious political mouthpieces as Bill Shipp) there IS significant waste in state government.
This is intuitive to us because a government built upon the Good 'Ole Boy System could not have been built with an eye toward the highest and best use of available resources. It is simply not possible.
In order to discover this cache of waste and inefficiency, consider implementing any or all of these proposals:
1) People who have been in charge of any department for more than 1 year should be reassigned to another department and tasked with the duty of finding the cuts in the new department with an incentive of some sort if they accomplish the task. If a person is reassigned to a new department, they aren't "married" to their department and can better examine what's going on. There will be less of a "co-dependency" between department heads and employees if they are new to each other.
2) A real needs-based audit should be performed on every department by an outside contractor. Such an audit will question each activity within each department to determine if it is truly needed to operate the department. Or, if some services can be consolidated. All we keep hearing about is how state government should run like a business...this is how businesses streamline their operations.
3) A real expense audit should be performed on every department in state government. We don't mean that ridiculous variance report published by the Revenue Department every year that merely compares budgeted expenses with actual expenses. We mean an audit that analyzes what is paid for copy paper and determines if the contract with the vendor is the best it can be.
What's that, you say? Too expensive to hire outside consultants? You're right...outside consultants are plenty expensive, and who wants to hire some yo-yos like Authur Andersen? That's why you need to hire consultants who work for their food and don't receive one penny unless they find where significant money can be saved.
We know of a small niche of industry consultants that specialize in expense reduction analysis of entities like colleges, large corporations, and government municipalities. They examine a department's accounts payables (excluding employee payables) to see where supply contracts can be improved. They could examine utility bills, cellphone bills, office supply contracts, etc. and make recommendations on where costs can be reduced. Their reward is based on a negotiated percentage of the savings the municipality experiences as a result of implementing their recommendations. Since no money is paid unless savings are found, there is no financial risk to the entity being audited. Any entity that would refuse this kind of service should be immediately investigated for corruption...because, chances are, the person in charge is hiding something they don't want found.
Look, in order to streamline government, it's going to take new thinking to accomplish it. We understand that legislators or government bureaucrats may be too wedded to the system to make the right changes, but, something has to be done. Canceling guided tours of the state capitol will not result in enough expense savings (so, keep thinking, Ms. Cathy Cox).