5 Great Cost Saving Ideas

In the good old days, economic slumps were followed by recoveries. To survive lean times, governments tightened their belts, maybe raised some taxes and waited...
by | February 3, 2010
 

In the good old days, economic slumps were followed by recoveries. To survive lean times, governments tightened their belts, maybe raised some taxes and waited until the economy bounced back.

Not this time. Crisis is the new normal.

Tax hikes simply won't get governments through this one. Neither the economy or the electorate will allow for much in the way of tax increases, not after states collectively enacted $23 billion in tax hikes in 2009.

So what's the answer? Transformation. A deep and abiding commitment to government that is better, faster and cheaper. This means rethinking mission; focusing on core functions; and embracing a set of tools, technologies and organizational approaches dedicated to delivering true public value efficiently.

Some folks, apparently, still haven't gotten the memo. Here are five "innovations" that have a proven track record, but still aren't being used everywhere. In 2010, there just isn't any excuse for it.

311 call systems. This is a no-brainer. Think New York City, Chicago, Baltimore and Houston. The art and practice of installing a centralized 311 call number to track requests for public services is well established. This not only boosts service quality, it also provides important data for public managers, helping them learn where they need to improve.

In Boston or Cleveland, however, residents still have to figure out who the heck to call if they see a rabid raccoon or a leaking fire hydrant in front of their house. It's inefficient and, in 2010, unacceptable.

Plastic cards for benefit delivery. Food stamps don't exist anymore. Instead of paper coupons, the federal government's Supplemental Nutrition Assistance Program uses plastic benefits cards to deliver and monitor point-of-sale purchases. The cards cut down on theft, fraud and provide instant data to program designers.

When it comes to benefits, plastic beats paper hands down. Roughly 30 states now use plastic benefit cards to disburse unemployment insurance payments, saving on check printing, postage and staff costs. The Kansas Department of Labor, for example, estimates that it will save $300,000 annually in paper and postage costs for a system they say will be "faster, more secure and efficient." The Texas Workforce Commission estimates it saves $1.4 million a year by using electronic cards rather than paper checks for unemployment benefits.

That leaves 20 states that still issue paper checks. C'mon folks, it's 2010, get with the times.

Economic development clawbacks. You know the story. The big company promises to bring a bunch of jobs to the region in exchange for a whopping tax break. The tax break goes into effect, but the jobs never materialize.

That's roughly what famously happened in New London, Connecticut, home of one of the most controversial economic development efforts ever. In addition to giving Pfizer a massive tax break, New London officials used the power of eminent domain to evict homeowners to enable a private development centered around Pfizer. Susette Kelo didn't want to lose her home, but she lost her case in a 5-4 Supreme Court decision in 2005.

Kelo's little pink house is gone, and where it once stood now stands an abandoned lot. In November 2009, Pfizer, following a merger with Wyeth, announced it was pulling out of New London. Pfizer has enjoyed a decade-long tax break -- paying about $1.3 million yearly instead of roughly $6 million -- but they will leave New London a ghost town.

The idea of using tax abatements is questionable to begin with, since other taxpayers will have to pick up the slack. But here's a no brainer: If you offer a company a tax break, they ought to keep their end of the bargain. A "clawback" provision or other guarantee that the promised jobs will actually appear should be standard practice.

Embracing competitive service delivery. In the early 1990s, Massachusetts Governor Bill Weld took a page from the Reinventing Government playbook and used outsourcing to reduce the cost of service delivery. Weld issued 36 contracts, saving taxpayers an estimated $273 million. Public employees objected, and in response the Legislature passed a law creating an onerous process such that since its adoption in 1993, only six contracts have been approved.

Contracting out won't always be the right answer, but it should be a tool in every public official's toolbox. If there has ever been a time when government cannot afford to ignore competition as a spur to productivity, this is it.

Shedding non-essential assets. California, the state with a $20 billion budget deficit, owns a lot of stuff, including golf courses, the Los Angeles Coliseum and an $11-million Malibu beach house once used to film an MTV series. It's time for the Golden State to join the real world. Every state and municipality that owns a golf course, museum or abandoned property should consider these spaces an excellent site for a "for sale" sign.

Leased space needs a trimming as well. In New York City, Mayor Michael Bloomberg's recent State of the City address set a target of trimming office space by 10 percent -- a whopping 1.2 million square feet of expensive real estate. "For example, we'll consolidate two back offices for the Human Resources Administration, saving taxpayers $3.9 million annually beginning in 2012 -- without in any way reducing services," said Bloomberg.

It's 2010. Crisis is the new normal. It's time to redefine low-hanging fruit and take advantage of these proven cost-trimming approaches.

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