Five Reforms Arizona Should Adopt Immediately

Arizona's general revenue spending currently is about $3.3 billion more than its ongoing revenues. Money-saving strategies are a must. But reducing spending need not mean cutting...
| October 12, 2009
 

Arizona's general revenue spending currently is about $3.3 billion more than its ongoing revenues. Money-saving strategies are a must. But reducing spending need not mean cutting core services. Rather, the situation presents a golden opportunity to make government more efficient.

Here are five ways to help state governments become more efficient:

Reform #1) Privatize public buildings - The state should fully outsource all maintenance on its 4 million square feet of office space, saving on employee costs as well as providing for efficient building maintenance over time. Currently, state agencies pay $21 per square foot for state buildings. The average cost per square foot paid to rent private buildings is $17.50. If the state sold its buildings and rented space, it could represent a potential total one time savings of $14.4 million.

Reform #2) Expand school choice - Of the $9,700 per public school student Arizona spends, more than $4,000 comes from the state. Arizona's corporate income tax credit program for private school tuition costs the state $2,300 in tax revenues per scholarship recipient. By expanding the program to allow 15,000 children to transfer from public schools, the state would save $25.5 million annually.

Reform #3) Convert higher education funding to per-student grants - Arizona already has grant programs for students attending private colleges and universities. These programs should be used as a model to convert the entire university funding system to yearly tuition grants so students can attend any school they choose. By including a requirement to graduate, grants could foster greater competition among universities and the resulting efficiencies could save $750 million annually.

Reform #4) Provide high deductible health plans with Health Savings Accounts for public employees - Arizona could potentially cut its health benefit premium costs in half with high-deductible health insurance benefits. Half of those savings could be used to help fund employees' health savings accounts. The state would still net $154 million in annual savings.

Reform #5) Develop alternative sentencing for minimum-security criminals - It costs Arizona $18,500 per year to incarcerate minimum-security offenders. GPS tracking costs $4,500 per prisoner. Even with group therapy and other monitoring costs, the state could save $10,000 per prisoner, per year. With only one-quarter of Arizona's minimum-security prisoners sentenced this way, the state could save $25 million annually.

The ongoing nature of the fiscal challenges facing state and local government requires innovative solutions. Arizona's legislature has recognized this fact in one modest way: a private concession for some state prisons. Savings are estimated at $100 million. These additional five reforms would be good steps toward state government making the most of its limited tax dollars.

Byron Schlomach , Ph.D. is director of the Goldwater Institute's Center for Economic Prosperity.

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