Reading the Fine Print on Financials, A Gold-Plated Tunnel in San Diego, and a Useful Source for Public Policy News

Plus: Assessing corruption in the public sector, and more management news
by | November 17, 2011

Words matter. A recent press release from the Census Bureau states that in 2009, "state and local governments brought in nearly $2.1 trillion, a 22.1 percent ($587.5 billion) decrease from 2008." The next sentence reads as follows: "Most tax revenues saw declines except property tax, which saw a 3.7 percent increase to $424.0 billion."

When we first saw the release, we were dubious. We know that tax revenues dropped that year, but 22.1 percent seemed outrageously high. The answer was easily found — right in the report, but not the press release. It turns out that tax revenue declined by 4.5 percent from 2008 to 2009; the bulk of the 22.1-percent drop in revenue comes from declines in "public-employee retirement systems, unemployment compensation systems, state government workers compensation systems ... and other state government social insurance trusts."

Still, readers could easily believe from that press release that the Census was saying that tax revenues, on their own, dropped by 22.1 percent. In fact, Bloomberg.com made just that assumption on Oct. 31, in an article that talked about this horrific drop in tax revenues. It made a correction the following day.

At a time when citizens are besieged by bad news about cities and states — a good portion of which is overblown, even in these tough times — it's a pity when a well-meaning Census press release muddies the waters still further.


Why do surveys often show that "trust in government" is on the decline? We think it's stories like this: Back in 2005, when the San Diego County Water Authority was considering an 11-mile tunnel from Rancho Peñasquitos to the San Vicente Reservoir, engineers estimated it would cost about $161 million. But then the lowest bid came back at $198 million, which was approved.

By the time the county cut the ribbon six years later, the project had racked up a $342 million price tag. That alone would have been enough to make any citizen wonder about the folks running the show. But just five days later, according to the San Diego Union-Tribune, General Manager Maureen Stapleton was explaining a rate increase, and indicated the project actually cost $459 million.

Why the huge overruns? That's not entirely clear, and litigation has been initiated between the water authority and the project contractor. One thing is clear: The initial estimates didn't include all sorts of knowable costs like planning and design, construction management and money set aside for reserves. Feels like buying a house and then being told that the asking price didn't include the cost of the adjoining garage, the heating system or the windows.


"PublicPolicyMatters," according to the home page of its website, "is a daily service that aggregates the latest public policy-related news and information from governmental, congressional and interest group websites onto a single webpage for the convenience of its registered users, as well as to alert users to news and information they might otherwise never see." Although it focuses on federal issues, we regularly find it useful in our work on states, cities and counties, and we highly recommend it to you.


Help Wanted: An old buddy just passed this along to us, and we thought it might well be of interest to at least some B&G Report readers: "The State Integrity Investigation — a three-way collaboration between Global Integrity, the Center for Public Integrity, and Public Radio International — is recruiting 'peer reviewers' in all fifty US states to review the project's Integrity Indicators assessing the risk of corruption in each state's public sector. This crucial work kicks off in November 2011 and is an important part of ensuring that our final reporting and data are as accurate as possible when we publish in early-2012. All work will be performed via an easy-to-use web platform, and all reviewers will be paid for their participation in the project."

You're not going to get rich off this. The payment is $300 per reviewer. But it sounded like a cool project. If you're interested, email a brief expression of interest and current CV/resume to Marko Tomicic (marko.tomicic@globalintegrity.org) and Abhinav Bahl (abhinav.bahl@globalintegrity.org)." The collaborators promise that all applications will be acknowledged.


Travel restrictions are in place for public employees in many cash-strapped governments. And we're not going to get on our his-and-hers soap boxes to argue that travel should be preserved unless we know what's going to be cut in its place. Still, we found it ironic to see the following two items in the same issue of State Legislatures magazine:

  • On page 39, we read that Montana citizens have suggested cutting travel costs as a good money-saving idea;
  • On page 12, there was reference to a pilot program in Virginia that could result in less expensive roads. Virginia came across the idea at an NCSL Legislative Summit, which presumably required travel.

Here's our recommendation: Somebody someplace should do a cost-benefit study about travel. It wouldn't be easy. But the results would be illuminating. Right now, travel is frequently cut without any regard to its benefits.


"Just tell him that ...." Those four words should be avoided when public-sector managers interact with citizens through a third party, according to Dave Anderson, president of Learn to Lead. In the current issue of PM Magazine, the periodical of the International City/County Management Association, Anderson writes that those four words typically precede some kind of a deceit. A few examples come to mind: "Just tell him that there's no need to attend the meeting;" or, "Just tell him that I'm out of the office today;" or the ever popular, "Just tell him that I'm already dealing with that."


Nonprofits are the recipients of huge sums of taxpayer dollars. And it appears that many simply don't get the oversight they need. We speculate that their spending may get even less attention than that of for-profit groups that receive public funding. The latest example, from the Austin American-Statesman: "Millions of dollars in Austin social service contracts and grants dispensed over the past three years were poorly monitored by the city," the newspaper explainedm, "with staffers regularly failing to check how nonprofit groups spend taxpayer money and whether they were providing the services for which they were paid, according to a report by the city auditor."

City leaders have apparently heard this message loud and clear and are taking steps to remedy the problem. Other cities should take note.


More on user fees: For a while, we've been predicting a backlash against the proliferation of user fees in state and local governments. But until now, we were only confident of the magnitude of the trend toward using such fees based on mounds of anecdotal evidence. Now we see, according to the National League of Cities' 26th annual City Fiscal Conditions report, that 41 percent of cities are increasing service fees, thanks to a fifth straight year of declines in revenue. That's fewer than are delaying work on infrastructure and more than are modifying health-care benefits.

We're not arguing that there's anything intrinsically wrong with user fees. We just want to make sure people remember our warnings when their potential for overuse leads to resistance.


Former New York City Mayor Ed Koch had this to say about his town (which happens to also be our town), and it seems to apply to many municipalities today: "We're in the hands of the state Legislature and God. But at the moment, the state Legislature has more to say than God."


The dirge beat rolls on, as more and more independent sources of solid and useful research about state and local government shrink or bite the dust. The latest victim, to our knowledge: The California-based Center for Governmental Studies (CGS) is out of business. As an email from Center officials said, "With some sadness, but with considerable pride in our accomplishments, we are closing the Center for Governmental Studies' offices after 28 years of service in the public interest. The recession has depleted our funding, and we cannot continue to operate CGS in its present form."

We'll miss the CGS's good work and are sad to see it go.

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