Grading the States introduction THE GOVERNMENT PERFORMANCE PROJECT Report Card: Virginia GOVERNOR James S. Gilmore III (Republican, elected 1997) LEGISLATURE House — 52 Republicans, 47 Democrats, 1 independent Senate — 22 Republicans, 18 Democrats FINANCIAL MANAGEMENT: B+ The governor’s current budget proposal has attracted far more criticism than this state is accustomed to. The issues are complicated, but here’s the gist of it: Legislation was passed, taking effect in 1999, which promised a continuing reduction in car taxes if state revenues went up by 5 percent. That happened, but only because of cash from the tobacco-settlement windfall. The Gilmore administration insists on going ahead with the tax cut, even at a time when ongoing revenues are softening. In fact, Virginia has underestimated its ongoing revenues in the current year by $450 million, and a solid argument can be made that this is not the time for tax cuts. In general, the commonwealth does a good job with its fiscal practices. Virginia has a triple-A bond rating from all three agencies. Even with lower than anticipated revenues, it continues to add money to its rainy day fund. Virginia’s investment and debt management policies and practices take a centralized approach, with a Debt Capacity Advisory Committee keeping close watch over all debt issued by government and quasi-governmental entities. Virginia’s procurement practices are generally good, but they’re not invulnerable, as evidenced when the state’s transportation department came under fire last year for contract management problems. CAPITAL MANAGEMENT: B+ Virginia does an excellent job here in many ways. The Department of Planning and Budget separates agency requests into high and low priorities, and inter-agency project teams review the high-priority requests before they’re included in the state’s six-year capital outlay plan. Projects are carefully monitored as they’re being implemented. But the Department of Transportation is having serious problems. A recent study by the Governor’s Commission on Transportation Policy criticized the department’s construction program, and a legislative audit warned that the DOT may face a $3.5 billion overrun. A reconfiguration of three interstate highway routes in northern Virginia stands years away from completion, and has already risen in expected cost from an initial $350 million to $567 million. To Virginia’s credit, it has moved quickly on the commission’s recommendations. The governor introduced reforms designed to refocus the DOT on planning for and building highways. Cost estimating has been tweaked, too: More attention will be paid to inflation in estimates for long-term projects. But the agency’s ongoing problems represent a significant departure from what has been a strong record. HUMAN RESOURCES: B+ Several years ago, a mammoth employee outreach effort — including a survey that garnered 45,000 responses, and town hall sessions in which 8,000 employees met the governor — gave leaders a clear view of the problems employees perceived in working for the state. This is leading to changes in an already good personnel system. Last September, the commonwealth reduced the number of classified titles from 1,650 to 300, with major compensation reform giving agencies a variety of pay tools — for example, the ability to award retention bonuses — in tailoring their pay plans. On other fronts, the commonwealth’s work-force planning is significantly improved, as are its efforts to recruit. For years, a sore point in Virginia HR has been the so-called performance-pay program. The state has measured performance, but there has been no money for the incentive pay. The problem is not solved yet, but the legislature and governor appear committed to providing the money necessary for the program to actually function. MANAGING FOR RESULTS: A- Virginia steadfastly links the four major components of any good MFR process: strategic planning, performance measurement, program evaluation and performance budgeting. The link between performance measures and the budgeting process has been strengthened this year with a requirement that agencies submit performance measurement and strategic planning information on all budget requests. Each of over 700 performance measures was accompanied by a trend graph, baseline, performance target and footnotes if applicable. The state also developed a framework for a statewide results-oriented Internet site, tentatively named Virginia Results. This site will be a centralized source for a variety of results-oriented information generated by state agencies. Meanwhile, the state’s Joint Legislative Audit and Review Commission, established about 30 years ago, provides the legislature with an impressive array of reports to help it monitor the agencies. Unfortunately, some legislators still haven’t thoroughly bought in to the measurement process. “They just don’t use it for budgeting as much as they could,” says one executive branch observer. INFORMATION TECHNOLOGY: A- Almost everything in this state’s technology is top-drawer. No state makes better use of technology for financial management. Virginia was an early entrant into the race to put electronic transactions on the Web, and now is one of the leaders. And it continues to innovate. Starting early this year, when Virginia citizens click onto Internet providers such as Yahoo and AOL, they’ll discover an icon for their city or county. They will then be able to personalize the site in a variety of ways. For example, the system can let them know when it’s time to renew their driver’s licenses. One of the few problems the state confronted in this field was an overly complex procurement process. Now the responsibility for procurement has moved to the central IT office, and agencies can purchase technology far more quickly. Virginia could improve its efforts at evaluating IT projects after they’ve been implemented. It continues to grapple — mostly successfully — with the decentralized funding of agencies that presents a challenge in areas such as standardization, central planning and sharing of resources. AVERAGE GRADE: B+ Copyright © 2001, Congressional Quarterly, Inc. Reproduction in any form without the written permission of the publisher is prohibited. Governing, City & State and Governing.com are trademarks of Congressional Quarterly, Inc.