The Case for a Total Overhaul

The sobering fiscal reality of our current circumstances are creating an environment more open to a fundamental rethinking of government’s roles and responsibilities.
by | May 28, 2010 AT 3:00 AM

The headline in the New York Times tells the story: "Hard Times Spur Ideas for Change." Written by Monica Davey, the article told of some of the major shifts contemplated by state and local governments grappling with massive budget shortfalls:

As states around the country gird for another grim budget year, more leaders have begun to talk not of nipping, not of tucking, but, in essence, of turning government upside down and starting over. Ever growing is the list of states, municipalities and agencies with blue ribbon committees aimed at reconsidering what government should be.

Nebraska is considering eliminating half of its 93 counties. Missouri merged the state's water patrol with the state police -- saving about $1 million. Since the early 2000s, Michigan has shed about one fourth of all state agencies, cut the state workforce by 11,000, closed 8 prisons and drastically reduced funding for services such as the arts.

None of this is much fun.

Voters want two contradictory things: low taxes and great services. Politicians have tried to deliver both, usually by delaying payments into the future, either by borrowing or by paying workers in part with future retirement packages. The triple whammy of an economic downturn, an aging population and rising health-care costs have placed state and local governments into "reset" mode. Notes Davey:

"We are working essentially off a 1950s, 1960s model" of government and services, said Tom Emmer, a state representative and a Republican candidate for governor in Minnesota, where lawmakers closed a nearly $3 billion projected budget gap in May and are already anticipating a $5 billion hole next year. Mr. Emmer voted against the current budget agreement, explaining in an interview: "You cannot Band-Aid the Good Ship Lollipop. It's time to completely restructure the hull."

Still, the forces of the political status quo work against big changes. Georgia's Legislature voted to eliminate funding for the Council for the Arts. But then protesters, some in costume, swarmed the state house, and legislators backtracked and restored funding, though at a much lower level.

While "complete overhauls" are often discussed, few are implemented without a massive crisis. In Detroit, Mayor Dave Bing convened a "Crisis Turnaround Team" that laid out a path forward. Based on the team's 150 recommendations, the mayor was looking to close a city-run power plant that employs 68 city workers, outsource the management of Detroit's airport and consolidate IT operations. In many ways, it is a total revamping of city operations, one fiercely opposed by municipal unions. Bing recently submitted a balanced budget of $2.9 billion, down from $3.7 billion for the last year that contains plans for implementing some of these changes.

"The biggest problem that we're going to have ... is that it's a very hard spin to get city workers and people who live in the city to accept change," Bing told the Detroit Free Press. "But if we don't, we die..."

Some are calling for a federal overhaul as well. Paul Light, a professor of government at New York University, argues in the Wall Street Journal that the federal government should look at the "$1 trillion opportunity that resides in comprehensive bureaucratic reform." He notes that the last time the structures of the federal government were reevaluated was 60 years ago during the Hoover Commission.

President Obama is already reexamining the federal government through the "National Commission on Fiscal Responsibility and Reform." There is broad agreement that our current spending path is unsustainable and our federal structures outdated. There is little agreement regarding what should be done about it.

One thing is clear, however: The sobering fiscal reality of our current circumstances are creating an environment more open to a fundamental rethinking of government's roles and responsibilities at all levels.