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The Introduction from ... The Price of Government The usual, political way to handle a projected deficit is to take last year’s budget and cut. It is like taking last year’s family car and reducing its weight with a blowtorch and shears. But cutting $2 billion from this vehicle does not make it a compact; it makes it a wreck. What is wanted is a budget designed from the ground up. —The Seattle Times
November 17, 2002
On April 7, 2003, the mayor of New York announced the layoff of 3,400 city employees and the closure of eight firehouses. The following day, the city’s Department of Education cut another 3,200 jobs. America’s largest city faced a budget shortfall of $3.5 billion, despite an 18.5 percent increase in the city property tax and the elimination of 14,000 city jobs since Mayor Bloomberg took office.
Many school districts in Oregon had to end school weeks early in 2003, because of state funding cuts. Oklahoma City had to close seven schools and dismiss 600 teachers. Birmingham, Alabama, closed nine schools, Boston five. Some 100 local school districts across the country shut down schools one day a week to save money. But local government problems are dwarfed by those of the states. Collectively, the states faced a budget shortfall of $82 billion as they approached fiscal 2004 — “the most dire fiscal situation since World War II,” according to the National Governors Association (NGA). “The stress is just huge,” said longtime NGA executive director Ray Sheppach, “by far the worst we’ve ever seen.” In fiscal 2002, 38 states cut their budgets by nearly $13.7 billion. In 2003, 40 states — the most ever recorded by the NGA’s Fiscal Survey — cut another $11.8 billion. Connecticut laid off prosecutors; Kentucky and Washington released prison inmates. Every state in the union has cut Medicaid: either throwing poor people off the rolls, cutting benefits, limiting payments to health providers, raising co-payments, or limiting prescription drug coverage. Texas cut 275,000 children from its health-care rolls, while Nebraska raised the eligibility threshold for Medicaid by 30 percent. Most states have cut spending for higher education. As a result, the University of Arizona hiked tuition by 39 percent in the fall of 2003, the University of Oklahoma by 28 percent. Massachusetts, Missouri, Iowa, and Texas have all raised tuition at least 20 percent. Meanwhile, programs are disappearing: The University of Illinois eliminated 1,000 classes; the University of Colorado dropped programs in journalism, business, and engineering; the University of California delayed the opening of an entire campus. The future looks even bleaker. State governments have just begun to pass their problems down to cities and counties, with deep cuts in local aid. And the federal government is digging a fiscal hole so rapidly that further cuts and unfunded mandates for states and localities are inevitable. Scheppach argues, correctly, that the public sector has entered an era of “perpetual fiscal crisis.” He describes the convergence of forces swelling to buffet public finance as “a perfect storm.” Most prominent among these are a colossally irresponsible president and Congress, an obsolete tax structure, an aging population, an ineluctable rise in the cost of health care, and continuing resistance to major tax increases. Economic recovery will ease the pain, but it will not eliminate it. The president’s tax cuts and spending increases, passed enthusiastically by Republicans in Congress, have blown a hole in fiscal policy that will be difficult to close. The 2004 deficit is expected to weigh in at $521 billion. Federal revenues in 2003 were the lowest, as a percentage of gross domestic product (GDP), since the 1950s. In January 2004, the Congressional Budget Office forecast that at current spending and tax levels, President Bush’s plan to make most of his tax cuts permanent would increase the national debt by $4.1 trillion over the next decade — a 60 percent increase in just 10 years. This would create a future obligation of $37,450 for every living American. At the state level, other factors are at play. In fiscal 2002, per capita tax collections were down almost 10 percent, when adjusted for inflation — the first year they had fallen since the NGA began tracking them almost 60 years ago. Total revenues (adjusted for inflation and tax increases) dropped for eight straight quarters. The recession, by historical standards quite mild, was only a part of the problem. A second element was the transformation of capital gains into losses as the stock market bubble burst; a third, the tax cuts passed by many states during the flush years of the late 1990s; and the final element, a sudden drop in performance bonuses, which have emerged as a much greater portion of income over the past decade.
These problems will pass, though not quickly: Tax revenues lag economic recoveries by several years. But more fundamental problems will persist, because our tax base is, to use the NGA’s word, “deteriorating.” In the Information Age, we cling to an Industrial Era tax base, capturing less and less of the economy. Corporations can avoid taxes by moving money to offshore tax havens with the press of a button. Most states don’t tax services, which now account for almost 60 percent of consumer spending. Congress and the Supreme Court forbid taxation of Internet access, as well as Internet and catalog orders from companies that have no physical presence in the purchaser’s state. Imagine that we had said, when we first imposed sales taxes in the 1930s, “We have to protect this new industrial economy, so we’ll tax only agricultural products.” When we refuse to tax services and Internet sales, we do the equivalent today. Will the fiscal storm force us to modernize our tax systems? To a degree, yes. But because we now live in a global economy, in which businesses can easily shift investments across state or national boundaries, it is more difficult than ever to broaden the tax base. Every attempt is met with the argument that new taxes will slow the economy, because corporations will relocate and investors will take their money elsewhere. Around the world, the new economy has put a lid on tax revenues. The third pressure system in the perfect storm is our aging population. With average life spans pushing 80, we spend ever greater portions of our income on the elderly. In 1975, Social Security and Medicare consumed 23 percent of the federal budget; today the figure is 34 percent. The Congressional Budget Office projects that under current law, even if the historical growth of Medicare slows a bit, those two programs will rise from about 6.6 percent of GDP to almost 15 percent by 2030 and about 22 percent by 2050. To put this in perspective, total federal expenditures have averaged about 20 percent of GDP for the past 50 years. At current tax levels, both Social Security and Medicare are headed for insolvency. Thanks to the baby boom, the number of people 65 and older is expected to double over the next 30 years, while the number under 65 — who must pay Social Security and Medicare taxes — will increase only 15 percent. That demographic reality paints a frightening picture. By 2003, reserves plus the long-term value of all Social Security taxes to be paid by current workers over their lifetimes totaled $3.5 trillion. But benefits owed retirees and these same workers over that period totaled $14 trillion. And Social Security is only the tip of the iceberg. Public pension funds are also in trouble. Of the 123 largest funds monitored by the Wilshire Group, 79 percent are underfunded. Nine states have liabilities that exceed their annual budgets, and the total shortfall could be as high as $1 trillion within seven years. With all other state, municipal, and county funds added in, the number could be $2 trillion. But the real time bomb hidden in our ever-longer life spans is the cost of health care, which has been rising by 10 percent a year since 1960. It now eats up 15 percent of GDP, and governments pay 45 percent of that total. The rise appears both inevitable, because of our aging population, and unstoppable, because the American people wouldn’t have it any other way. When technology can give us longer life spans — with new hearts and hips and knees, new drugs for cancer and heart disease and AIDS, new machines to scan our insides for problems — we will continue to shell out for the best medicine has to offer. And because we refuse to junk our aging loved ones as if they were worn-out machines, we will spend an ever-rising portion of our health care dollars on the elderly. Skyrocketing health-insurance premiums are bad enough. Because they consume an ever-increasing share of our profits and paychecks, however, they also erode our ability to pay taxes to support public spending on health care. Yet that very spending is exploding. In 1985, Medicaid cost $40 billion and consumed 11 percent of state budgets; today it costs $230 billion and consumes 20 percent. (Health insurance for state employees and the non-Medicaid poor takes another 10 percent.) It’s not hard to see why. The elderly made up less than 10 percent of Medicaid recipients in 2000, but they consumed 28.3 percent of spending. Medicare, which is exclusively for the elderly, cost $278 billion in 2003, nearly 10 times what it cost in 1970, even after adjusting for inflation. The cost of care associated with the graying of our population is simply eating government alive. Meanwhile, other pressures give budget makers few places to cut. Education spending has risen steadily for 40 years; today it consumes 33 percent of the average state budget. But we can’t compete in the global economy without better education, so our leaders resist major reductions. In an effort to reduce crime, we have imprisoned more than two million Americans — a fourfold increase in 25 years. But no one wants to see felons released onto the streets, so we won’t make deep cuts in prison spending. And our public infrastructure of roads, bridges, airports, and water and sewer systems is in no condition to absorb cuts; if anything, we have deferred maintenance for so long that future costs will rise. SINCE THE FISCAL STORM BROKE, many governments have flailed about, grabbing any solution that could keep them afloat for another year. The tidal wave of red ink has triggered accounting gimmicks worthy of Enron: shifting next year’s revenue into this fiscal year; pushing this year’s spending onto next year’s books; borrowing against future revenue to pay current costs. At least 20 states have sold their huge, 30-year tobacco settlement revenues at deep discounts to plug current deficits. As former congressman Bill Frenzel put it, “Politicians have more tricks than the CFO of Enron.” Some government financial officers have even admitted, off the record, “If we were in the private sector, we’d be in jail.” When sleight of hand is no longer enough, our leaders have turned to across-the-board cuts, which weaken every program equally, regardless of its impact on citizens. When these are exhausted and real choices must be made, legislatures typically cut in an ad hoc and highly political fashion, based largely on which interest groups have the most muscle and scream the loudest. This process inevitably victimizes the weakest members of society, who have the least political clout. This is what the Seattle Times likened to “taking last year’s family car and reducing its weight with a blowtorch and shears.” But as shortsighted or thoughtless as these tactics may be, they all obscure the fundamental flaw in the conventional approach to fiscal crisis. The true outrage is that traditional budget cutting focuses entirely on what we cut (or hide), while ignoring what we keep. It does little to improve the effectiveness of the 85 or 90 percent of public dollars that continue to be spent. It never broaches the question of how to maximize the value of the tax dollars we do collect. Some conservatives are happy with this situation; they don’t mind beggaring government. Many liberals plead for higher taxes to protect spending for the poor and other core constituencies. But virtually all ignore the 90 percent that remains. Few ask the most fundamental question: How can citizens get the most value for the taxes they do pay? Addressing this issue is neither liberal nor conservative — it is just plain common sense. THE WASHINGTON STATE EXPERIENCE Consider the recent experience of Washington State. In fiscal 2002 and 2003, the state’s general-fund revenue declined for the first time in 30 years. Halfway through this period, Democratic governor Gary Locke and the legislature had to trim $1.5 billion and eliminate 1,340 jobs. The governor and his staff were extremely frustrated by the process. “Every step we took, we asked ourselves, ’Why aren’t we asking the right questions; why are we so focused on the cuts and not on the keeps?’ ” says Marty Brown, director of the Office of Financial Management (OFM). “We were missing something — we knew it in our guts.” The governor was tired of across-the-board cuts. He wanted to focus on the big question: What should state government do and what should it stop doing? In the upcoming biennium, he faced an estimated $2.1 billion deficit in the general fund — almost 10 percent — plus another $600 million in the health-services account. “Closing the $2 billion gap we face in the next biennium would require an across-the-board cut of 15 percent — if that’s all we did,” he announced. “And that is not what we are going to do. I don’t want to thin the soup. I want state government to do a great job in fulfilling its highest priorities.” In August 2002, Locke’s chief of staff asked our company, the Public Strategies Group (PSG), for help. We made him an “unreasonable” proposal. In the time available, only ten weeks, we were not going to help Washington find cuts equivalent to 10 to 15 percent of its general fund budget — at least not the traditional way. So we shifted the focus from spending cuts and tax increases to helping Governor Locke buy the best possible results for citizens with what remained. Like most governments, Washington traditionally started with last year’s budget and added money to cover inflation, caseload increases, and the like. Then it asked each agency to propose cuts. The agencies traditionally volunteered as little as they thought they could get away with, while padding costs to protect against the cuts they knew were inevitable. Then an army of analysts in the finance office combed through agency submissions looking for savings. As usual, the entire process was based on the assumption that no one could be trusted. More important, it accepted, “with little question, most of the status quo level of spending,” says Wolfgang Opitz, deputy director of OFM. “Moreover, it led quickly to discussions about how fairly we’ve treated each agency’s programs in the cut exercise.” In contrast, PSG proposed budgeting for outcomes: starting with the results citizens wanted, not the programs the agencies funded. We proposed to start not with last year’s spending but with the outcomes that mattered most to the public. We urged the governor and his staff to focus not on how to cut 10 to 15 percent but on how to maximize the results produced with the remaining 85 to 90 percent. Governor Locke decided that this unreasonable approach was the only reasonable thing to do. PSG helped the governor’s budget staff design a process to answer five key questions: • Is the real problem short or long term? These five questions led to five key challenges. 1. Get a grip on the problem. 2. Set the price of government. 3. Set the priorities of government. • student achievement in elementary, middle, and high schools; 4. Allocate available resources across the priorities. 5. Develop a purchasing plan for each result. Each team started by choosing three indicators they would use to measure progress toward their outcome. Then they developed a strategy map, which used available evidence about “what really matters” to create an explicit cause-and-effect diagram showing the best ways to achieve the desired outcome. With a cause-and-effect theory in hand, they developed a general purchasing plan: the five or six key strategies they would use to produce that outcome. This process stimulated a kind of creativity that is absent from traditional budget development. For example, the team dealing with K-12 education said they needed to purchase more early childhood education, start the shift to a “pay for skills” compensation system for teachers, and move away from across-the-board school funding toward targeted funding for those schools and kids most in need. The health team decided that the highest-impact strategies focused on prevention: mitigating environmental hazards, improving food sanitation, providing public health clinics, and the like. They proposed spending more on these strategies and less on health insurance for childless adults. Next, the process turned to existing state activities — the place traditional budget processes start. Each Result Team was given a subset of the 1,300 state activities funded by the traditional budget. “Their mission,” the governor explained, “was to get more yield on less acreage.” To do so they had to put together a detailed purchasing plan, indicating four things: • what they would buy — both new and existing activities;
Finally, the 10 Results Team leaders met together to talk about what they needed to purchase from one another. The higher-education team decided to use some of its funds to pay for better K-12 education, to better prepare its incoming students. Two teams jointly bought increased efforts to protect water quality, to improve both health and natural resource outcomes. Several teams decided to use some of their money to fund prisons, to reduce the number of low-risk prisoners who would have to be released early. This cross-team buying was necessary because the work of state government is so interconnected: Spending in one area contributes to outcomes in others. Following this meeting, the Results Teams finalized their purchase plans. These plans gave the Staff Team and Guidance Team a prioritized ranking of all existing activities of state government. Using these and similar rankings provided by the agencies, they made final recommendations to the governor. The result was, in effect, ten strategic programs for state government-linking results, indicators, strategies, and purchase plans. The governor embraced the product and generally followed the purchase plans in finalizing his budget proposal. Under each of his 10 priority results, his budget showed those activities that would be purchased and those that would not. It was clear, easy to understand, and it explained in simple terms why some activities continued and others were eliminated. Governor Locke had warned that the budget would be painful, and it was. It proposed to eliminate health insurance for nearly 60,000 of the working poor; dental, hearing, and optometric coverage for poor adults on Medicaid; and 2,500 state jobs. If passed, it would eliminate cost-of-living increases for state employees, and suspend teacher pay increases and a $221 million class-size-reduction effort both mandated by citizen initiatives. University tuition would rise by 9 percent a year for two years; 1,200 low-risk felons would leave prison early; and a series of smaller programs would shut down. Yet the response from the state’s newspapers was overwhelmingly positive. As former chief of staff Joe Dear put it, “Never has such bad news been received so well.” “Gov. Gary Locke’s budget is a big step forward for Washington,” declared the Seattle Times. “Few Washingtonians will find much to like about the brutal state spending plan Gov. Gary Locke recommended Tuesday,” added the Tacoma News Tribune. “But as ugly as the result was, there’s a lot to like about the way Locke and his staff arrived at it, using a new process that forced hard choices about the core priorities of state government.” After six years in office, Locke was widely seen as a status quo manager. But by setting clear priorities and making tough choices — while refusing to raise taxes or make across-the-board cuts — he transformed his image. When Republican John Carlson ran against him in 2000, his central message was that Locke had failed to show any leadership. Soon after the budget was released, Carlson wrote a column indicating that he had changed his mind. Locke’s “budget for the next two years is a work of bold, impressive statecraft,” he wrote. He told the Seattle Times, “He is willing to face down the most powerful interest groups in his own party to bring this budget in without a major tax increase. Genuine leadership is doing what must be done when you don’t want to do it. And I think the governor is doing that.” In a late January survey, voters agreed. Sixty-four percent endorsed the following statement: “Whether or not I agree with all of the governor’s budget recommendations, I respect his leadership and vision to solve the current problem and get the state’s economy back on track.” Only 29 percent disagreed. The legislature also liked the new budget format. “It was astounding,” says Finance Director Brown. “I’ve never been to a set of hearings where the reception was so positive, despite the amount of bad news we had to deliver.” With the budget framed around 10 desired results and all activities listed in order of importance — including those that would survive and those that would be eliminated — legislators found the documents very clear. One committee chair asked what would happen if a proposed revenue change in health were not approved, Opitz recalls. “I said, ’Just move the line up $389 million. That shows you what’s still on the list and what’s off.’ There was no hemming and hawing. It made it very clear that our choice was probably better than cutting deeper into the Medicaid program.” In early April, when the Republican majority in the Senate presented its own budget, the first slide was titled, “Following the Governor’s Lead.” Despite deep differences between the parties over taxes and budget cuts, the legislature ultimately passed a budget that was remarkably close to Governor Locke’s original proposal. Legislators approved Locke’s major sentencing reform in criminal justice and his proposed delay in initiatives that would have reduced class sizes in K-12 and guaranteed automatic pay increases for teachers. They also agreed to amend another public-initiative-backed plan to expand coverage in the state basic health plan in order to allow its revenue to go toward current programs. And they required that the next biennial budget be structured around the 10 Priorities of Government, with outcome measures for each one and for each activity proposed. Public reaction was similar. “When we’ve taken this public, no matter what the setting — business, labor, social services advocates, health care, the classroom, the Rotary meeting — people understand what we’re doing and not doing in a much more fundamental way than ever before,” according to Opitz. “When they say, ’Well, I don’t like that cut,’ I say, ’Okay, then what from above this line do you not want to do?’ And the response is usually ’Oh.... Well, I’m learning to like the cut a little more now.’ It seems to be helping resubscribe everyone to the basic business of state government.” Perhaps most important, Budgeting for Outcomes can help public leaders win back some of the support government has lost in recent decades. The Everett Daily Herald put it well:
Washington State has not finished its work. It has much more to do to maximize the results citizens get for the $24 billion they still spend every two years. Because time was so short, the governor held back some of the more far-reaching reform proposals for further work. He proposed a joint legislative-executive study of the K-12 financing system, for instance, to examine the options more carefully and build the political support necessary for reform. The finance office and Results Teams plan to deepen their reexamination of other strategies to produce the 10 results, in preparation for the next budget cycle. And the agencies will develop outcome and output measures for each activity, so the next budget can include performance targets for every activity funded. But the Outcome Budget has opened a door, and Governor Locke fully intends to drag his state through it. The goal is not just to save money, but to foster strategic thinking and big reforms that will help government produce better outcomes for less money. And that is precisely what the American people want. SMARTER GOVERNMENT As Washington State demonstrates, new ways of doing the public’s business already exist. This book will describe them, showing not only how vital services can survive the permanent fiscal crisis, but how leaders can turn that crisis into an opportunity to reinvent the way their bureaucracies work. Our prescription begins with the five critical decisions Washington State made: • 1. Getting a Grip on the Problem: Is it short or long term? Is it driven by revenue or expenses, or both? • 2. Setting the Price of Government: Determining how much citizens are willing to pay. • 3. Setting the Priorities of Government: Deciding which results citizens value most. • 4. Setting the Price of Each Priority: Deciding how much the government will spend to produce each of these outcomes. • 5. Purchasing the Priorities: Deciding how best to produce the desired results at the price citizens are willing to pay. Once these decisions have focused attention squarely on buying better results for citizens, the 10 approaches described below provide the means. Through smarter sizing, spending, management, and work processes, they make it possible to produce the desired results at the set price, by increasing the value created for every dollar spent. 1. Strategic Reviews: Divesting to Invest. 2. Consolidation. 3. Rightsizing. 4. Buying Services Competitively. 5. Rewarding Performance, Not Good Intentions. 6. Smarter Customer Service: Putting Customers in the Driver’s Seat. 7. Don’t Buy Mistrust — Eliminate It. Ten years ago, for example, Occupational Safety and Health Administration (OSHA) officials in Maine were intensely frustrated by the failure of their traditional inspect-and-fine approach. While they won gold medals from Washington for issuing the most citations and fines, Maine’s workplace safety records were the worst in the nation. So they decided to try something different: They asked the 200 employers with the highest volume of injury claims — 45 percent of the state’s total — to create employee teams that would survey hazards in their plants and correct most of them within 12 months. As long as the company was making a good-faith effort, OSHA would forgo its traditional inspections and fines. Over the previous eight years, OSHA inspectors had identified 37,000 hazards at 1,316 work sites. In the new program’s first two years, employee teams identified 174,331 workplace hazards and corrected 118,671 of them. Two of every three companies decreased their injury and illness rates, and payable workers’ compensation claims by the 200 firms dropped by 47.3 percent — far outpacing declines in other companies. 8. Using Flexibility to Get Accountability. 9. Making Administrative Systems Allies, Not Enemies. 10. Smarter Work Processes: Tools from Industry. THE REST OF THIS BOOK EXPLORES these 5 key questions and 10 approaches in depth, then concludes by discussing the kind of leadership necessary to implement them. The stakes are huge. There are certain basic results that our society demands if it is to remain viable. If we fail — if we continue to lose the battle for public support — the consequences will be all too real. Nothing is more important in the global marketplace than the skill level of a nation’s or region’s workforce, yet in our public schools, roughly 30 percent of all students have not achieved even the basic level of proficiency in reading and math. Public safety is fundamental to a civilized society, and threats of terrorism add frightening new challenges. Yet America’s cities and states are laying off policemen and slashing spending for teams that respond to hazardous materials and chemical or biological weapons. Mobility of people and goods is essential to any region’s economic health, yet congestion is endemic in many metropolitan areas. Higher education is now a necessary ticket to middle-class life, but it is increasingly being priced out of the reach of average Americans. Forty-four million Americans are without health insurance, yet the American people don’t trust government to intervene without making a mess of things. The 10 warmest years in the twentieth century all occurred during the last 15 years of the century, yet our environmental programs do little to offset global warming. Spending on Social Security, public pensions, and health care is devouring our public dollars at a frightening pace. Yet our businesses and citizens will tolerate few tax increases, because skyrocketing health-care costs are squeezing them harder every year. The collision between these realities — the heart of the fiscal storm — is already forcing us to strip away valuable public programs. Given fierce public resistance to tax increases, we can’t solve all these problems by raising taxes. Nor can we continue to borrow without undermining our economic well-being and mortgaging our children’s future. Yet doing nothing will mean educational decline, impaired public safety, crumbling highways and bridges, polluted air and water, and millions of people defenseless against disease. Doing nothing will also undermine the sense of community that binds us together. Those who can afford it will take care of themselves, retreating to private schools and gated communities with private security, and everyone else will be left to fend for themselves. This does not seem to bother many on the right, who still appear to be fighting King George III over the inherent “tyranny” of government. It does bother most on the left, but their only solutions seem to be more spending on dysfunctional public systems that cry out for reform. For too long, both left and right have given us false dichotomies and dead-end choices.
A majority of the American people want a third way. Given the option, they would often vote for “none of the above.” In fact, by removing themselves from the political process through low turnouts, that is exactly what they have done. Many are in a “commonsense majority” of independent voters, moderate Republicans, and New Democrats. They don’t want to cut spending so far that they destroy our public institutions, but they don’t want government benefits at any price. They want government to provide what only the public sector can provide, such as security, national defense, infrastructure, equal-opportunity education, regulation of the marketplace, and social insurance for the poor, aged, and disabled. But they want their money’s worth. They want value for dollars. When they can’t get it, they often opt for tax cuts and private services. When they do get value from public institutions, however, they are often willing to invest in them. That citizens want value for their money is no mystery. We all want as much value as we can get from each dollar we spend — including what we spend on government. The price and value of government are up against the price and value of housing, food, clothing, health care, and countless other goods and services that meet people’s needs. The price of government is limited, therefore, by the value that citizens want — and get — from government, compared with the value they want and get elsewhere. Government can win this competition for public support only by delivering more value per dollar. The rising costs of health care, Social Security, public pensions, prisons, and interest on the public debt have put the price of government under immense upward pressure. Yet that pressure has met enormous resistance to broad-based tax increases. President Bush and the Republican Congress have pushed the federal price of government down to its lowest level in 50 years, by cutting taxes and borrowing the difference. Spending borrowed money may create the illusion that we’re getting more for our money, but it is virtually impossible at the state and local levels, because such massive borrowing is nominally illegal. Yet resistance to tax increases remains strong, because too many voters feel they aren’t getting value for their tax dollars. This fiscal collision is undermining vital state and local services, while generating massive federal deficits. These circumstances suggest that some tax increases are inevitable. But given the political realities, we believe that our governments and school districts must dramatically improve the services they offer, if citizens are to willingly pay a higher price. Any significant change in the price of government is impossible until the majority of Americans feel they are getting real value for their tax dollars. And the only way to accomplish that is to reinvent the way we do the public’s business. Our public institutions must learn to work harder, but more important, they must learn to work smarter. Native Americans have many sayings, and one of the wisest is this: When you’re riding a dead horse, the best strategy is to dismount. You don’t change riders. You don’t reorganize the herd. You don’t put together a blue-ribbon commission of veterinarians. And you don’t spend more money on feed. You get off and find yourself a new horse. Too many public leaders, from school districts to cities, from counties and states to the federal government, have been getting by for the past two decades with “dead horse” solutions. But getting by is not good enough. Getting by has crippled our public services and withered the public’s confidence. During these same two decades, pioneering leaders at all levels of government have been inventing solutions that work. They have been finding new horses. Today, as the permanent fiscal storm batters us, we no longer have the luxury of ignoring them. It is time for the rest of America’s leaders to saddle up and ride. • About the book Copyright © 2004 by David Osborne and Peter Hutchinson. Published by Basic Books, a member of the Perseus Books Group (ISBN: 0-464-05363-7) |
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merican government is waist deep in its worst fiscal crisis since World War II.
Nationwide, 16 percent of cities and towns were forced to cut police positions in 2002 and 38 percent of large cities predicted cuts in police services — even as crime rose and pressure to improve homeland security increased. Portland, Oregon’s largest city, cut its police budget by more than 10 percent over three years. Station houses now close at night, the city is turning nonviolent criminals free because it can’t afford to provide public defenders, and the county had to stop prosecuting drug and property crimes, like burglary and auto theft. Crime is already up sharply.