Perhaps the biggest flaw in our thinking -- which we’ve tried to diminish as time goes on -- is the notion that once a lesson is learned by states and cities, it stays learned. When we looked back at Governing’s first Government Performance Project issue in 1999, we saw that we had talked to several state budget directors for a section on financial management. We concluded that states had learned painful lessons from recent recessions and were sobered up with regard to their budgeting and financial practices. They were, in short, going to be more straightforward -- no more tricks, like deferring pension fund contributions to make a budget appear balanced when really they were just kicking the can down the road. As the budget director from Montana told us, “We got burned in the mid-’80s and in the early ’90s. We’re not going to be burned again.”
But in actual practice, states continued to kick the can down the road time and again. Within three years, we were writing about budget devices and how states were using them to make their fiscal status appear better than it actually was. In 2011 we wrote a column that asked, “Do states really balance their budgets?” The answer was a resounding, “No.”
We’ve also been inclined toward over-optimism about new management techniques that appear to show great promise. One example cropped up in March 2000, when we wrote that governments were finally beginning to figure out how to develop solid figures for the costs of the services they provide. Our prediction: Within five or six years, there wouldn’t be a sophisticated government official or manager around who wasn’t using the useful data derived by cost accounting (also known as activity-based costing). Look around at the cities, states and counties today and you’ll find that while there has been some progress in the use of cost accounting -- particularly in developing justifications for fees -- we went a little overboard in predicting that all sophisticated government officials and managers would be using the device. If we wanted to sneak out from under that one, we could just define a “sophisticated” official as one who uses cost management, and that would retroactively make us accurate. But that’s not what we meant at the time.
Similarly, in 2001 we wrote, “The concept of creating fiscal notes -- that’s budget jargon for information accompanying [legislative] bills that detail their potential financial impact -- makes such good sense that more and more states are putting increased effort into them.” Flip the calendar forward about 14 years and you can find a November 2015 study of fiscal notes by the Center on Budget and Policy Priorities. That study found that while states generally produced some kind of cost estimate of a bill’s impact, in many states these estimates were not very useful. The center noted that “they often fail to estimate the cost beyond the next year or two, they are not revised when the legislation is amended, or they are only produced for a narrow set of bills.”
Yet another mea culpa is a forecasting lesson we learned: No matter how quickly the waves appear to be coming onto the shore, it can take a very long time for the shoreline to actually be impacted. The best example of this was our mistaken notion -- one that was actually repeated by many others who study the public sector -- that retirements about to hit the public sector would lead to a severe shortage of workers -- and soon. We first started to trumpet the news that “the baby boomers are about to retire” back in the late 1990s. We repeated that same notion for about 15 years. In a 2006 column we wrote about a “personnel tornado” on the horizon.
We’ve been burned enough times to stop making that forecast with any conviction, though we continue to read elsewhere about the “imminent” wave of retirements. We tend to think this is finally true, but we’re not about to say so here. What led to the “Chicken Little” state of mind years ago? We had no way of foreseeing that the two big recessions of the early 21st century would keep workers in place much longer than we had expected. With an uncertain stock market and a rising unemployment rate, people were inclined to stay in their jobs for quite a bit after they reached their official retirement age.
One commonality to the lessons learned in many of these imperfections is the reverse of the slogan found on car mirrors. Our variation: “Objects seen in the rearview mirror may be much further off than they seem."
