Wednesday, February 16, 2011

Governor Scott’s Real Budget Problem - Budgets and Bureaucrats

Florida’s projected 2012 budget deficit is about $100 million more than forecast in December, according to Amy Baker the State Legislature’s chief economist. That would put the deficit at about 3.6 billion dollars. The deficit is being driven by Medicaid costs, education costs and pension funds. County and local governments also face steep budget deficits in 2012. Governor Scott, Senate President Haridopolos and House Speaker Cannon seem to be converging on a series of solutions to cut costs. Governor Scott wants to lower property taxes, reduce or eliminate the corporate income tax and get employee participation in pension plans. The question is how do you do all of that.

As I set at the Inaugural Prayer Breakfast on inauguration day I looked around the room at probably 2000 attendees a many of whom were state, county and municipal employees. Those bureaucrats you hear so much about. It dawned on me that the real budget problems of state, county and local government probably reside right here with this group. Leaders like Governor Scott, Senate President Haridopolos, Speaker Cannon, County Administrators and Mayors all face the same issue. A bureaucracy has a real strong tendency to protect itself. Here are three examples that point out the problem.

The first is pothole budgeting. In this scenario, to reduce the budget, the bureaucrats lay off the guy or guys that actually fix the pot hole. The lowest paid people on the totem pole and also, by the way, usually the position where the government in question gets the smallest dollar benefit for the actual staff reduction. They don’t, in most cases, lay off the supervisor or the manager, or the assistant director, or the director. When people complain about the pot holes, the supervisor does not go fix the pot hole, nor do any of the managers or directors, they just keep collecting their salaries and blame budget cuts for deteriorating streets. Nobody in that chain wants to get rid of the person below him because THEY would actually have to do some real work. Governor Scott has a whole state bureaucracy full of this problem as does every county and municipal government of any substantial size.

In the private sector they solve this problem by expanding the span of control. Keep the workers and reduce the number of supervisors, and managers along with their aids, assistants and secretaries. With today’s technology, supervisors can manage a lot more people than they could even five years ago. There is a real good chance productivity will go up along with morale.

This same idea works in education. Take a look at the number of administrators, directors, program planners and other non-teaching jobs in the state and local education system. Spend some serious time reducing all of that overhead and less time fighting with the teacher’s union. It is time to stop letting middle management drive the train and paint the teachers and the teacher’s union as the problem while keeping all of these really cushy management jobs in place.

The second scenario is ballistic budget cuts. In this situation, under pressure to reduce cost, the middle level bureaucracy picks a program to cut that they know has a serious, dedicated constituency or even better a fanatical public following and recommend the whole program as a budget cut. Examples: Catastrophic cuts or elimination of social programs, entitlements, libraries, pools, public safety functions, arts or sports programs. These cuts are specifically designed to be headline makers, create fear and raise the ire of the public so the Governor, County Administrator or Mayor becomes an instant target. Never mind the fact that the program is probably loaded with excess baggage in terms of mangers, administrators, program directors or whatever and could be streamlined and probably maintained. The objective of the ballistic budget cut is to create a public furor that redirects the budget effort in an entirely different direction; and the ultimate goal is to position this particular area so it is completely off the budget cut radar. It happens every budget cycle and midlevel bureaucrats have become experts at orchestrating this type of budget scenario. Beware of the ballistic budget cut.

Then there is the whole issue of actual verses ceremonial budget cutting. Or the cut and shuffle. In an actual budget cut, the position is eliminated and person is removed from the payroll - gone. In government we have ceremonial budget cutting. We cut the position, usually with great fanfare, but miraculously the person is quietly shuffled to a new job often times with less responsibility but oddly enough at the same salary. Granted nobody likes to terminate people. Besides, if we really start that you might be next. The cut and shuffle process has got to stop if state, county and local budgets are going to get balanced.

Don’t buy all of those nodding heads and smiling faces in the budget meetings as you talk on and on about cutting the budget, programmed budgeting, doing more with less and those other budget cut clichés. The smiling, nodding bureaucrats are likely working up their cut list of pothole patchers or the next ballistic budget cut so they can teach you who really runs the show.

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