Government Issues and Politics
Insurance and Employee Benefits
Business and Economic Info
Human Resources and Safety
Education Policies and Practicies
Training and Consulting Services
Welcome to CBIA's Training and Consulting site!
Small Business Human Resources Workforce Development Your Questions Answered Success Stories

continued from page 1

Reforming state government

 

Lessons from the private sector

Today, policymakers have many more tools than in years past for improving, streamlining, and bringing down the cost of delivering government services. Over the last few decades, says Joe Brennan, CBIA senior vice president of public policy, the private sector has come a long way in developing methodologies and technologies to make business and manufacturing operations more efficient.

“Lean processes,” he says, “stress efficiency and removing waste from production systems. The goal is to avoid using up resources on anything that doesn’t provide customer value. Although originally a manufacturing concept, lean is now applied at many levels in many kinds of organizations and businesses. It could be an important part of any government’s efforts to modernize and become more customer-focused.”

Town by town

State policymakers will also need to give Connecticut’s cities and towns the tools they need to become more cost-efficient.

“That’s especially important,” says Brennan, “if state aid to local communities is reduced or does not increase or if state spending reductions involve shifting the cost of some programs and services to municipalities. Cities and towns will need to become less reliant on state funds and more efficient in the way they deliver services. Otherwise, increased costs will translate into higher property taxes for residents and businesses, which will have a negative impact on jobs and the economy. There are many things the state can do to give local communities more autonomy when it comes to bringing down the cost of programs and services.”

Empowering municipalities to reduce government spending and the need for property-tax increases will require that the state take several key steps. Chief among them are implementing mandate reform and encouraging the regionalization of services among cities and towns.

Mandate reform

Municipal mandates are laws enacted by the General Assembly that direct local governments to implement or administer a wide range of standards, programs, and services. They are one of the leading cost drivers in municipal budgets. Of the hundreds of mandates in effect, many are unfunded or underfunded, meaning that municipalities must foot some or all of the bill for their implementation. That, in turn, puts a strain on local resources and drives property tax increases.
The most burdensome mandates, according to a CBIA survey of municipal officials, are education, prevailing wage, and binding arbitration mandates.
• Education mandates include those for special education, collective bargaining on teachers’ salaries, and the construction of new buildings. Of any mandate category, education mandates typically put the biggest strain on municipal budgets.
• Prevailing wage mandates dictate that companies doing business with municipalities must pay their employees wages and benefits according to a formula largely based on union wage scales. The burden of that requirement is particularly acute for towns undertaking major capital improvement projects.
• Binding arbitration mandates require that teacher and other municipal-
employee contract disputes be settled by an outside mediator—which often results in rulings against municipalities, leaving them with no recourse. Many local officials believe that the threat of binding arbitration forces municipalities to agree to contracts they would otherwise reject.

To get mandate relief, officials from cities and towns across Connecticut have expressed a desire to see the state review all mandates and take swift action to reform or eliminate the most onerous ones. They would also like the state to restrict the creation of new unfunded and underfunded mandates and improve the flow of mandate-related information from the state to local governments.

Regionalization

Another key strategy in lowering the cost of local government and making communities less dependent on state aid is to provide incentives for cities and towns to collaborate on the delivery of certain services. The approach, known as regionalization, is based on the idea that by cooperating, municipalities can take advantage of economies of scale to provide services more effectively at lower administrative costs.

The state legislature embraced this concept in 2007 when it established the Regional Performance Incentive (RPI) Program, funded from the budget surplus that existed at that time. The program was designed to provide grants for municipalities to share services or participate in collective purchasing. In Fiscal Year 2008, the Office of Policy and Management, the state agency charged with administering the RPI Program, awarded 24 grants totaling $8.6 million to 11 regional planning organizations. Many of the regionalization projects that received funding involved technology assistance, public safety, and maintenance of infrastructure.4

“Whether collaboration among towns will produce significant savings depends on what services are being considered, the size of the towns, and other factors, but it’s already working well for some towns,” says Pete Gioia, CBIA vice president and economist. “The more we see that happen, the more our communities will be able to reduce the tax burden on residents and businesses, and that will help stimulate economic growth and job creation statewide.
“Although we do not believe the state should mandate new regional entities,” adds Gioia, “the legislature should build on incentive initiatives like the RPI Program. In the long run, the state will benefit as well as the towns if local governments become less dependent on state funding and more moderate when it comes to property taxes.”

For the regionalization movement to grow, residents from across the state will need to push municipal officials in that direction. “There is sometimes resistance to regionalization,” says Rathgeber, “perhaps rooted in the strong sense of home rule in our state. But having 169 separate governments in a state as small as Connecticut isn’t necessarily the most cost-efficient arrangement when it comes to providing services.”

A special role for businesses

To advance regionalization and mandate reform—and impress upon legislators the urgency of streamlining state government—CBIA encourages members of the business community to become vocal advocates in their communities and at the Capitol.

“Frankly, many people don’t fully understand the economic impact of an outdated, inefficient agency structure and the ever-increasing government spending it takes to support it,” says Rathgeber. “Businesspeople are experts in cost-efficiency—they have to be to survive. So they are especially qualified to educate legislators about best practices for getting leaner and about the economic and social benefits of more efficient, effective state and local governments. It’s imperative that state policymakers take those issues seriously, because the status quo is simply no longer acceptable.”

Notes

1 Figures are based on 2006 data compiled by the Pew Center on the States in a 2007 report titled Promises with a Price: Public Sector Retirement Benefits. According to the report, Connecticut has the highest per capita unfunded retiree health bill in the country, at $6,186, compared to the national average of $1,283. The figures cited appear on Page 10 of the report, which can be downloaded at www.pewcenteronthestates.org/uploadedfiles/Promises with a Price.pdf.
2 Gittell, Ross. The Declining Young Adult Population in New England, Carsey Institute Fact Sheet, Winter 2007. (Between 1990 and 2004, Connecticut’s “young adult” cohort declined by 30%, the steepest drop of any state in the U.S.) See the entire document at http://pubpages.unh.edu/~rgittell/documents/ Carsey_NHYoungAdults.pdf.
3 U.S. Census Bureau (http://quickfacts.census.gov/qfd/states/09000.html)
4 Regional Performance Incentive Program Report to the Governor and the Finance Revenue and Bonding Committee (www.ct.gov/gis/lib/gis/rpip_final_2008%5B1%5D.pdf)

previous