By DAVE TRABERT
All levels of government are struggling to make ends meet these days, and the deliberations often come down to one of two bad options: raise taxes or eliminate services. Higher taxes always lead to economic declines, and it's easy to say "cut the services that someone else uses, but not those that I want."
But there may be an option that provides the proverbial best of both worlds. Our research indicates there are tremendous opportunities to reduce spending and taxes without cutting necessary services. The answer lies in using efficiency studies and implementing "best practices."
Let's start with State spending. Amidst all the struggles to balance the state budget, we discovered that state agencies finished the fiscal year ended June 30 with nearly $2 billion in unencumbered carryover cash balances. The General Fund only had about $40 million but it is just one of 1,658 separate funds. Amazingly, most legislators were not told that the money existed. Some of those ending balances may be legitimate, but the sheer fact that no independent analysis of the appropriateness of those balances has been conducted is good reason to believe that a fair portion of taxes collected over the years may not have been necessary.
Taxpayers routinely review their personal and business spending to determine if they are making the most efficient use of available resources, but it's rare that that takes place in government. We won't know how much can be saved until independent efficiency studies are performed, but the potential is substantial.
There is also tremendous potential for saving in local government. Crossland Construction, headquartered in Columbus, analyzed the budgets of nine counties in southeast Kansas. They calculated spending on a cost-per-resident and other apples-to-apples basis to determine which counties had the "Best of Class" spending on a variety of government services. They found that if each county were at the "Best of Class" cost, they could have reduced their 2009 budgets by 57 percent. We are replicating this study across all 105 counties, and while we can't yet say how much could be saved statewide, the total budget is about $2.4 billion. The "Best of Class" savings could be much lower than 57% and still amount to serious savings. And that is just county budgets; the same is likely true of our 1,979 cities and townships.
There is also potential to wring hundreds of millions out of school budgets. Per-pupil budgeted spending for the school year ended June 30, 2009 ranged from a low of $7,986 to a high of $45,278 (excluding USD 422 Greensburg that was rebuilding from tornado damage). We further analyzed spending among similar sized districts and found that budgets could have been reduced by $612 million (not counting capital outlays and debt service) if the high-spending districts could have been at the median cost for each category of expenditure.
There may be good reason why some schools or government agencies can't match the spending of others, but we would only have to achieve a portion of the collective potential to have a dramatic impact.
Before we consider raising a single dollar in additional tax or cutting a service, shouldn't we first see how much unnecessary spending we can eliminate?
Dave Trabert is President of the Kansas-based Flint Hills Center for Public Policy and he can be reached at email@example.com.