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October 26, 2009
What's Ailing RI?
John Kostrzewa's description of Hasbro Chairman Alfred Verrecchia's speech at the recent dinner hosted by the Rhode Island Public Expenditure Council brings to mind a few questions:
"Unless we change the way we do work we will not achieve long-term sustainable cost reduction nor will we eliminate the structural budget deficit and be able to provide a more competitive and stable tax environment," he said. "... We can't afford to have 39 fire, police and public works departments; we can't afford to have 36 school districts. We need to consolidate the backroom activity of government at both the state and municipal level."
Presumably, Rhode Island once had a stable economy and a sustainable public budget; did it have fewer towns and school districts, then? On the matter of structural budget deficits, does Verrecchia have evidence that consolidation would save towns — some of whose total budgets are only in the tens of millions — the hundreds of millions that the state's budget is perpetually lacking?
Lastly, would consolidation solve this problem, enunciated by Ed Mazze, or would solving this problem be more likely to end the structural deficit?
In Rhode Island, there is a high underemployment rate since virtually no jobs have been created since late 2007. Some of the underemployed remain in Rhode Island rather than look for jobs in other states because their spouses have good jobs and they want to focus on their children, the family or other personal matters. Presently, the average time it takes to find a job is longer than the time unemployment benefits are paid.
The whole consolidation thing seems faddish to me, and I don't see how it saves sufficient money or resolves Rhode Island's manifold problems.
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In theory consolidation could save money, but it would never be implemented that way in RI. Here for the political class government jobs are the coin of their realm, and they're not about to give up their currency or put their relatives out of their coveted "state job" (or municipal job).
This consolidation talk if merely a con man's shell game to obscure the reality that they'll only make such reductions if there is absolutely no alternative, and then they'll stick it to the municipal workers first, before touching state workers or welfare recipients.
That's because the hierarchy / pecking order at the General Assembly is:
1) themselves;
2) welfare / poverty industry;
3) state workers / unions;
4) municipal workers / unions;
5) private sector employers and employees.
Don't believe it? Consider the last 13 percent increased budget that left the GA budget untouched, state workers relatively untouched, ditto the poverty crowd (leaving RI a welfare magnet) ... and cut local aid.
To put it into terms that the municipal workers can understand: in this shop, the state workers and welfare recipients have more "seniority" than you do, so you'll get "bumped" before they do.
Posted by: Ragin' Rhode Islander at October 26, 2009 10:39 AM"consolidating the back room activity of government"
Seems like a flawed idea, despite the buzz words that hover around consolidation. Phrases like "economies of scale" or "critical mass" dominate a well intended effort to optimize the spending of tax dollars.
Nothing demonstrates this flaw more clearly than Steyn's observations that you cite, Justin, in a more recent post.
The question cannot be whether we can afford 36 school districts, but rather can we afford to cede the limited controls these districts have upwards to some as yet undefined body? It is not too surprising that executives from large corporations endorse the idea, as that is the environment from which they come. Hayek's "Fatal Conceit" comes to mind.
My business makes a living providing large businesses with solutions when their own bureaucracies tie their own hands. Many B2B operations that service the private sector are similar.
The threshold where efficiencies kick in is very low. There is a real and counter-intuitive critical mass where increased size actually builds layers of bureaucracy. Steyn taps into that idea. In the private world, there is at least a competitive check on that inefficiency, with a shareholder demand for profit that holds top executives accountable (of course that gets undermined when a federal body deems a business too big too fail and bails out the critically flawed entities). In the public world, with no such restrictions in place, look out!
Posted by: Roland at October 26, 2009 10:50 AMconsolidation means a few years of blue ribbon commissions and at the end of it, not much will happen..the costs will probably just stay the same...
Posted by: john paycheck at October 27, 2009 1:52 AM