Hey Governor McDonnell, Take a Look at This! I Balanced Virginia's Budget

OK, anyone who knows me well knows I am a math idiot.  I understand the concepts, typically, but it just doesn't come easy for me.  And people who know me well also know I love my regular, old-fashioned, newsprint newspaper.  No on-line substitute for me, no sir - sorry, John Sarvay, you'll have to pry the old school medium out of my cold, dead hands. 

[As a total aside, a HUGE shout out to my newspaper person, who got me my papers throughout Snowpocalypse II.  I love you, (wo)man!]

Why does the math + newspaper thing matter, you ask?  Well, on the front page of today's Richmond Times-Dispatch is an article that invites "You To Be the Governor" and cut the budget by an additional two BILLION dollars.  So, I decided to take the challenge. 

Well, my math idiocy is such that I didn't realize until a while into the exercise that I "only" had to cut $2B TOTAL, rather than $2B a YEAR.  I had come up with almost $3B in cuts, so I got to revisit my cuts and add money back, which made me feel pretty good.  Following are my cuts, with the policy rationales for all.

EDUCATION:  This category included K-12, the community college system, the largest public universities (VCU, Virginia Tech, UVA, George Mason and ODU), and cultural institutions (Library of Virginia, Virginia Museum, Virginia Commission for the Arts).

I really didn't want to cut anything here.  I think education is an investment in the Commonwealth's future.  But, after reflection, I imposed a 5% across the board cut on everything.  My policy position:  There isn't anywhere on this daggone sheet that ISN'T a bad place to cut.  We're beyond cutting fat.  We're down to bone, people, and amputating "unnecessary" limbs.  So everybody has to do less with more.  Also, I felt:

• Localities should be most responsible for their education systems.  To offset the proposed state K-12 cuts, they must find additional revenue sources for their programs.
• Higher education has been largely immune from the cuts in the most recent budget cycles.  They have to take their licks now.  I am also hoping that the universities can raise the money they need through capital campaigns and private fund raising.
• Hopefully, the impact of the revenue reductions will be limited to deferred capital expenditures, and instructional impacts will be limited unless and until absolutely necessary.
• The cultural institutions, for example the Virginia Museum of Fine Arts, have the potential to be  net revenue generators for the Commonwealth, by attracting tourists and other dollars.  Limiting impacts to 5% are therefore justified.

TOTAL ONE YEAR SAVINGS:  $308.1425M

HEALTH AND HUMAN RESOURCES:  This category included the Department of Medical Assistance Services ("DMAS"); the Department of Health ("DOH"); the Department of Behavioral Health and Developmental Services, which serves the mentally ill and mentally impaired; the Department of Social Services ("DSS"), which serves the poor; Comprehensive Services for At-Risk Youth and Families; the Department of Rehabilitative Services ("DRS"), which serves those with disabilities; and the Department of Aging.

People aren't going to like what I did here, so I'm prepared for howls of criticism.  Here was my thinking:

• I imposed NO CUTS on those Departments that provide direct aid to individuals, with one exception.  Part of the rationale is because Virginia has one of the lowest funding ratios per capita for services to the indigent and medically needy of any state.  This is not something we should be proud of, in my humble opinion.
• Society should be judged by how it treats those least able to care for themselves.  That's a philosophical position, but I believe the principle.
• As a result, I did not cut the budgets of DMAS, the Department of Behavioral Health and Developmental Services, DSS, or DRS.
• HOWEVER, I eliminated the Department of Aging.  Indigent elderly are covered by DMAS and/or DSS.  Non-indigent elderly receive Medicare and Social Security.  The AARP is the strongest lobbying organization in the nation, and there are a host of not-for-profit programs that address the needs of the elderly.  I don't understand the need for a specific department for a subset of individuals that already seem to be extremely well-served.
• I also cut by 50% the funding for the Department of Comprehensive Services for At-Risk Youth and Families, and consolidated this Department with DSS.  I'm not sure why the folks being served by this Department wouldn't also be receiving services from DSS and/or DMAS.  On paper, I don't see the need for a bureaucratic organization that provides services to a subsection of people already receiving public assistance.
• Finally, I cut by 10% the budget of the Department of Health. DOH provides general public health programs rather than direct personal services to the poor, the ill, the mentally disabled, or the physically challenged.  I am not suggesting that programs like Water Safety and Health Inspections aren't important, but again, everyone is going to have to do more - or as much - with less.

TOTAL ONE YEAR SAVINGS:  $169M

PUBLIC SAFETY:  I know it is never "good politics," particularly as a law and order candidate, to appeared to be soft on crime.  But I don't care about politics and I'm not running for anything, so I have the luxury of looking at this without political concerns.  I do think the reality is in extremely tough times we all have to work harder, smarter, faster, BETTER, and must do more with less.  The Department of Public Safety is no different.

• I imposed 5% budget cuts on the Department of Corrections, the Department of Juvenile Justice, and the Department of State Police.  These seem to me to be the people directly responsible for overseeing our prisons and catching criminals.  I wanted to insulate these departments as much as possible, but they still have to take a hit - just like education organizations.
• I EXEMPTED the Department of Forensic Science from budget cuts.  This organization has been underfunded in the past, ans needs every dollar it gets to solve crimes in a concrete and indisputable way. 
• I imposed 10% budget cuts on the State Compensation Board, the Department of Correctional Education and the Department of Criminal Justice Services.  None of these were palatable decisions, but seemed to be the lesser of the evils.
• NOTE:  I frankly have no idea what the Department of Criminal Justice Services does.  According to the R-TD, it "works to improve and promote public safety."  It gets a LOT of money - almost $200M a year - to do that.

TOTAL ONE YEAR SAVINGS:  $187.95M

OTHER:  This category included the Department of Conservation and Recreation, the Virginia Circuit Courts, the Virginia Department of Transportation ("VDOT") and the Virginia Tourism Authority.  I cut each department's budget across the board 10% over two years, EXCEPT for the Virginia Tourism Authority.  I gave them an additional $1M per year, on the theory that they could be net revenue generators for the Commonwealth.  But don't think if I was Governor that I wouldn't be standing over their shoulder in this economic environment DEMANDING that they leverage that investment into additional dollars for the Commonwealth.

TOTAL ONE YEAR SAVINGS:  $7.785M

STATE WORKERS:  I expect to hear - assuming I hear anything (:)) - the strongest objections to these recommendations.  I recommend (i) 15 furlough days per employee ($240M) and (ii) an additional 5% contribution towards retirement ($90M).  That saves a TON  of money, $330M.  In anticipation of the state employee backlash, here are my rationales:

• 15 furlough days, over a 250 day work year (5 days x 50 weeks) is the equivalent of a 6% salary reduction.  That's mice nuts, compared to what's going on in the private sector.  Would you rather have your salary reduced 6%, or be laid off?  Not a hard call, IMHO.
• To the people who say "It's not fair, we're public servants, we already get paid less than our equivalents in the private sector," here's my answer.  Anyone who went into government service traded one potentiality - huge cash reward - for another - stability.  If someone tells me they went into government service to get rich, they ain't the sharpest knife in the drawer.
• The risk-reward principle means you give up high return opportunities for steady, safe returns. 
• Government workers are compensated in other ways besides salary, including incredibly rich benefits packages, both health benefits and retirement benefits.
• The other major advantage of a state government job is almost absolute job security.  Last I heard, you have to dance naked on the desk of the Governor to get fired.  And even then the firing would only be effective after a complex and complicated "grievance" procedure.  Hey folks, welcome to the real world.  In the private sector, Virginia is what's called an "at will" state, which means any employee serves at the will of his or her employer, and can be fired for any reason, OR NO REASON, so long as it is not discriminatory, at any time. 

I have no problem making the recommendation to cut state employee salaries and benefits.  Maybe that's partly because I know plenty of bright, smart, talented people who have lost their jobs, or who have been making it work on 20%+ salary reductions for over a year now.  So recommending a 6% salary reduction for people who have almost 100% job stability and some of the richest benefits packages around, including a defined benefits retirement plan, ain't a hard call.  Guess what?  6% of $50,000 is $3,000.  6% of $100,000 is $6,000.  These are not insurmountable deficits to overcome.  Sell some stuff on eBay.  Cut back on meals out.  Clip coupons.  No new clothes this year.  Shared sacrifices mean....shared sacrifices.  State employees, it's your turn.

TOTAL ONE YEAR SAVINGS:  $330M

TOTAL ONE YEAR SAVINGS FROM ALL CUTS:  $1,002,877,500

NOTE: I would probably impose the additional $.30 per pack cigarette tax, to raise an additional $155M in revenue a year.  This is the classic example of the user fee, and it's also got additional public policy rationale because it might limit teen and young adult smoking, which would be all for the good.  Any additional revenues that I raised, I'd add back money in K-12 education first.

So there you have it.  If I was Governor, presented with these limited options, this is what I would do to close the $2B budget deficit.  People may hate my ideas, and that's fine.  Let's have a productive dialogue.  I'm curious to see the reaction.  And the exercise just goes to show, it ain't easy being the Boss.  These are TOUGH decisions. 

Comments

[mike]

More people need to realize the concept behind your comments on the risk/reward of government workers. I wont repeat what you wrote, it's spot on. This is ALSO true for Federal and local covernment as well. Government workers often feel entitled and special. Look at some of the salaries, in the 100's of thousands for many government jobs. It's ridiculous. I can be canned at any moment in my private sector job. Its risk/reward.

[Rasta Bossman]

Wait, if you cut all of those areas of state government by 5-10% there are going to have to be layoffs. How does that mesh with your therory that government workers traded thier salary for "near 100% job security" and should therefore take a pay cut. You're asking them to give up both job security and their low pay guarantee. You're inconsistent. (Of course you don't actually have to make any hard decisions - saying you'll cut a department by 10% is easy if you don't have to identify who in that department loses a job to generate the savings).

In health care, how about mandatory insurance? After all, society should be judged by how it treats those least able to care for themselves. Everyone agrees that the use of emergency care is far costlier than timely preventative care. Subsidize those who truly can't afford it, but penalize those selfish individuals (usually young adults) who decide to go without so they can spend money on eating out and fancy electronics. There's no excuse for a 25 year old college graduate to go without insurance and pass the costs on to the taxpayers when he is in a car accident or she gets pregnant. Of course this would require Republicans to actually show some leadership and do something rather than just sitting back and throwing stones.

Here's another idea - lets use that money that is currently going to benefit a small number of home buyers for more broadly applicable stimulus packages. If homeowners and realtors need an economic stimulus, why don't they just cut 1% from the (artificially supported) 6% commission and split it between the buyers and sellers. One extra sale would make it up to the realtors (or sell some stuff on eBay, cut back on meals out, clip coupons, no new clothes this year) and the parties would each get a bigger stimulus than the $8K the buyer now gets. Plus the funding comes from those who benefit, not from the taxpayers.