Making Government More Efficient

Making Government More Efficient

The $454 million in 2010 spending cuts Governor O’Malley just announced are going to be excruciatingly painful.  Unfortunately, over 75% of the cuts just announced are one-time savings that will do nothing to make balancing next year’s budget any easier.  While potentially necessary in the short term, furloughing employees and cutting county assistance create real hardships but no long-term benefit.

With huge deficits foreseeable for the next several years, we need to stop focusing on short-term measures and figure out how we can deliver the services important to our citizens far more efficiently. Well-run businesses spend a lot of effort figuring out how to cut costs, but there is typically little push to do this in government agencies.   Governor O’Malley’s request for cost-saving ideas from employees and citizens was a wonderful first step. 

Among the hundreds of pages of submitted ideas, several opportunities for major savings stand out: 

Vehicle Usage:  It is apparent from the multitude of detailed comments that far too many state employees use state vehicles to drive to and from work and for personal use.  While immediate access to a state vehicle might be important for some people to be able to respond to emergencies, it appears that this perk is being granted too frequently.  Excluding the State Police and Fire Prevention services, the state is planning to spend $224 million on motor vehicle operations, $93 million on travel, and $378 million on fuel and utilities in FY 2010.  In addition to the costs of the vehicles themselves, we can achieve substantial savings in maintenance expenses, gas, and insurance by severely limiting the number of employees with their own state vehicles.

Procurement:  Many state employees wrote about procurement policies that restrict them to using particular vendors and keep them from purchasing lower-cost supplies.  As one employee explained, “I remember in the 1990s and early 2000s we had to get three bids to make virtually any purchase and the lowest bidder would be the vendor we had to buy from. I know for the last five or six years we have spent anywhere from 25% to as much as 400% more on materials and supplies purchasing from small businesses”.  While such policies might have been created for noble purposes, it’s time to return to competitive purchasing.  A 10% decrease in the state’s purchasing budget for supplies and materials would save taxpayers $46 million annually. 

Perhaps the most interesting recommendation was the following:

Incentivize Saving Money:  “The State should implement incentives for overall State agency savings.  The goal should be a 6% annual reduction in each (sic) overall agency budget. If an agency reaches this target, 1% of the savings would go to the employees in the form of bonuses, the other 5% would return to the State. This would encourage a frugal mentality in every State employee.… Currently there is NO incentive in State government to spend frugally and shrink your budget, and arguably the incentive is the exact opposite. Agencies that don't spend their full budget are penalized by receiving less in the following year whereas bloated agency spending is rewarded because the agency ‘demonstrated the need for their budget’.”

Creating a system that rewards employees financially for saving money would single-handedly change the culture in state agencies and lead to increasingly-efficient government.  Such programs have proven their worth repeatedly in the private sector.  Rather than continuing to cut services and furlough employees, I encourage Gov. O’Malley to set up systems to enable employees to deliver services more efficiently and financially motivate them to do so. 

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