Budget Solution of the Week: Government Efficiency Review

With the budget deficit casting a shadow over the current fiscal year, and deficits projected for at least the next five years, policymakers are acting to stem the tide of red ink.

The Wolf administration has adopted a hiring freeze—an idea CF proposed back in October. And just this week, the administration announced the consolidation of the state’s technology and human resource functions—a move aimed at achieving savings for taxpayers.

The governor has also ruled out broad-based tax increases this upcoming fiscal year, which were the central components of his two prior budget proposals. Instead, he—and legislative leaders—are putting greater emphasis on reducing the costs of a bloated state government. Taxpayers should be optimistic about these developments, which all point to a culture shift in Harrisburg. Instead of seeing large tax increases as a viable solution, the focus has shifted to the spending side of the ledger.

Beyond the promising cost-savings steps taken thus far, more must be done. State government needs a complete overhaul. In our latest policy brief, Embracing Innovation in State Government, CF outlines solutions to reduce government spending and improve the institutions and programs now failing too many Pennsylvanians.

Over the next month, we will highlight at least one budget solution per week. First up, a government efficiency review.

This review would identify ways government can make the best use of each tax dollar. The State of Louisiana conducted such a review in 2013 with the help of Alvarez & Marsal (A&M)—a business management firm specializing in performance improvement. The firm made 72 recommendations, which were estimated to save or raise $2.7 billion over five years.

According to state's final report on the recommendations, “efficiency reviews have generally identified savings of five to six percent of the general fund budget” in other states. For Pennsylvania, this would mean $1.5-$1.9 billion in savings. Such a significant sum would go a long way toward helping policymakers reduce government spending.

An efficiency review is just one of many ideas that can lead to savings for taxpayers. As we move closer to the governor’s budget address, we’ll be exploring other ideas to balance the budget without taking more out of the pockets of working people. Be sure to check back next week for the 2nd blog in our series.