Advisers scour state for savings (News and Observer)
RALEIGH — Gov. Bev Perdue, faced with the deepest budget crisis in decades when she took office, assembled a group of outside experts and asked them to put North Carolina state government under a microscope and to report back how it could be improved – and how money could be saved.
Those experts are expected to recommend millions of dollars of savings early next year. Among the many options they are considering are combining operations of the state air fleet, increased power-buying for common items such as toilet paper and outsourcing some state maintenance contracts.
“My gut instinct as a business guy tells me there are significant savings to be had,” said Norris Tolson, a retired DuPont executive who is now president and CEO of the N.C. Biotechnology Center.
Tolson is co-chairman of the Budget Reform and Accountability Commission, or BRAC, which Perdue appointed to advise her on overhauling state government.
Nearly every governor going back to Jim Holshouser in the early 1970s has created some form of efficiency commission to provide an outside look at state government, often with mixed results. Then-Gov. Mike Easley appointed the current one in 2002.
The efforts of Perdue’s panel are already being greeted with a measure of skepticism.
John Hood, president of the John Locke Foundation, a conservative think tank based in Raleigh, said the commission will likely find some useful savings around the edges. But he said it is unlikely to tackle major cost savings that are politically difficult to achieve.
“No one is against bulk buying or managing the motor fleet,” Hood said. “Everyone is against merging some departments or changing the mix of services that North Carolina delivers. The big savings are changes in Medicaid or changes in finances of the UNC system or in the management of the prisons.”
“There is a strong political constituency for protecting those agencies from change,” Hood said.
Perdue’s plans
Since taking office in January, Perdue has talked about the need to use the fiscal crisis to spur the state to innovate and think creatively about state government.
“You will continue to see me restructure government,” Perdue told reporters during a year end news conference last week.
She has cited as a role model North Carolina Gov. O. Max Gardner (1929-33), who used the Great Depression to reorganize government when the state took control of the roads, schools and prisons from the counties. Last week, Perdue said that tough times – whether the Great Depression of the 1930s or the Great Recession of 2009 – provide the perfect opportunity for the state to reevaluate how it does business.
The governor sees her innovation coming in different forms, such as a disputed financing plan for speeding up completion of Interstate 485 around Charlotte, forming public-private partnerships for road building and possibly modernizing the tax code.
One of her chief vehicles for making changes was BRAC, which she created shortly after taking office in January.
“What she charged the commission with is to scour the budget, line by line if you have to, program by program, major activity by major activity, and come back to me with a list of recommendations on things that the commission feels needs to be improved, done differently or eliminated,” Tolson said.
Tolson, who previously ran the state departments of Transportation, Commerce and Revenue, was chosen as co-chair along with Hilda Pinnix-Ragland, a Progress Energy executive. Other members of the 10-member commission bring a mixture of government and business experience.
The commission grew out of Perdue’s campaign for governor last year. The idea was patterned after Congress’ Defense Base Closure and Realignment Commission, better known as BRAC. Congress created BRAC to close unneeded military bases that remained open because they had powerful political protectors in Congress. The concept was that Congress would have to vote up or down on the BRAC recommendations as a total package.
Perdue, as lieutenant governor, was assigned by Easley to work with the BRAC process in North Carolina to make sure that North Carolina’s military bases made their strongest cases for staying open.
Her first year as governor was dominated by a $4.6 billion budget shortfall, which prompted her to back major cuts in state spending as well $1 billion in new taxes.
Her initial idea for the commission was to offer her recommendations to the legislature for a BRAC-like up-or-down vote. But it met with resistance from lawmakers reluctant to give up their budget-making authority, and Perdue seems to have cooled to the idea.
Instead, Perdue is likely to try to order some savings on her own and go to the legislature for changes in the law when necessary, according to Chrissy Pearson, the governor’s spokeswoman.
Getting scrutiny
The commission has been looking at a broad range of areas, including improving state computer operations and how state social programs are administered.
One area of particular interest is whether the state can better manage the 51 aircraft it operates – 31 airplanes, 16 helicopters and four bombers used for firefighting efforts. Ownership of the planes is spread among five state agencies and the University of North Carolina system.
“Do you need four sets of mechanics? Do you need four sets of pilots?” Tolson asked.
The commission is also looking at whether it can get into power-buying in a bigger way. If six state agencies are buying toilet paper, for example, the commission would like to know whether the state could get a better price by making one large bulk purchase.
Norma Houston, a commission member who is on the faculty of UNC Institute for Government and is a former chief of staff for Senate leader Marc Basnight, said the commission also wants to learn how other states and private corporations such as Lowe’s, McDonald’s or SAS handle their bulk buying. The commission also wants to find a better way of keeping track of what various state agencies are paying for items, so other departments can take advantage of low prices, she said.
The commission is examining outsourcing maintenance services in prisons and hospitals, making sure there are fewer idle state cars around, and studying whether certain Cabinet agencies are needed.
“Do we have too many Cabinet agencies?” Tolson asked. “Do we need to be combining some things? Do we need to be looking at how the Cabinet agencies operate?”
The commission is examining whether the state could save money by purchasing more buildings rather than renting, and whether more state offices can be consolidated in the same buildings, said Ron Penny, a former state personnel director and commission member now teaching at N.C. Central University in Durham.
Here for the long haul
Tolson said that beyond the initial recommendations that will likely be made in early March, the commission hopes to continue its work through the Perdue administration with more long-range recommendations. But as a veteran of state government, he is also realistic.
“We are under no illusion that we are going to turn our state government upside down,” Tolson said. “If we advance the ball a little bit more toward more efficient government, more efficient delivery of services, more cost efficient use of taxpayers dollars, we have been successful.”
BY ROB CHRISTENSEN – Staff Writer
[email protected] or 919-829-4532
